The redistributionists, however, ignore some inconvenient truths about those high tax rates. First, there was no limit on deductible expenses, including taxes paid, installment interest on credit cards, personal borrowing, and even medical expenses, not to mention lunch with the boys. There also existed no punitive Alternative Minimum Tax, which today hits so many middle-class taxpayers that each year Congress has to exempt millions from it. As a result of the atmospheric tax rates, tax shelters sprang up everywhere and were used by nearly every investor. The end result was that the 70 percent top rate with which Reich and the Left are so in love actually wasn’t that high, given all the deductions and maneuverings that were allowed. Today, a 70 percent rate would be much closer to an actual 70 percent rate and would wreak movie-monster havoc on the economy. It would have us living like Bob Cratchit in A Christmas Carol, dressed in hand-me-down rags, eating one terrible meal a day by candlelight with no heat in the house. To paraphrase Tiny Tim, “Goddamn Marxists, everyone.” I think I got that right.
The leftists also blow off the historical evidence that lower capital gains and dividends tax rates raise more tax revenue. When the capital gains tax rate is lower, more taxpayers are willing to sell assets and fork over the tax money, so the feds get more revenue, mainly because the number and frequency of taxable transactions increase. When the capital gains tax rate gets prohibitively high, they’re less likely to sell their assets and thus the revenue level drops.
The redistributionists ignore these facts; they care more about punishing the successful than filling the Treasury, although they do “heart” your money.
To be clear: neither Obama nor any of his fellow class warrior kooks ever say they want to raise taxes on YOU. They always say they want to raise taxes on your big, rich, meanie boss and those capitalist pig companies that sell you your car, the gas that goes in it, your clothes, electricity, cigarettes, and indoor tan. They never tell you that those higher taxes get passed on to you in the form of higher consumer prices. Instead, it’s always about sticking it to “the man” while pretending to protect the middle class as they go about their noble government work. People forget that you don’t have a right to be employed, so if “the man” takes a hit, you just might find yourself at home, broke, watching The Steve Wilkos Show.
At one point during the 2011 debt negotiations, Speaker John Boehner criticized the Obama White House for its intransigence over tax hikes. “Dealing with them the last couple months has been like dealing with Jell-O,” Boehner said. “Some days it’s firmer than others. Sometimes it’s like they’ve left it out overnight.... The only thing they’ve been firm on is these damn tax increases.”
President Jell-O was all over the map in the debt negotiations except when it came to raising taxes. Then he became President Krazy Glue. Obama referred to his desire for higher taxes as a commitment to a “balanced approach,” in which “cuts” may be made (though not really) and taxes are increased to better achieve that “shared sacrifice.”
The inconvenient truth is that in 2009, 51 percent of tax filers paid no federal income taxes at all. While it’s true that they pay other taxes, including Social Security taxes, when it comes to federal income taxes, half of all Americans are now on a collective free ride. More outrageously, 30 percent of tax filers had a negative tax liability in 2009, meaning they actually made money off the tax system from refundable tax credits such as the Earned Income Tax Credit. When Democrats speak of “shared sacrifice,” they demand that the wealthiest as well as jobs-generating small businesses pay even more, but they’re okay with half the country not contributing anything at all. This non-paying group is also known as a core Democratic constituency.
Into this insane mess of kook class warfare, enter Warren Buffett. For years, Buffett has been whining that his tax liability just isn’t high enough, that as a gazillionaire, he should be paying much more in taxes, that his secretary is paying a higher rate than he is, and oh the humanity! As early as 2007, Obama referred to Buffett’s self-imposed predicament by saying that “a secretary shouldn’t pay more taxes than a billionaire.” Until she showed up at Obama’s 2012 State of the Union address, Buffett’s secretary, Debbie Bosanek, was an elusive creature around whom we were debating national tax policy.
Here’s how Buffett’s tax buffet has warped the conversation. First, Buffett has claimed that he pays just 17 percent of his income to the government. Buffett usually gives himself an annual salary of $100,000, which is taxed at that rate. The bulk of his annual income, however, comes in the form of investment income, which is generally taxed at a lower rate than wages. The current top capital gains tax rate is 15 percent, hence the discrepancy with his secretary, who could be taxed at the top income tax rate of 35 percent rate, depending on her salary.
What Buffett doesn’t say is that much of his capital gains and dividends income is already taxed at 35 percent (via the corporate income tax) by the time he gets to it, so in effect, taxes are being paid twice on the same earnings. After both taxes kick in, Buffett’s effective tax rate would be over 40 percent by the time the feds are done with him, and that doesn’t include state and local taxes. He has argued that passive capital gains should be taxed at a higher rate. But income tax and capital gains tax rates are apples and oranges, and Buffett has been making a fruit smoothie with them for years. Obama has been mixing his taxes up deliberately as well, and he’s never let the disingenuousness of the comparison stop him. If Buffett is so enthralled with the idea of paying more in taxes, nothing is stopping him from writing a check to the Treasury for whatever amount he thinks might alleviate his anguish. The same is true for former Google executive Doug Edwards, who attended an Obama fund-raiser in the fall of 2011 and told him he was so rich that he was unemployed “by choice,” and then begged him to raise his taxes. Edwards’s hand must have carpal tunnel syndrome because he has yet to write an additional check to the government either. Funny how that works: the super-rich complain publicly about their light tax load but never pay a dime above what their accountants tell them they owe. They never want to be the only sucker paying more. Instead, they are asking everyone in that upper bracket to be forced to pay more under penalty of jail.
Further, if Buffett had real confidence in the government’s ability to “invest” taxpayer money wisely, he’d not only voluntarily pay more to the Treasury. He’d also be bequeathing his massive fortune to the state upon his death. Instead, he has already committed much of his personal wealth to a private charity, the Bill and Melinda Gates Foundation. By doing so, he, like many others, reduces his estate tax exposure while also receiving the benefits of charitable deductions while he’s still alive. To be clear, charitable giving is most often a noble act. It should not, however, escape notice that through the deduction, the taxpayers are in essence contributing to Buffett’s charitable giving. (That is, for every dollar that Buffett gives to charity, a certain percentage would have otherwise gone to the government in the form of taxes.) This is his prerogative, of course, but while he lectures the rest of his super-rich friends to cough up more money to the feds, he minimizes how much the feds get from him every chance he gets.
While we’re on the subject of tax hypocrisy, let’s check out the Obamas’ 2010 tax return. The first family’s adjusted gross income for that year was $1.728 million. Their taxable income after deductions was $1.34 million. This means that they saved nearly $400,000 through deductions—such as $78,269 for state and local taxes and $49,945 for mortgage interest on their home in Chicago as well as charitable deductions. They also received a $12,334 tax refund from the federal government that year. So while Obama has been telling us that paying more taxes is the “neighborly” thing to do, he’s been minimizing his tax bill as much as possible. If Obama really believes that “rich guys like him” should pay more in taxes, then why doesn’t he pay more himself? Why does he take every possible deduction? And why didn’t he sign over that $12,000 refund back to the U.S. Treasury? Here’s why: so he can affor
d more Blu-ray discs of the movies that have been adapted from Nicholas Sparks novels, like Dear John and The Notebook. It’s a romantic tradition that every Friday night, Rahm Emanuel flies in from Chicago and they watch one alone, just the two of them, wrapped in a single, oversized Snuggie.
In September 2011, Obama proposed that Congress impose the “Buffett Rule,” which he described as “asking the wealthiest Americans to pay more taxes.” Ask? The power of the IRS to toss your buns in prison isn’t the same as a polite request.
Here’s the illogic: if the tax rate were raised by 13 percent on the 237,000 individual filers reporting income over $1 million, as Obama wants, it would generate only another $26 billion or so. And that assumes that the tax increase didn’t kill jobs and suffocate the economy further, which would be likely. In a universe of nearly $4 trillion budgets with trillion-dollar-plus deficits, $26 billion is a drop in the ocean. Obama needs to start the “millionaires and billionaires” clock ticking at the $200,000 mark because that’s where the real dough is. In 2009, those 237,000 filers who reported $1 million or more in income paid $178 billion in taxes. But only 8,274 filers reported income of $10 million or more, and they paid $54 billion in taxes. But lower the bar to $200,000, and you hit the jackpot: 3.92 million people reported income above that level in 2009, and they forked over a whopping $434 billion in taxes. This means that 90 percent of the tax filers who would pay much more under Obama’s “Buffett Rule” wouldn’t be millionaires at all, and 99.99 percent wouldn’t come close to being billionaires. In a world in which various taxes can eat up nearly 50 percent of a salary, $200,000 is hardly a solid measurement of “wealth.” The “Buffett Rule” would hit the middle class disproportionately, despite Obama’s hyper-emphasis on the Big Rich.
There may be some individual millionaires who pay taxes at lower rates than middle-income folks. According to the IRS, in 2009 there were 1,470 households that filed tax returns with incomes above $1 million but paid no federal income tax. But that’s less than 1 percent of the 237,000 returns showing incomes over $1 million.
Our system appropriately has the wealthy paying more than the less fortunate. But they’re not just paying more. They’re paying a lot more. The richest 0.1 percent of taxpayers already pay 16.4 percent of the total tax burden—and the top 1 percent pays 39 percent of all federal income taxes. The wealthiest 10 percent are carrying 70 percent of the federal tax burden already, while nearly half at the bottom pay nothing at all. How’s that for “fair”? When you hit the very bottom of that group, you’ll find the quintessential Obama voters. Picture a dorm room, filled with the haze of pot smoke, crushed beer cans on the floor, empty pizza boxes, and The Daily Show playing in the background, while two idiots in Che Guevara T-shirts try to set their flatulence ablaze. Let’s hope they’re too stoned to know when Election Day is.
In fact, the top 5 percent of earners account for 37 percent of all consumer spending, about as much as the entire bottom 80 percent. Those making over $200,000 give 36 percent of all charitable contributions. This is, in essence, the crux of the leftists’ ideological failure: raising taxes on the job creators, who spend, invest, hire, and donate hurts the middle and lower class, not the rich. The leftists believe they are punishing the “rich” but they are actually punishing the middle and working classes, whose livelihoods depend heavily on the fiscal health of the “rich” and the businesses and charities they power. It’s a trickle-down whoopin’.
The real fiscal issue isn’t revenue demands; it’s out-of-control government spending, particularly on entitlements. As the late great economist Milton Friedman pointed out, the true burden on taxpayers is government spending because government borrowing demands future interest payments out of future taxes. The more the government spends, the heavier the burden on the taxpayer. House Budget chairman Paul Ryan put it this way: “Even if tax revenue as a share of the economy were to grow in excess of its historical average, tax increases simply cannot match the spending commitments of the federal government in the years ahead. Based on Congressional Budget Office projections of their likely policy trajectory, government spending is on pace to double within a generation.” When Paul Ryan makes a statement like this, people stare at him like he’s an alien, and there’s a reason for that. You see, as government spending doubles within a generation, the intelligence quotient of big-spending members of Congress divides in half. If Ryan stays in Congress another ten years, the Democrats in his audience may very well be lobotomized vegetables.
In the fall of 2011, Obama announced a new wave of class warfare that tracked perfectly with his previous policy and rhetoric. A big tip-off that it was, in fact, class warfare? Obama pointedly said it wasn’t: “This isn’t class warfare,” he said. “It’s math.” And further: “The money is going to have to come from someplace.” Just not from any of his big-government programs, of course. He proposed $1.5 trillion in real tax hikes along with illusory “savings” such as $1 trillion in war “savings” over ten years from wars in Iraq and Afghanistan that we will no longer be fighting. While he distracted people with his right hand by proposing another temporary tax cut (the payroll tax holiday), he karate-chopped the rest of us with his left hand by proposing permanent tax hikes. Sure, Barry. And as soon as we’re done fighting the War of 1812, the Civil War, and Vietnam, we’ll collect even more imaginary savings when we bring home all those invisible troops who aren’t fighting.
Team Obama believed that thanks in large part to the nearly $1 trillion “stimulus,” the economy would have been moving along enough by 2011 that they could proceed with their beloved tax hikes. When that didn’t happen, they proposed temporary tax incentives and cuts such as the payroll tax holiday to get the economy going and get them to their tax hikes faster. Now they believe that the economy will be sailing along sufficiently in 2013 so they’ll finally be able to enjoy their tax hike fiesta. Their goal is to get the economy to appear to be getting healthier in order to secure Obama’s reelection, after which the massive tax hikes will kick in and the economic damage will be severe.
In the summer of 2011, riots broke out in London, Athens, and other parts of western Europe. The violence and chaos in Great Britain were particularly shocking. The British enjoy a wealthy society. There is a poor underclass and a rich upper class, but like every Western democracy, Great Britain has a large and prosperous middle class. With the exception of Margaret Thatcher, who liberated the British from the shackles of statism, over the decades British leaders succumbed to the socialist impulse that ran rampant in western Europe. As a result, the nation is teetering, thanks to a huge, unsustainable nanny state: nationalized health care, massive social welfare programs, “free” child care and education.
And yet, despite having essentially cradle-to-grave state security, they riot. They protest. They demand more. They never have enough. No matter how big the welfare state is, no matter how many programs and giveaways and freebies there are, no matter how many subsidies, no matter how much hand holding by the state—it’s never enough.
And no matter how much you tax and confiscate from the wealthy, it’s never enough. It will never be enough.
These rioting fools are part of a wider movement to destabilize capitalist societies, but they’re the laziest people in Western civilization. For them, it’s easier to throw rocks at cops than it is to train at the police academy. It’s easier to scream at evil bankers than it is to open a savings account and accumulate interest. And it’s easier to bitch and moan about free education than it is to actually open up a book and discover that the cult leaders of Marxist doctrines are actually an assortment of mass murderers: Stalin, Mao, Kim Il Sung, Castro … pick your commie, pick your poison.
On the heels of the riots in western Europe, a full mobilization began in America of what Vladimir Lenin once supposedly termed “useful idiots,” those blind supporters and apologists for the communist cause. The “useful idiots” served as helpful propaganda and political tools for the Soviet Union in the We
stern democracies as our enemy chipped away at our system from within.
A new wave of “useful idiots” appeared on the scene in September 2011, as thousands of protesters gathered in New York, Chicago, Los Angeles, Seattle, and elsewhere, ostensibly to “occupy Wall Street.” Many of the demonstrators claimed that they were protesting “capitalism” as they munched on Munchkins from Dunkin’ Donuts, sipped lattes from Starbucks, and tweeted revolution from their iPhones. Most of them were either hippies aging badly or aspiring hippies. When asked what they’d like to replace capitalism with, most went deer-in-the-headlights; that is, when they weren’t hurling obscenities at unnamed “fat cats,” defecating on police cars, stealing from and raping their fellow protesters, tripping on all kinds of illegal drugs, committing all manner of violent crimes, getting arrested by the hundreds, and screaming anti-Semitic slurs at “the Jews running the banks and the Fed.”
They often carried out their vulgar and criminal activities to the musical stylings of their resident bongo drummers, because no leftist protest is complete without sundry drum circles. They yelped about everything from corporate greed to food modification but only slowly and reluctantly mentioned their ultimate goal. I guess they were instructed by the men behind the curtain not to mention socialism early on. Have you ever heard a barista at Starbucks wax poetic about fair-trade coffee? That’s these idiots. Have you ever tripped over a body lying in the aisle floor of a Barnes & Noble? That’s these idiots. Have you ever gone to a concert and been asked by someone with a bone through their nose to purchase them a beer? That’s these idiots. The kids at Occupy Wall Street look like they shop at Urban Outfitters. There, and at Furthur concerts.
It turns out that the Occupy Wall Street protests of useful idiot troops were created and coordinated by Kook Generals with one mission in mind: to provide the Obama reelection effort with the handy theme of income inequality. According to Glenn Beck and his team, who’ve done pathbreaking investigative work on the global socialist movement, SEIU was helping to plan Occupy Wall Street months before the protests actually materialized. Beck also unearthed a Craigslist ad posted by the Working Families Party, offering to pay community organizers $350 to $650 per week to attend the protests. I have a strange feeling that that Craigslist posting was actually found under the “missed connections: men seeking men” section. The WFP, which was established in the 1990s by prominent members of the American socialist movement, played a key role in mobilizing and running the demonstrations, as did ACORN and the New Party, which was founded in 1992 as a socialist coalition including members of the Democratic Socialists of America. (Obama attended a New Party event in 1995 and received their political endorsement.) In 1994, a New Party newspaper listed some one hundred activists “who are building the NP,” including known radicals such as Noam Chomsky, Frances Fox Piven, and ACORN’s Wade Rathke.
What the (Bleep) Just Happened? Page 18