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  • President Obama’s Budget will Spread More Wealth Around

    Everyone remembers President Obama’s now-infamous comment as a candidate that he thinks everyone is better when we “spread the wealth around.” Of course, we spread plenty of wealth around through the tax code before Obama became President. In 2006, the latest year of available data, the top 20 percent of earners paid over 86 percent of all income taxes. While the bottom 50 percent of earners paid almost no taxes whatsoever.

    To get a complete picture of government redistribution, however, we need to know who receives the spending in addition to who pays the taxes.

    The Tax Foundation released a new paper today, “How Much Does President Obama’s Budget Redistribute Income?” It puts both sides of the equation together and analyzes how much President Obama’s budget will increase redistribution.

    The key findings include:

    • In 2012, when President Obama’s policies have taken effect, income redistribution from the top-earning 1 percent of families will rise by an average of $64,000 per family.
    • On average, a family in the top 5 percent would have an additional 1.8 percent of its market income redistributed as a result of President Obama’s policies (compared to baseline); for the top 1 percent only, that figure is over 3 percent.
    • President Obama’s policies would reduce the amount of income redistribution from families in the 60th-95th percentiles.
    • President Obama’s policies would increase the amount of income redistribution to families in the bottom 60 percent of the population, especially the bottom 20 percent.

    This additional redistribution comes on the heels of the stimulus that already increased redistribution through refundable credits, including the Making Work Pay Credit.

    Redistributing income hurts economic growth because it reduces the incentives for high-earners to work more and take on new economic risk. It discourages low-earners from doing the same, because they can maintain an acceptable standard of living without working more. Instead of pursuing these redistributionist policies, the President should pursue pro-growth policies that encourage Americans of all income levels to work more and generate new economic growth.

    Posted in Ongoing Priorities [slideshow_deploy]

    11 Responses to President Obama’s Budget will Spread More Wealth Around

    1. Pingback: » Financial News Update - 06/25/09 NoisyRoom.net: “Extremism in the defense of liberty is no vice. Moderation in the face of tyranny is no virtue.” Barry Goldwater

    2. Roger S., MA. says:

      There really are two issues involved in this discussion. The first is strictly moral/ethical. Since when does the government, any government, have the right to take legally and fairly aquired income or wealth from one citizen to give to another? It's an equal protection issue in that any criteria established to identify the forced donors as well as the entitled recipients are necessarily discriminatory. The second major issue is pragmatic, indicating a complete misunderstanding of the economic role of capital in production. Capital is much more than the alleged huge pile of wealth sat upon by some alleged fat-cat spending his days counting the pieces. Capital is unconsumed previous production constituting a lever to facilitate moving forward new economic projects. Because productive projects must be funded well in advance of any returns, "redistributing" this "pile" shortens the lever, thereby decreasing the potential size of the next project, be this a business start-up, a new factory, sales and marketing of new products, developing an invention, R+D, whatever. Redistribution is therefore unethical twice, once regarding from whom is taken, and again regarding to whom given, as it ultimately denies both the larger choices and opportunities they could otherwise have had.

    3. Myron Holmgren says:

      This is absolutely horrible…. Can't believe what he is doing to our country.. What on earth is he doing in our presidency!! Very Socialist and leading to Marxism and Communisum…Only God knows where all this will take us….

    4. Steve, Michigan says:

      As this country becomes more hostile to big business (and wealthy individuals) more of them will start to relocate overseas… leading to more job losses and losses in tax revenue as a result. As we all know, government doesn't take a pay cut, so this means higher taxes for the working class that will be left. This will be a smaller and smaller pool to draw from as private business tries to compete with government run business that will continue to grow… where does that leave us? At the same level of misery. This is where this spreading of the wealth (or economic justice) will take us. Thanks Obama!

    5. Ben C, Ann Arbor, MI says:

      I posted this once before. This week I am sending letters to our Senators and my Congressman stating that if they have or will vote for Cap and Trade aka Cap and Tax, and Obama health care I will niot vote for them in the next election and I will donate and campaign for their opponets.

      You cannot legislate the poor into freedom by legislating the rich out of freedom. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend is about the end of any nation. You cannot multiply the wealth by dividing it."

    6. Richard, Spring TX says:

      The people wanted change and they are getting it whether they like it or not.

    7. Gary, soon to be fro says:

      We know what works, its the U.S. CONSTITUTION, the Bill of Rights, and the individual freedoms those documents protect, our American Legacy: all of which are now being corrupted, suspended, stolen away from us right before our unbelieving eyes, like we are nothing more than helpless infants.

    8. Roger S., MA. says:

      It used to be that in democracy "it's your vote that counts, and in feudalism it's your count that votes". The more "modern" version of this appears to be that once Constitutional Limits have been breached, the New Feudalism amounts to "the counts that vote count the votes of those who can't count to make laws for those who, they think, don't count". 2010, let's begin showing them how wrong they were. Wasn't it Ben Franklin who said that "he who would trade liberty for safety deserves neither" ? Or, more "recently", Gerald Ford (a 1976 campaign speech?) "a country that does everything for you will have to take everything from you"? Who won ? Carter. We'll have to start campaigning NOW to make sure Obama joins Carter's fate as a one-term pres. ! No more voting "present" in this Republic !

    9. Kevin, Addison,TX says:

      I agree with Richard. You asked for it, you got it. Hope and change……………what a joke.

    10. Maria, Soon to be WY says:

      In the campaign's Saddleback Church interview, Obama was asked on what policy did he most change his mind. He answered "Welfare Reform," stating that originally he didn't think it would work and was surprised to see how well a hand up (instead of a hand out) gave people the incentive to get back to work, gain self confidence, and to better their situations. Now he appears to be ignoring his own epiphany. It would be fun to show how the stimulus bill wiped out welfare reform, and then to replay Mr. Obama's response in that interview.

      Meanwhile, I have noticed the top 5% of earners in our area have cut their charitable spending, are not starting new businesses, are canceling home improvements, and are shopping with me only at discount stores. I can hardly blame those who are taking early retirement; why work 60-70 hour/week for a country who hates you and steals much of your earnings?

      I hope Heritage is tracking these two effects on societal behavior so that we have even more qualitative data proving how ignorant and pernicious these redistribution policy makers are. It seems that every couple decades the US needs the cold slap of reality to counter liberals' and teachers' revisionist history propaganda. Very frustrating for us old folk watching it happen again and again.

    11. Thomas S. Caylor, Fo says:

      President Obama is a Socialist idealogue who will resort to whatever means possible to promote his Socialist agenda. We must remember the President is a very smart man who knows exactly what he is doing in remaking the USA into a second-class country. Let's pray more Americans realize, resist and vote their re-awakening in defiance of the President's dangerous financial policies, his attempts at weakening our national security, his rudeness toward our allies, his mis-aligned non energy generating idealogy, his constant pitting of Americans against each other and foremost his trampling of our glorious Constitution..

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