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  • Soaking the Rich to Raise the Debt Ceiling Won’t Solve Spending Problem

    In the debate about raising the debt ceiling, the reality is often lost that the top 10 percent of income earners—those making more than $113,799 in 2008 (the latest year available from the IRS)—already pay 69.9 percent of the income taxes. The same top 10 percent, however, earn only 45.8 percent of the income.

    The IRS also reports that in 2008, the top 25 percent of income earners—those earning $67,280 or more—pay 86.34 percent of the income taxes, yet earn only 67.38 percent of all income in the U.S. (See chart below)

    In addition to their large and some would say “unfair” share of income taxes paid, the “rich” also are scheduled to pay more taxes starting in 2013 as a result of changes to Medicare made in the Patient Protection and Affordable Care Act (PPACA). This change will add an additional .9 percent tax on incomes above $200,000 for an unmarried person and $250,000 for a couple. People making under those limits already pay 1.45 percent of their wages for the Medicare tax, and their employers pay another 1.45 percent, which in effect is a tax on their income of 2.9 percent for Medicare. Those who have to pay the added .9 percent of income tax will be paying 3.8 percent of their income for Medicare beginning in 2013.

    So taxes on the “rich” are already scheduled to go up under PPACA in 2013, which translates into less money available for new hires and less business growth. Those are businesses that would make investments in capital and people, likely boosting economic performance and helping everyone.

    The bottom line is that the next time President Obama or someone in Washington says, “We just want the rich to pay their fair share,” he should think about how much the top 25 percent of income earners already pay. Making them pay more to increase the debt ceiling won’t control Washington’s spending problem, but it will translate into fewer jobs, lower wages, and diminished opportunities for all.

    Posted in Economics [slideshow_deploy]

    20 Responses to Soaking the Rich to Raise the Debt Ceiling Won’t Solve Spending Problem

    1. Steve Ettien says:

      It's funny, I do not feel very rich with two kids in college (I am paying the full ride myself), a mortgage, three dogs, and the upkeep on a modest house. I completed 22 years in the Marine Corps and started my own small business. I am considered "rich" and I own a for profit corporation, I pay a lot of taxes for my hard work and now I am supposed to pay more since I have worked since I was 15 years old. It is interesting that by setting goals for myself, working 35 years, educating myself, serving the Nation, and being successful I am penalized for my success.

      However, no matter how much the Feds fleece from my paycheck I refuse to give in or give up. I do not need the Feds help, assistance, or guidance. I am successful in spite of them and will continue to do so.

      • Martha Brady says:

        Thank you for your service to our country, in uniform and out! Obama and the Democratic Party should be PAYING you! God Bless You!

    2. George Colgrove, VA says:

      We have to get to a fair tax system that is transparent. Everyone should be playing by the same rules. Tax collection needs to be simpler and require less people to do. The "rich" should be paying their porportion as all other income levels. If the "rich" earns 46% of the income, then their taxes should be around 46%. Even if you add in some progressive taxation which will render "poor" people with less tax burden – since these people woudl virtually pay no tax anyway, the "rich" would not be paying much more than 46%. When you tax the "rich" (i.e. business owners) they will either fire people or pass that cost onto their customers. This will have a cascading effect on destroying all levels of income earners. The best policy is a flat tax system. Heck, didn't Russia do that years ago?

    3. George Colgrove, VA says:

      Here is the truth of the GDP. The GDP has not budged since 2006. Government projections include deficit spending. When we say we will spend 4% on defense for example, what these proponents are counting on is that part of that spending will be based on deficits. For 2012 4% on the artificial GDP will be $633 billion, but if we freeze the debt ceiling and cut the $1.1 trillion that will be necessary for a balanced budget the GDP will lose 7%. 4% of the GDP would then be $588 billion – or a "cut" of $45 billion in defense spending. Kind of explains why the GOP is having a hard time letting the deficit go. This is the dark side of the debate. The government needs the GDP to look higher to justify even higher spending. This is spiraling out of control.

      • George Colgrove, VA says:

        [ Year ][ GDP ][ Deficit ][GDP w/o debt]
        [ 2005 ][ $12,638.40 ][ $318.59 ][ $12,319.81 ]
        [ 2006 ][ $13,398.90 ][ $248.57 ][ $13,150.33 ]
        [ 2007 ][ $14,077.60 ][ $160.96 ][ $13,916.64 ]
        [ 2008 ][ $14,441.40 ][ $458.55 ][ $13,982.85 ]
        [ 2009 ][ $14,258.20 ][ $1,412.69 ][ $12,845.51 ]
        [ 2010 ][ $14,508.20 ][ $1,293.49 ][ $13,214.71 ]
        [ 2011 ][ $15,079.60 ][ $1,645.12 ][ $13,434.48 ]
        [ 2012 ][ $15,812.50 ][ $1,101.24 ][ $14,711.26 ]

    4. George Colgrove, VA says:

      "The Hill" reported that federal spending will need to be cut by 44% (a 10% cut in the GDP) in the event the debt ceiling is exceeded.
      Obama said that if we do not raise the debt ceiling or raise taxes we could not afford to:
      1. Continue funding the national weather service.
      2. Continue funding critical medical research.
      3. Continue funding food inspection.
      4. Continue funding military pay as it is.
      5. Continue funding transportation projects.
      6. Continue funding entitlements.
      7. Continue funding college scholorships.

    5. George Colgrove, VA says:

      How about this:
      1. Privatize the weather service. There are better services in the private sector anyway.
      2. Privatize ALL medical research. Not a constitutional duty anyway.
      3. Privatize ALL food inspection. The Feds have not been any more effective in this venture anyway. Bad food still gets into the market.
      4. How about cutting pay and the numbers of the federal workforce instead.
      5. The stimulus spending since 2009 was supposed to have done this – where did the money go? Do we really want feds to lose more money on this?
      6. Serious cutting has to be done in entitlements. Priorities need to be made to who gets aided. Entitlement reform has to be focused on cutting unnecessary entitlement now and through attrition, eliminate these programs all together for the elderly.
      7. Let the private sector get back to privately funding private scholarship programs that has been very successful for over a century!

      In short this is very doable. We need not fear this demigodry.

    6. George Colgrove, VA says:

      Tax increases are off the table because the taxpayer says so! 80% of the population are watching the budget debate. Many are educating themselves on the budget and the con jobs played by politicians over the years. Over 60% of the people do not want to increase the debt ceiling. Since getting elected the GOP in the congress is loosing ground in the polls because they are NOT cutting the spending. If the debt ceiling is raised and if taxes are raised, politicians will be losing their offices in the next election. Democrats have lost ground and soon ALL RINOs will be following their lead. Why we have not done anything has happened in the 180+ days since the GOP took over the house. It is time we see some leadership from the GOP! They have the facts backing them. The democrats have nothing!

    7. jeffselan says:

      The left just does not get a simple concept. The money does not belong to them. They have no right, either constitutionally or morally, to take it.

    8. MJF in CT says:

      I just don't understand the logic here. First of all, you cannot tax the "rich" more without going against the Constitution (not a first for Mr. Obama and his administration). Secondly, this is nothing more than "spreading the wealth" which never works no matter how many times it is tried. Making the rich pay for the ineptness of the government is definitely the wrong thing to do. You can only go to the well so many times before the well runs dry. Once that happens, then what?

      Hey, here's a thought. Let's tax the rich government officials like Harry Reid, Nancy Pelosi, Chuck-u-Shumer and all the others! Let's see how they like "taking a little pain". Next, let's make Mr. & Mrs. Obama reimburse the taxpayers for the use of AF1 & 2, all junkets to Europe and Africa, the cost of the Secret Service to follow Mr. Obama to the golf courses —— all that should put some money back in the coffers, don't you think?

      Imagine, Mr. Obama tells us to suck it up and take the pain and he plays golf and his wife runs all over the place when we can't even afford the gas in our cars to get to work!

    9. Mike Gabel says:

      It is amazing, really, how the USA could elect such an un-presidential person, with such un-American policies, to the White House.
      All presidents, from both the left and right, will have their successes and failures. This is the first time, however, where I feel that my president resents me and others who attempt to be self-reliant, fiscally responsible, and in favor of freedom over tyranny.

      • reflectionephemeral says:

        Income taxes aren't the only federal taxes (consider the payroll tax), which aren't the only taxes. When you account for state, local, and federal taxes, the poorest actually pay a higher share than what they earn. Do a Google search for "America’s Tax System Is Not as Progressive as You Think" for the details.

        "I feel that my president resents me and others who attempt to be self-reliant, fiscally responsible, and in favor of freedom over tyranny."

        Throughout Dwight Eisenhower's term as president, the top tax rate was 89 percent or higher. Why was Dwight Eisenhower an un-American socialist in your opinion? Was it because of all that time he spent in France?

        Listen, it's fine to say that you want marginal federal income tax rates to remain where they were set in 2001, rather than where they were set when we had surpluses and a booming economy, in the 1990s.

        But it's quite unbecoming to descend into wailing, self-pitying hyperbole when others have a different view.

    10. Tom says:

      I just do not understand how you can gather this information and explain what it really means and our so called elected officials – The President and both Republican and Democrat reps simply ignore the facts that they publish.

    11. CalCon733 says:

      I dislike using the term "rich" or "wealthy" in the debate over raising taxes. This country does not yet tax wealth or riches, thank God, (except as inheritance) and the use of these terms serves only to incite class warfare. While those that are wealthy or rich may be the same from year to year, those in the top 10% or even 25% of earners are NOT the same persons from year to year. I think it is important to keep this distinction.

    12. Bobbie says:

      What happened to Juan Williams? we use to admire him when he was very reasonable and respectful of other opinions. He was considerate of all facts and recognized truth. Now he talks over the facts and dismisses considerations, putting words in people's mouths and tells people what and who they are like he had one too many kool-aids I never expected a man of his character to ever sip!

      With no respect to and heavy defense on taking from the rich by force for what government control laid on the country! Hopefully he'll rise above and recover? Personally very bummed out!

    13. Bobbie says:

      What happened to Juan Williams? we use to admire him when he was very reasonable and respectful of other opinions. He was considerate of all facts and recognized truth. Now he talks over the facts and dismisses considerations, putting words in people's mouths and tells people what and who they are like he had one too many kool-aids I never expected a man of his character to ever sip!

    14. Philly16 says:

      The premise of this article seems to me to make no sense. These statistics are based on wage earners and their salaries. How are wageearners going to create jobs? The real question is what per cent of capital is being taxed at what rates.

    15. BuddyLama says:

      Before the shrieks arise from the Left decrying that the so-called "poorest" pay a higher percentage of their income in sales taxes and property taxes and the other taxes that we ALL have to pay, I say the Left should have considered all that before imposing their myriad taxes on us all — taxes they now want to see increased (but not increased on everyone across the board)!

      For ANY tax to be "fair" it must be apportioned equally, which the current income tax clearly is not, (due to the unconstitutional nature of the 16th amendment).

      Fair Tax or Flat Tax or the current abomination, the tax code employed will make no difference if certain income groups are exempt and others penalized. SSDD.

      Corporations do NOT pay taxes! ALL corporate taxation is a ruse, a scam used by deceitful politicians to impose hidden taxes on everyone, because the cost of all taxes, fees, surcharges, permits & licences (more taxes) must be passed on to the consumer in the prices of all goods & services! Corporations do not have magic money or a printing press, only the federal government can print more money or devalue the currency you already have.

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