Wednesday, February 15, 2012

FactCheck.org Calls Obama Out

February 15, 2012 USA Today carries a piece by FactCheck.org pointing out that:
President Obama has repeatedly and falsely claimed that "right now, we're scheduled to spend nearly $1 trillion more" in tax cuts for the "wealthiest 2% of Americans." That's simply not true. The Bush tax cuts — which Obama and Congress extended for two years — expire at the end of this year, so any plans to "spend" beyond Dec. 31, 2012, would require Congress to act again.
While doing a good job of pointing out that Obama's claims are wrong because those tax cuts are expiring at the end of the year, they fail to point another false claim that is part of this.  The tax cuts are not for the wealthiest 2% of Americans, but the 2% with the highest taxable incomes.  There is a difference, you know.  If you are obscenely rich (like the people who fund the Democratic Party), and you have a $100 million stashed away, you can buy non-private activity municipal bonds of your state.  The interest income (at 4%, that's about $4 million a year, which you can probably live on comfortably) is exempt from both federal and state income taxes.  You aren't paying income tax on that $4 million a year; the Bush tax cuts are completely irrelevant to you.

Many other very wealthy people have other ways to avoid paying income taxes of any sort.  I've mentioned that the book Perfectly Legal is tendentious, but the point that the author makes that many super-rich people arrange complicated tax shelters so that they pay little or no income tax is perfectly true, and has been for decades.

Now, there are wealthy people who don't buy municipal bonds or use complicated tax shelters; they invest in more conventional instruments, or they buy stocks, and have significant income taxes, and therefore benefit from the Bush tax cuts.  But they do not have to do so, and to say that an income tax aimed at the top 2% of taxable income earners is the "wealthiest 2% of Americans" is simply wrong.  Yes, there is doubtless a good bit of overlap there, but many of that top 2% of incomes are people who are trying to become rich, and have not reached that point yet.

I really don't have a big problem with progressive tax systems.  I don't have a problem with requiring the wealthy to carry a big chunk of the costs of the government.  But our current income tax system is full of sleazy and manipulative stuff that means that once you are rich enough, income taxes are pretty much optional, and Obama knows that, or at least he would, if he were reasonably intelligent and educated.

UPDATE: I see that February 14, 2012 Bloomberg News is reporting that Obama is about to have a fundraiser among the people that he is supposedly seeking to soak:

President Barack Obama will return to New York on March 1 for a fundraiser with investment bankers and hedge fund managers, according to a campaign invitation, marking his first high dollar event there since calling for increased taxes on the wealthy in his 2013 budget.
Hosts of the fundraiser, including Ralph Schlosstein, chief executive officer at Evercore Partners Inc., and his wife, Jane Hartley, co-founder of the economic and political advisory firm Observatory Group LLC, were assured last week by Jim Messina, Obama’s campaign manager, that the president would not demonize Wall Street in his re-election.
The $35,800-per-person dinner at ABC Kitchen, the first of the evening’s four fund-raising events, is being hosted by many of Obama’s top Wall Street donors, according to a person familiar with the matter. Sponsors include Blair W. Effron, partner and co-founder of Centerview Partners LLP; Marc Lasry, managing partner and founder of Avenue Capital Group; Mark Gallogly, a managing principal of Centerbridge Partners; James Rubin, managing director of BC Partners; Robert Wolf, UBS AG’s chairman for the Americas; and Antonio Weiss, global head ofinvestment banking at Lazard Ltd.
Wow.  A fundraiser with a $35,800 per person ticket.  Obviously, this is a crowd really worried about Obama's efforts to go after the "wealthiest 2% of Americans."

1 comment:

Anonymous said...

There's a very good reason to be against "Progressive" income taxes, and that is, the notion that the Government has been so good with our money, it ought to take it from those who have (mostly) proven they can at least earn a lot of money--and are at least prone to taking care of it.

But there's also a good reason to be against the income tax itself. How have we come to accept a "Right to Privacy" via Roe v. Wade and Griswold, but have no problems whatsoever with telling our Government how much we earned, how we got it, what we spent it on, and how much we saved--complete with reviewing all this with an agent who requests an "audit" without so much as a warrant to do so?

It's amazing that so few people are willing to call out these inconsistencies!