Obama's Dirty Little Trick

Under the guise of a debt reduction proposal President Obama unleashed the opening salvo of his 2012 reelection campaign. And from the looks of it, things are about to get nasty. Sadly, we are in for more than a year of vitriolic class warfare the likes of which we have not seen in a long while. His supposed debt reduction plan is actually a prolific series of tax increases combined with dubious future savings and next to no concrete spending cuts. Obama's "plan" perverts billionaire investor Warren Buffet's statements regarding taxation of the super rich into wide ranging tax increases on people, businesses and job creators earning as little as $200,000 a year. But perhaps even more disturbing than the giant tax hikes to fund further wasteful spending is the intentional obfuscation and trickery used by the President to attempt to dupe the American people into supporting his tax and spend agenda.

We won't belabor our first point because it is all over the news and even the AP has reported the fact that people with higher incomes pay a higher percentage of their income in taxes to the federal government. In fact the top 1% of wage earners pay about 40% of ALL Federal income taxes while approximately the bottom 50% of wage earners pay 0 dollars of Federal income tax. Don't take my word for it, check the numbers, they are easily available from the government itself. So the general notion that the "rich" don't pay much is taxes is nothing but a political device perpetuated to drum up support for higher taxes.

      What about the much hyped "Buffet Rule" to make those rich people pay their fair share you may ask. Lets consider Warren Buffet, the billionaire investor who famously said he pays a lower percentage in taxes than his secretary (or words to that effect). Buffet is a member of a very small class of super rich investors that make the overwhelming majority of their money from their securities and/or real estate investments, the gains on which are taxed at a lower rate. The reason these "capital gains" are taxed at a lower rate is that we want to encourage people to invest their money in companies so that those companies can access capital to grow and CREATE JOBS. We need more of this, not less. If the Buffet Rule were enacted and applied as Obama seemed to suggest, the rule would apply to only about 22,000 people in the whole country (about a third as many people as attend one NFL game). This is simply too small of a group, rich although they may be, to make much of a difference. So the the purpose of Obama's Buffet Rule is not debt reduction but to sew anger at this tiny group of super rich such that Obama can take that anger and channel it into support for much broader tax increases.

If you look back at Obama's speech you will see that he slides seamlessly between those making $1 million a year (Buffet Rule candidates) and those with a worth $1 million (someone who might own a small business or a couple of houses). Turns out there are many more people that are "worth" $1 million than make a million a year. Enough that raising their taxes could help fund Obama's insatiable spending habit (never mind the negative effects on the economy). It also turns out that this group of people already pay a lot higher percentage in income taxes that the middle class and they are a major driving force in small business job creation. So Obama's dirty little trick is to sew anger at a very few super rich investors and use this anger to raise taxes on the job creating sector which already pays higher taxes than anyone else. Quite a class warfare gambit, I hope it fails.

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--Hand

"The democracy will cease to exist when you take away from those who are willing to work and give to those who would not."

Thomas Jefferson