President Obama, keeping his promise from his speech to Congress, has unveiled his plan to reduce the record federal deficits his administration has radically enlarged. With a public debt of almost $15 TRILLION and current annual deficits in the federal budget of around $1.3 TRILLION, the President has recognized the absolute need to tackle the fiscal problems that will not escape us.
President Obama’s plan is a remarkably simple approach to solving our nation’s complex financial imbalances: tax people that are already heavily taxed more.
The President’s “new” plan calls for higher taxes on “millionaires and billionaires so they can pay their fair share.” The reality of the plan is that taxes on anyone making over $200,000 will increase. This hits far more than “millionaires and billionaires.” Many small-businesses file their taxes as individuals and will also be hit by this, including the owner of my own company.
More importantly, there is no proposal in the President’s plan for how the government will enforce this new tax as there is currently no tax bracket for incomes in excess of one million dollars. The plan does not outline any proposal for creating this new bracket, either.
A logical look at our revenue and spending gives a clear indication of our main problem. It is not that the American people are under-taxed; it is that government spending is far too high. After adjusting for inflation, the Federal government averaged $1.872 TRILLION in annual revenue during President Clinton’s years in office. During that same span, the government spent $1.929 TRILLION annually. President Bush’s term saw $2.159 TRILLION in revenue (an increase after the “Bush” tax cuts no less….) and spent $2.407 TRILLION annually. In the three years of President Obama, the government has averaged $1.906 TRILLION in revenue, but spent $3.193 TRILLION on average.
Even if everyone making in excess of one million dollars was taxed 100%, the one-year revenue would be $727 BILLION. This is nowhere near enough to fund the government at current levels. Not to mention, who would continue to work when they were taxed out of everything? Then there is the fact that 50% of the working-age population pays absolutely no federal taxes. So when there is talk of “fair-share”, who really needs to be paying more? And what is “fair”? What percentage should the government allow us to keep of our own paycheck?
A new euphemism has emerged as a result of the President’s plan: the “Buffett Tax”. A few weeks ago, mega-billionaire Warren Buffett wrote an op-ed article in the New York Times attempting to demonstrate how he was massively under-taxed. President Obama has taken that idea and started sprinting with it. Never mind the fact that Mr. Buffett’s company has close to a BILLION dollars of unpaid back taxes.
The truth in this sad situation is that Mr. Buffett has made billions of dollars speculating on which companies will receive government aid. Mr. Buffett knows that his wealth comes from special knowledge acquired through special connections about what government spending will go where. Real deficit reduction will require less government spending, lessening Mr. Buffet’s company’s ability to "win" with the certainty it has in the past. If Mr. Buffett were serious about solving our deficit issues, he would pay the taxes already owed before talking about more. And Mr. Buffett can always provide a gift to the Treasury without mandating higher taxes on everyone else.
President Obama asked for bi-partisan cooperation. Why then would he propose a plan that he himself has acknowledged would be awful for the economy? Even his own party would not pass these tax increases when it held both the House and Senate. If these tax increases cannot pass a Democratic Congress, how will it gain support from Republicans as well?
Perhaps President Obama is not really concerned with our problems. Perhaps President Obama is more concerned with campaign speeches that get his radical base motivated for the 2012 election. But as much as tax reform is a popular issue for many voters, raising taxes does not equal tax reform. There is a lot of talking about "raising revenue". The best way to do this is to get more people paying taxes, not increase taxes on the few that actually do pay. And if we really want to get job-creation going, taxing those that hire is probably not the best idea. Personally, I have never been hired by someone who was not "rich," as defined by the President.