A week ago today, I embedded a video that the left-wing blog Think Progress had prepared showing alternatively images of Ronald Reagan and Barack Obama denouncing tax loopholes for millionaires. The bloggers (and the president) are trying to make the point that the incumbent is following his conservative predecessor in seeking to hike taxes on “millionaires and billionaires.”
The only problem (as I pointed out in that post) is that the Gipper (working with Democrats in Congress) favored comprehensive tax reform eliminating loopholes whereas his big-spending Democratic successor favors a more piecemeal approach, imposing a surtax on millionaires.
And, to be sure, that surtax might generate some revenue for the federal government, but not enough to cover the cost of the president’s proposed extension of the “payroll tax holiday”. Over at Powerline, John Hinderaker linked a study showing it might only generate $21.437 billion.
And despite this paltry amount (comparatively) such a surtax would add to the federal coffers, the real issue is that it won’t begin to address the problem of some millionaires not paying their “fair share.”
Let me illustrate.
Say, there are two millionaires, Mr. Smith and Mr. Jones, each taking home annual incomes of $2 million. Every year come March, Mr. Smith collects his various pay stubs, itemized list of charitable donations, bank statements and etc., and on his home computer, plugs the numbers into TurboTax. He ends up paying 25% of his income, or $500,000, to the feds.
Meanwhile, Mr. Jones has an accountant who, for an annual fee of $25,000, keeps an eye on his client’s finances. Said accountant e-mails Mr. Jones in January, asking him for a great variety of documents. These, he and his secretary, readily provide. (Throughout the year, the accountant had been alerting Mr. Jones to various ways to invest his income, etc., in order to limit his tax liability.) As a result of this accountant’s hard work (and his intimate knowledge of the intricacies of the federal tax code), Mr. Jones pays a tax bill of $350,000 or 17.5% of his income. The extra $25,000 he paid to the accountant deprived the federal government of a $150,000 of his income and netting him $125,000*.
Despite having an identical gross income to Mr. Jones, Mr. Smith pays $150,000 (or 43%) more in taxes.
So now comes the surtax.
Each man would have a 3.25% tax on $1 million (the amount he earned over $1 million), or $32,500. Now, Mr. Smith sees his tax bill shoot up to $532,500 while Mr. Jones sees his jump to $382,500, yeah the latter has a higher rate of increase, but that’s because he had been paying a smaller amount of tax. Mr. Smith still pays more than Mr. Jones.
The surtax penalizes the millionaire who hadn’t availed himself of loopholes.
The federal government nets $65,000 from the two men, less than the $150,000 it would get if it eliminated the loopholes that allowed Mr. Jones to cut his tax bill.
Obviously, this simplifies things, but in order to make a point: unless we have real tax reform, some millionaires and billionaires, thanks to their ability to hire accountants and lawyers whose job it is to understand the intricacies of the tax code, will still manage to limit their tax liability. The president’s demagogue notwithstanding, the surtax will not eliminate the loopholes — and would increase the tax on those millionaires who have not availed themselves of loopholes.
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*The $150,000 less the $25,000 he paid his accountant.
Typical of Washington, tack-on yet-another tax…rather than dive-down into the voluminous Federal Tax Code and dig-out the Byzantine corporate, investment and subsidy loopholes on the pre-tax side.
Obama isn’t aware he’s turned into 1984’s Democrat presidential candidate, Walter Mondale, who advocated higher taxes. Obama’s heavy on the demagoguery stink, but he’s still advocating higher taxes. Obama is just plain stupid. Arrogance does that to people.
Not sure what the thinking is. Either libs don’t give a damn about revenue or too stupid to realize they could get a nice influx of cash if they allow more exploration of oil & gas. They’re also keen on keeping tens of thousands unemployed and living without the revenues those folks would generate.
Which is the real point: the surtax is not about fairness, it’s about coming up with more ways to squeeze those boring, reliable, “racist” people who do what they’re supposed to and play by the rules, for the benefit of those who don’t.
Chief among them: Warren Buffett. Just google “warren buffett tax hypocrisy” and you will be amazed what that guy does to avoid taxes – while calling for them to be raised on others.
So long as a growing number of citizens do not contribute to the tax expectations levied against other citizens, this logic, or lack thereof, will continue to sell to the #OWS crowd. You see, like the lady (if you can call here that) in Orlando with 15 kids who expects those who are supporting her to pay for her “suffering” and be held accountable for the plight she finds herself in, the so-called 99% refuse to accept accountability for choosing a major that will not pay off their student loans that they incurred by attending a school they could not afford, with the expectation that everyone gets a trophy, their performance not withstanding. The “rich”have more money which they do not want to share with the poor so therefore they are greedy. The “poor” who want the rich to give them their money for no reason are not greedy…they are deserving. The rich need to be held accountable for the poor’s choices (as in the case of the Orlando woman who could not keep her legs closed or purchase a condom) but yet the poor do not need to be held accountable for any of their decisions (like choosing to not close one’s legs or purchase a condom.) I especially enjoyed liberal icon, Jon Stewart’s take on the #OWS crowd and how the so-called revolution devolved into typical rich/elite versus poor/stinky class warfare. Until our tax code levies taxes against all, then you will have this kind of class warfare.
If you guys haven’t listened to Adam Carolla’s rant against the OWS crowd, it is well worth hearing. He talks about how they are the first generation of “every kid gets a trophy”, and how they are nothing but spoiled, lazy, entitled brats. When they get out into the real world, they aren’t making very much money and there aren’t any participation awards any more. He goes on about the villification of rich, successful people. Parents use to point them out to their kids and say “See Mr. So and so driving his nice car? He worked really hard and he invented something or built
something. If you work really hard, you can drive a car like that”. Nowadays,
it’s”See Mr. So and So? He’s rich. He’s not paying his fair share. Let’s get him and
throw a brick through his window”.
Raising taxes on the millionaires is not point. It is like raising the debt ceiling. Neither action pays any attention to how the money is being spent.
Now, as should be expected, the clowns are looking at how to spend the money they will have (which they don’t) from not spending it in Iraq.
It like going shopping and getting huge discounts and then spending the money you saved on more stuff at huge discounts and then spending the money you saved on more stuff at huge discounts and then spending the money you saved on more stuff at huge discounts and then spending the money you saved on more stuff at huge discounts ……….
If we taxed all the really rich 100% we still could not cover the amount of money the gov’t wastes every year.
If we socked it to those 0bama has called ‘rich’ we could possibly cover 1 year.
See Bill Whittles brilliant video ‘Eat The Rich’ based on Iowahawk’s ‘Feed Your Family on $10 Billion a Day’ on his blog.
http://youtu.be/661pi6K-8WQ
To add to Helio’s comment in #7: I don’t really give a fig about the rich. They can and will take care of themselves… I can’t feel sorry for them.
The problem is how gummint money is spent and the amount. There’s not enough money in the world to keep on our current course. Unfortunately, not enough people get that.
I think it’s interesting how few “rich” there really are. Rush was talking about that a few months ago. I think he said that there’s only about 300-something in the top 1%, or something like that. I’ll have to go back to the archives.
Point being, it seems that 300-some people are supposed to pay for a couple hundred million. Not sure how something like that is supposed to be “fair”.
Just as it’s easy to simply-define “rich” as top-1%, the socio-economists typically define “poor” or “poverty” as a similar percentage…rather than defining a set of measurable-metrics and determining what percentage it applies-to.
And to abuse a term from “My Fair Lady”, those defined as poor goes far beyond “the deserving poor“. Many college students are defined as poor due to their lack of income, or recent grads in the first years of employment. One of the metrics they use is “…have you in the last year ONCE worried about where your next meal?” ONCE? …That defines poverty in America? One meal, one time? Not “missed”…just “worried” about.
Further to comment #6, here’s the link to Carolla’s rant: http://www.youtube.com/watch?v=cJD8pZiRIzs&feature=player_embedded