Obama’s Tax The Rich Strategy Will Not Solve Budget Deficit
President Obama’s tax the rich strategy will not solve the budget deficit or come close to addressing the national debt. This week, President Obama choose to run for a second term rather than demonstrate leadership in solving the budget deficit. He wants to raise taxes on the wealthy to fix the crushing deficits that Obama plans to deliver over the next several years.
Bush Tax Cuts
President Obama indicated that he will not extend the Bush tax cuts as part of his plan to solve the budget deficit and attack the national debt. This plan is purely red meat for Progressives who are disappointed with Obama’s performance on delivering extreme leftist policies.
Had the Bush tax cuts for the wealthy been allowed to expire, the federal government would have brought in an extra $40 billion this year, falling far short of eliminating the $1.6 trillion dollar budget deficit the Obama administration will rack up this year.
The fact is that the Bush tax cuts allowed the middle class to keep far more. For the 2 years the Bush tax cuts were extended by President Obama, the federal government will take in roughly $81.5 billion less from those making over $250k, but $463 billion less from those making less than $250k.
But if you think the United States has a revenue problem, think again. Had President Obama not extended the Bush tax cuts, the Obama deficit for this year would have still been over $1.3 trillion.
Tax The Rich
Obama’s plan to tax the rich to solve the budget deficit is more class warfare than a serious economic proposal. The Obama administration and the extreme far left constantly moans that the rich need to pay their fair share. What would be considered a fair share?
The top 5% of earners currently pay 59% of the total income tax while the bottom 50% pay less than 3%. Should the rich pay 80%, 90%, 100%? Would it seem fair for 5% of Americans to pay 100% of income taxes?
To put it into perspective, let’s assume that the United States dumps the notion that we are a free society and the bottom 51% of earners vote to take 100% of money earned over $250k. The federal government would take in an extra $1.4 trillion falling short of addressing the budget deficit that Obama delivered this year and well short of addressing Obama’s $3.7 trillion one year spending record for 2011.
The simple fact is that the federal government has a spending problem and not a revenue problem. This year’s spending is over double what was spent in any year prior to 2005 and the national debt has increased 300% since 2007 (source:CBO).
Americans need to start demanding that our representatives look to address the out of control spending that has been the norm for the last several years. Proposals that seek to bridge the gap by tax the rich strategies are far more effective at gaining votes from progressives, maxists, and communists than putting the country on a sound financial path.