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As Obama’s class war is endorsed by 51 U.S. senators, polls suggest it’s a political winner.
On Monday, the United States Senate voted on S.2230, the Orwellian-of-title “Paying a Fair Share Act of 2012.” (More precisely, senators voted on whether to invoke cloture and end debate on the measure.) Based on the so-called “Buffett Rule,” the bill, authored by Rhode Island Senator Sheldon Whitehouse and cosponsored by the most left-wing members of the Senate, aims to raise the taxes of American taxpayers who earn $1,000,000 or more in a year by forcing anyone who meets the income thresholds to pay a minimum percentage of their total income to the federal government.
The tally was 51 votes in favor, short of the required 60 votes, with 45 senators voting against this naked and divisive class warfare. It was a party-line vote other than Susan Collins (RINO-ME) who voted with the Democrats while Mark Pryor (D-AR) voted with the Republicans. (Neither is up for re-election in 2012.) Two Republicans, one Democrat, and Joe Lieberman did not vote, with Lieberman issuing a statement that he was against the Buffett Rule.
Specifically, the bill would create a 30-percent income tax rate which phases in beginning at one million dollars of income and is fully effective at $2 million of income.
Other than the “phase-in” the tax calculation is simple: If you make more than a million dollars, take your adjusted gross income, subtract charitable deductions, then multiply by 30 percent. From that amount, subtract the income tax, payroll tax, and Alternative Minimum Tax already due or paid, but add back your itemized deductions. (Taxes paid to foreign governments, income taxes withheld from your paycheck, and tax refunds for fuel used on farms and other non-road purposes are not added back to income for “Fair Share” calculations.) Then write a check for that amount to the United States Treasury.
For those Americans who are unfortunate enough to have great success in their businesses or investments, this bill effectively disallows deductions for mortgage interest, retirement account contributions, adoption expenses and other common itemized deductions except for donations to charity.
Between one and two million dollars of income, the additional tax is reduced based on how far along that scale you are, so that at $1.5 million, your “fair share” punishment is half of the amount calculated based on the above formula.
One revolutionary aspect — in the sense that V.I. Lenin or Fidel Castro was a revolutionary — of the “Fair Share Act” is that it does not add a marginal rate increase to those earning above the Democrats’ demonization threshold. Instead, it retroactively increases the tax rate on the first dollar earned, while simultaneously increasing the amount of the victim’s earnings that is subject to taxation.
It is a plan that is corrosive to our nation, pitting Americans against each other. It is a plan that will have negligible economic impact, raising less than 1 percent of the anticipated accumulated deficit over the next decade… and even that assumes away the anti-growth impacts of such an anti-entrepreneurial tax. The likely result is even worse than these estimates. And because so many Americans no longer know what has made our nation a success, it is a plan that, even as it fails legislatively, may work politically.
To the extent that very-high-income Americans have an effective tax rate that is lower than class warriors think it “should” be, it is primarily from the portion of their income that comes from capital gains (and to a lesser extent from dividends). History has shown us that raising capital gains taxes does not generate more tax revenue.
The vaunted Clinton budget surplus, for example, only arose in the second half of his presidency after he signed the 1997 law that cut the capital gains tax rate from 28 percent to 20 percent. According to a Heritage Foundation study, the Treasury Department estimated that the tax cut would cause a small net loss of revenue to the government, estimated at about $30 billion in the fourth year after implementation.
Instead, from 1996 to 1999, capital gains tax receipts increased by over 71 percent while GDP growth accelerated and unemployment dropped. To be sure, not all of the increased economic activity and stock price increase of the period was due to the capital gains tax cut. But some of it surely was, a contention boosted by the fact that capital gains tax receipts also jumped almost 25% in just two years following President Reagan’s 1981 tax cuts.
But this isn’t really about revenue for the Obama administration, and it never has been. When asked in 2008 about whether he would raise capital gains taxes even if it doesn’t raise revenue, he said yes “for purposes of fairness.”
Unfortunately for our republic, American citizens’ economic literacy — which should be the body politic’s primary anti-venom against President Obama’s snake oil — is just where the liberals want it, which is to say non-existent. Progressives have spent a century stripping public education and the ivory towers of universities of economic rationality. Such rationality — including the obvious lessons of an untaught history — would reinforce the limited-government principles of our Founding which are directly antithetical to the Progressive vision. Economic and political restraint go hand in glove, as well understood by those who penned our national rulebook called the Constitution.
For those of you who went to public school and finished high school in the last 20 years, you know that the Constitution is a barely legible piece of paper, written by a bunch of dead rich white guys. You know that it means what a few people in black robes say it means (regardless of its plain language). And you probably don’t know that the left sees it as “political witchcraft” and an obstacle to their long-held dreams of political nirvana in which the smart people (no conservatives or libertarians need apply) wield power over the rest of us — for our own benefit, of course. In short, you know just what John Dewey (hero of Marxists) and his disciples wanted you to know — and maybe less, but certainly not more.
By offering “everything for everyone for free” (a slogan I actually saw on a 20-foot wide banner during the 2008 Democratic National Convention in Denver), Democrats — with the unforgiveable passivity of decades of Republicans — are creating the political nightmare foreseen in a quote usually attributed to Alexander Tytler: “A democracy…can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits…with the result that a democracy always collapses….”
A man of faith in a godless age is hitting Americans where it hurts.
Mr. and Mrs. American Spectator Reader, let P.J. O’Rourke talk sense to your kids.
In Britain, defending your property can get you life.
The debacle of this president’s administration is both a cause and a symptom of the decline of American values. Unless Congress impeaches him, that decline will go on unchecked. An eminent jurist surveys the damage and assesses the chances for the recovery of our culture.
It won’t take long for conservatives to scratch this presidential wannabe off their 2008 scorecard.
The American Christmas, like the songs that celebrate it, makes room for everybody under the rainbow. Is that why so many people seem to be hostile to it?
Was the President done in by the economy, or by the politics of the economy?