-
Restrain the Abusive Administative State
May 22, 2013 | 24 comments
-
Delivering Serbs to the Wolves
May 21, 2013 | 29 comments
-
The Perils of Intervention in Syria
May 7, 2013 | 37 comments
-
America on Welfare
April 25, 2013 | 46 comments
-
Thursday Is Tax Freedom Day
April 17, 2013 | 5 comments
The Obama Watch
Write a Check, Mr. President
Barack Obama fails the “Buffett Rule,” depriving his government of vital revenue.
Americans have finished paying their taxes, according to Tax Freedom Day, which fell on April 17. But some of them should be paying a lot more, says President Barack Obama.
He wants rich people to pay a higher tax rate than their secretaries. Hence his support for the so-called Buffett Rule. However, it turns out the president pays a lower rate on his income than does his secretary. He should write an extra check to Uncle Sam.
The president has been on the campaign stump talking up the Buffett Rule, which would require anyone making more than a million dollars a year to pay at least 30 percent in taxes. The measure didn’t get out of the Senate, but that might make it an even better political issue for President Obama. At least it would if he — rich by any normal definition, though he didn’t make more than a million dollars last year — wasn’t violating the very rule he was promoting.
The proposal doesn’t make much sense as public policy. The top one percent of Americans actually pays an effective tax rate of 29.5 percent. The disparity of which the president complains reflects the difference in tax rates for earned income and investment income. Much of the latter is generated by investing the former, which already has been taxed. There’s no right or wrong tax rate in principle for either kind of income.
Moreover, the federal government already imposes the so-called Alternative Minimum Tax, which is supposed to set a minimum rate for the rich to override the effect of tax preferences. The AMT was created in 1969 after the revelation that 21 millionaires had not paid any income tax two years before.
However, the AMT is not indexed for inflation and increasingly covers the middle class. In 2008, 27 percent of those who paid the AMT made less than $200,000 a year. Every year Congress passes a temporary “patch” to override the AMT, since otherwise it would hit millions more Americans. More sensible would be congressional action to “fix” the AMT, whatever that means, than to add a new super-AMT under the guise of the Buffett Rule on top of the existing broken AMT.
Nor would the Buffett Rule collect much cash. The top one percent of taxpayers already pays 38 percent of total income taxes collected. The top five percent pays 59 percent. The top quarter pays 86 percent.
Turning the Buffett Rule into law would raise an average $4.7 billion a year. That sounds like a lot of money, but the deficit this year is expected to run $1.2 trillion. If enacted, the president’s budget would add about $3.4 trillion in red ink over the next decade to a collective deficit already predicted to run at least $3 trillion. The official national debt is more than $15 trillion. The real unfunded liability for Social Security and Medicare likely exceeds $100 trillion. The president’s proposal might assuage a bit of envy, but it wouldn’t do much to improve federal finances. For this reason even Barack Obama admitted that the Buffett Rule was a “gimmick.”
Worse, though, the president appears to believe in the political equivalent of cheap grace. The Obamas are rich, or rich enough — currently in the top .5 to one percent of earners. Moreover, they have been making well over a million dollars annually from their books; $844,585 was their worst year since 2004.
Yet the president is failing to meet what he claims to be a fundamental moral duty. Rather than do the right thing, he’s handing the issue off to government. “Under the president’s own tax proposals,” declared White House press secretary Jay Carney, “he would pay more in taxes while ensuring we cut taxes for the middle-class and those trying to get into it.” However, President Obama knows Congress won’t act. He is calling for higher taxes while he and his wife are pocketing their outrageously high earnings.
Treasury Secretary Timothy Geithner — who before his appointment had a little problem paying taxes that were legally due — claimed that “Just because Republicans oppose this does not mean it’s not the right thing to do and not the right thing to push for.” But surely that doesn’t mean the president should not do the right thing on his own if Republican opposition kills his proposal.
Last year the Obamas grossed $844,585. Their adjusted gross income was $789,674. Their itemized deductions ran $278,498. Their total tax due was $162,074. That’s less than 20 percent on gross and barely more than 20 percent on adjusted gross. In contrast, say administration officials, his secretary, Anita Breckenridge, paid a higher rate on her income of $95,000.
The president’s aides put the best face on things. “The president’s secretary pays a slightly higher rate this year than the president on her substantially lower income, which is exactly why we need to reform our tax code and ask the wealthiest to pay their fair share,” said White House spokeswoman Amy Brundage.
Instead of waiting for Congress to act, however, the president should pay the $73,628 necessary to make the 30 percent level on the Obamas’ AGI, or, better yet, the $91,302 to make the 30 percent level on their gross income. The easiest way would be to simply write a check for that amount — while not taking a deduction for the “gift.” But it would be more creative for the Obamas to enhance their tax liability. Since the law obviously doesn’t charge them enough, they should come up with better numbers.
It’s hard for the president to bump up his salary without a W-2 to match. But he has plenty of other opportunities to inflate his income. For instance, the Obamas declared just $3 (!) in dividend income. This is an easy one. Make it $10,003 or $20,003. The IRS wouldn’t mind. It certainly wouldn’t work to disprove that a (relatively) rich family collected that much in dividends.
About the Author
Doug Bandow is a senior fellow at the Cato Institute. A former Special Assistant to President Ronald Reagan, he is the author and editor of several books, including The Politics of Plunder: Misgovernment in Washington (Transaction).
Letter to the Editor View all comments (20) | Leave a comment
More Articles by Doug Bandow
More Articles From The Obama Watch
http://spectator.org/archives/2012/04/25/write-a-check-mr-president
Follow us:
ADVERTISEMENT
SPONSORED LINKS
FLASHBACK TO: 1995
-
Pope Culture
A man of faith in a godless age is hitting Americans where it hurts.
-
Why the GOP Does Not, Like, Totally Suck
Mr. and Mrs. American Spectator Reader, let P.J. O’Rourke talk sense to your kids.
-
Dames at Sea
-
In the Absence of Guns
In Britain, defending your property can get you life.
-
The Metaphysical Martini
-
Counting the Costs of Clintonism
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.
-
Chuck McHagel
It won’t take long for conservatives to scratch this presidential wannabe off their 2008 scorecard.
-
The Legacy of Old John and Mother Fresh-Roasted
-
It’s the Best Time of the Year
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?
-
The Bush Crack-Up
Was the President done in by the economy, or by the politics of the economy?
Clip of the Day
ADVERTISEMENT
Appleby| 4.25.12 @ 6:43AM
Congress should also follow suit, and all union employees.
Okay, back to reality now, folks.
Jack in Wi.| 4.25.12 @ 7:48AM
Buffet should leave all his money to the government. Most of it seems to be going to leftwing charities like Planned Parnethood anyhow.
Mick Hawk| 4.25.12 @ 2:46PM
I assume you are doing the same.
Bill Hussein O'Stalin| 4.25.12 @ 6:56AM
Actually, it's far worse for Buffett to argue for more taxes for others, while his companies have expensive accounting firms wearing down the IRS over billions in back taxes.
Buffet is a true political con artist. But then again, so is Obama.
http://www.nypost.com/p/news/o.....8q2Woq9yjJ
Obvious question: If Buffett really thinks he and his “mega-rich friends” should pay higher taxes, why doesn’t his firm fork over what it already owes under current rates?
Likely answer: He cares more about shilling for President Obama -- who’s practically made socking “millionaires and billionaires” his re-election theme song -- than about kicking in more himself.
Buffett’s free to back Obama, of course.
And if his firm wants to keep its tax bill low, well, that’s its right, too.
But it would be nice if this “pro-tax-hike” tycoon were a bit more honest about it.
Start, for example, with his grossly disingenuous recent claim that, as he wrote in The New York Times, he paid only 17 percent of his income last year to the government -- even as many working stiffs who make far less than him coughed up higher percentages.
Fact is, unlike most other folks, Warren Buffett gets most of his income from dividends and capital gains, which are nominally taxed at 15 percent.
Prester John| 4.25.12 @ 7:43AM
BHO could set the example for all his buddies on Wall Street, in Hollywood, and in Congress by writing at least a symbolic check to the U.S. Treasury, but that would require him showing a little bit of leadership, something which he has no experience in or understanding of.
Besides, anything his cronies send to the Treasury can't be send to his campaign.
TrueBlue | 4.25.12 @ 5:29PM
In order to lead first you must be able to follow. His ego doesn't allow him to follow anyone. He'll more than happily use people and then throw them aside when it's convenient though!
Indy| 4.25.12 @ 7:56AM
BHO had a large majority in the Senate and House for the first two years of his term. I don't want to hear anymore about this, he could have taken this on as his number one issue if he wanted to, he could have said, jack up the rates for the evil rich to 39%, 50% or higher but they didn't. If Congress takes no action, everyone's rates will take a jump at the first of the year plus new taxes kicking in under ObamaCare, we all know this is political theater. I'm tired of it and disgusted by it. Class warfare is dividing us...Obama is simply following his playbook and the media plays their role. It would be interesting to see the returns of all the big media heads, espcially those at the NYT and the alphabet channels. Write the check so GSA can waste it.
Indiana Alex| 4.25.12 @ 8:38AM
To hell with the revenue, what about "fairness"?
Denver todd| 4.25.12 @ 9:02AM
Wasn't there a time that Al Gore proposed declaring imputed income on assets? That would be income that you would make on an asset, such as a house, even though you didn't rent out any rooms, for example.
Mick Hawk| 4.25.12 @ 2:44PM
True. Despite the fact you live in the house, Algore etal figured there was an inputed income based on the fact this saved you from paying rent you would have received if you let the property out instead of living in it. Figure that logic out if you can. I sure as hell can't.
Von Mises Jr| 4.25.12 @ 9:12AM
Wake up America. You are arguing the wrong argument.
Capital gains and unearned income from dividends are taxed at 15% for two reasons:
1) To encourage investment
2) You can lose your money as easy as earn money
Obama gets paid some $400K as POTUS and he doesn't even do the job. Moochelle got paid about $325K for a no-show job and she was not replaced. Obama got $800K/yr total in royalties for at least one book that Barry did not even write while the government bought the copies to give as gifts.
There is no comparison to someone investing in a business as an owner or an investor. If I bought stock in General Electric October 1, 2007 (before the crash), it would have cost me $41.77 per share. The uncompetitive Czar, Immelt has crashed the stock to $19.54 today. That would have been a 53% LOSS of my capital. If I bought 1,000 shares at $41,770 and sold it today, I would have LOST $22,230. Great freaking job Immelt!!!
But Obama did not risk his salary and book royalties. They are always positive, not matter how much the job he did sucks.
The tax rate for capital gains and dividends is lower since one must RISK his money. Obama and Immelt got a windfall from government crony capitalism!!!
TrueBlue | 4.25.12 @ 5:30PM
Don't forget capital gains have already been taxed twice before you see it. First when you had to make that cash the first time in order to invest it, and then the second time when the company you invested in pays their income taxes before giving you your share of the profits.
junkyard infidel| 4.25.12 @ 11:42AM
Federal workers owe billions in back taxes
Two percent of the president's staff, 3% of the Senate staff and 4.2% of the House staff are among the 279,000 U.S. government employees who owe the IRS a cumulative $3.4 billion.
http://money.msn.com/tax-tips/.....bc20504dc0
Yougenic | 4.25.12 @ 2:37PM
I'm a small business owner in MD. When summed, I pay over 50% in taxes. 57% when my sin taxes are included. 57%. I'm in the top 5% of earners. I became incensed they day I realized I paid the feds $1 Million in taxes. Not until everyone pays taxes - will I cease being a single issue voter - taxes.
Pat| 4.25.12 @ 8:33PM
Yougenic, sorry to hear that but as a small business owner you probably didn’t include in your tally all the other freebies you do for your Uncle Sam and his nephews among the states. File information reports “required by law” but the law doesn’t require the government to compensate you for your time spent compiling their "vital" statistics. And sales and use tax reports – fun doing those babies, especially if your business activity spans more than one state. And how much do local governments pay you to collect their revenue and fill out their monthly forms – if it’s nothing to them, it’s certainly your time and money spent doing it. So, add up all the “required by law” reports and being our government’s unpaid tax collector and you’ll find it isn’t just the hard dollar taxes you are giving up.
SetOurChildrenFree | 4.25.12 @ 5:06PM
How do you know a Democrat is lying? His lips are moving. Never believe what they say, always observe what they do. When Obama and the Dems talk about rich paying taxes, they mean anyone with a job - and it's been that way for decades.
TrueBlue | 4.25.12 @ 5:32PM
No no, it's anyone with a job that doesn't support THEM. Those guys get a pass on paying too!
Occam's Tool| 4.25.12 @ 5:57PM
Al Gore also owes tens of millions to the government that he made from promoting fraudulent science.
POST American| 4.26.12 @ 1:04AM
---------------------FINAL WORD----------------------
----AGAIN----
in ALLLLLL the capstone authorized
blather about revenue, NOT A WORD
about revoking the TAX FREE status
of the ultra-rich, USURY feuled, subversion
seeding, EUGENICS mongering, capstone
foundations and NGOs.
--------------NOT EVEN A NANO PEEP.
"Remember, in 1939 there were
still sovereign nations to stand in the
way of Hitler's onslaught. Once the
NWO is fully operative there will be
NOTHING to stand in its way."
-ENDGAME
(10 MILLION views online)
In this, the 11th hour of the Globalist CFR
---RED China handover, occupation and
takedown op ----this is light years beyond
NOT GOOD.
Jeannie| 4.26.12 @ 7:27PM
With all the money you would think the least they could pay for their own vacations.