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Well we have been having quite a few heated discussions
about Obama’s call for “fair” taxation or tax the wealthy more or Buffet’s
alternative tax. It seems Obama is misleading many people, including my wife,
that somehow the rich or how about the not poor, are not paying their fair
amount of taxes. I think some facts are in order.
First, Obama said that he wants millionaires to be taxed at
a “higher RATE” than their secretaries, referring to billionaire Warren Buffet.
Higher RATE is not the same as paying more taxes.
Ordinary income which includes WAGES is taxed on a moving
scale with 35% reserved for the very top wage earners. Interest income is also
taxed as ordinary income. Buffet’s secretary gets taxed on her wages but Buffet
makes most of his money NOT from wages but from investment income which is
taxed at 15%.
Investment income is when you buy a stock a $5 and sell it
for $10; the difference is investment income (if held for 12 months or more) or
if your mutual fund distributes capital gains which are also investment income
taxed at 15%.
Why 15%? Because the government wants to encourage
investment in stocks, etc. which help companies raise capital to start a
business (IPO) or grow a business which usually translates to more jobs. If you
raise the rate on investment income, fewer people will invest and that will
stymie growth; it’s that simple.
The facts also state that 10% of the highest earners pay
more than 50% of all federal taxes (70% of federal income taxes according to
the Congressional Budget Office). Also 46% of low and medium income families
will pay NO federal income taxes.
Obama is desperate to soak the rich and he is trying to
paint a picture of the “rich” not paying their “fair” share but that is simply
not true as evidenced by recorded facts.
If you want “fair” you need to take out ALL tax exemptions
for everybody and just have a basic “flat” rate based on your income. Right now
our TAX CODE has more than $1 Trillion in deductions, exemptions and credits
and benefit ALL taxpayers, no matter what their income and most of us have
gotten used to these benefits (like a mortgage interest deduction) but hey, you
want to be fair Obama, then have some balls and make it “really” fair.
In a basic flat rate, tax rates would be much lower than now
and they would be based on amounts earned.
The Republicans are correct in saying that Obama is trying
to start a class war; poor against the rich and why... because the election is
coming in 2012.
He appears to have given up on trying to work with the
Republicans (and for very good reason…they don’t want to do what is good for
the country; they just want to win in 2012) and is therefore positioning
“himself” against “them” and making them to be the villains by protecting the
rich while hurting the poor.
There are things Obama can do to help the economy but he
can’t seem to get any good advice or as some say, he is unwilling to take good
advice and just goes his own way which, as we can see, is the wrong way.
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