The 2% Illusion
Take everything [the rich] earn, and it still won’t be enough.
The Wall Street Journal
February 26, 2009

President Obama has laid out the most ambitious and expensive domestic agenda since LBJ, and now all he has to do is figure out how to pay for it. On Tuesday, he left the impression that we need merely end “tax breaks for the wealthiest 2% of Americans,” and he promised that households earning less than $250,000 won’t see their taxes increased by “one single dime.”

This is going to be some trick. Even the most basic inspection of the IRS income tax statistics shows that raising taxes on the salaries, dividends and capital gains of those making more than $250,000 can’t possibly raise enough revenue to fund Mr. Obama’s new spending ambitions.

Consider the IRS data for 2006, the most recent year that such tax data are available and a good year for the economy and “the wealthiest 2%.” Roughly 3.8 million filers had adjusted gross incomes above $200,000 in 2006. (That’s about 7% of all returns; the data aren’t broken down at the $250,000 point.) These people paid about $522 billion in income taxes, or roughly 62% of all federal individual income receipts. The richest 1% — about 1.65 million filers making above $388,806 — paid some $408 billion, or 39.9% of all income tax revenues, while earning about 22% of all reported U.S. income.

Note that federal income taxes are already “progressive” with a 35% top marginal rate, and that Mr. Obama is (so far) proposing to raise it only to 39.6%, plus another two percentage points in hidden deduction phase-outs. He’d also raise capital gains and dividend rates, but those both yield far less revenue than the income tax. These combined increases won’t come close to raising the hundreds of billions of dollars in revenue that Mr. Obama is going to need.

But let’s not stop at a 42% top rate; as a thought experiment, let’s go all the way. A tax policy that confiscated 100% of the taxable income of everyone in America earning over $500,000 in 2006 would only have given Congress an extra $1.3 trillion in revenue. That’s less than half the 2006 federal budget of $2.7 trillion and looks tiny compared to the more than $4 trillion Congress will spend in fiscal 2010. Even taking every taxable “dime” of everyone earning more than $75,000 in 2006 would have barely yielded enough to cover that $4 trillion.
…
The bottom line is that Mr. Obama is selling the country on a 2% illusion. Unwinding the U.S. commitment in Iraq and allowing the Bush tax cuts to expire can’t possibly pay for his agenda. Taxes on the not-so-rich will need to rise as well.

On that point, by the way, it’s unclear why Mr. Obama thinks his climate-change scheme won’t hit all Americans with higher taxes. Selling the right to emit greenhouse gases amounts to a steep new tax on most types of energy and, therefore, on all Americans who use energy. There’s a reason that Charlie Rangel’s Ways and Means panel, which writes tax law, is holding hearings this week on cap-and-trade regulation.

Mr. Obama is very good at portraying his agenda as nothing more than center-left pragmatism. But pragmatists don’t ignore the data. And the reality is that the only way to pay for Mr. Obama’s ambitions is to reach ever deeper into the pockets of the American middle class.


http://online.wsj.com/article/SB123561551065378405.html

Obama's sinister plan has been revealed

He won the majority popular vote and won the electoral vote by a landslide.

If by "sinister plan" you mean bold faced lie, then sure..

Your concept of landslide is a little skewed.. Reagan won by a landslide by a 80-20 popular vote majority.

Obama won by about 7 percentage points...

Let's not get ahead of ourselves here..

Ah, I see. The only thing we need to do is to murder ONLY 2% of our own. For the greater good. It's only 2 out of every hundred. How bad can it be?

I think you might be outnumbered raiderfan, so what is all this Obama anxiety going to accomplish do you think?

Fitting, riderfan_32!

So let's suppose you're one of the lucky few and you earn inside the top 2 per cent of wager earners in America. You're probably north of 50 and/or looking at an early retirement anyways. why would you continue to work and end up taking home 30% of your paycheck after everyone's gotten their "fair share" of your earnings? Why take a huge paycut and still be looked at as the bad guy, the evil rich guy? Why not just cash out early, pack up the wife and kids and move to Belize? That's what I'd do..

Tell me you'd sit here and let the IRS suck your colon out through your nose and everytime you turn on the tv, you hear El Presidente tell "the people" that the private jet you bought and paid for is grounded ad infinitum because it's a luxury the unwashed masses can't afford..

I'm telling you if I got a few mil stashed away and I got a choice about it, I'm gone to costa rica faster than you can say what for. I'm cashing out and headed for the banana trees and white sandy beaches..

ex-pat.. see you on the flip side.

Same here, man.

If capitalists are so bad, then perhaps we should not stick around and complicate the hard life of the people. Let's go where we are welcome.

I know, that money is moving now. Quite a few are doing it now. Once it reaches it apogee, there will be capital controls.

Even though the socialists did everything they could to turn this planet into a "no escape exists" world, (so that their hated capitalists couldn't just go away), now that the socialists are finally and deservingly hurting, there are quite a few countries that offer exceptional conditions.

Asia and South America.

And your Reagan 'landslide' numbers are complete BS. Care to do your homework properly this time and check your facts before you make such grandiose assertions? Although the Al Gore's Most Excellent Invention is often used to spread disinformation like you've done, it can also be used to Google _accurate_ facts in an instant.

-Kerry O.

You're not serious, right? ROTFLMAO

I was being ironical, given that Gore was one of the very few presidential candidates to have won the popular vote and lost in the Electoral College.

Bonus points: can you name the others?

-Kerry O.

Nope. I don't follow elections.

I believe it is all a theater for the masses. I think is either predetermined or irrelevant, who will elected.

It's just a question of who sells how gentle your raping will be to you better.

no, you're right. It's wasn't 80-20. it was ~60-40 percentage wise in '84 when Reagan won 49 States with an electoral split of 525-13. It was a much clearer mandate than in '80 it was closer with Reagan winning a paultry 44 states and 489 electoral votes to 49 with percentage split 50.7-41.

whereas obama won 52.9% of the popular vote and 365 electoral votes to McCain's 45.7 and 173.

No, it wasn't close but it's not the Reaganesque landslide some are trying to make it out to be.