2012 Tuesday: Obama gives ‘tax the rich’ one more heave

We learned a few things yesterday with President Obama’s announcement that he wants to extend the current individual income tax rates for one more year, but only for those making less than $250,000 a year:

  • The current rates — commonly described as the “Bush tax cuts” even though they have been in full force for nine years, two years of which required Obama’s signature — apply to more than just “the rich.” Otherwise, how could they be extended for everyone who isn’t rich?
  • Even Obama understands that the economy is still too weak to withstand a major tax hike during the next presidential administration (his second, or Mitt Romney’s first). That is a pretty strong, if tacit, admission that his entire first term has failed to see a middle-class recovery of any consequence, just a stop to the bleeding — at most. Once upon a time, he theorized that such a result would lead to a “one-term proposition” for himself.
  • This move has nothing to do with being serious about the deficit, because the vast majority of the budgetary effects relate to the rates for sub-$250,000 earners, and always have.
  • If Obama were serious about the deficit, he would join other notable Democrats — and Republicans — in embracing the proposals of the Bowles-Simpson report he commissioned. Among other things, this would mean lowering rates across the board, while broadening the tax code to eliminate loopholes, carve-outs and subsidies/spending disguised as tax breaks.
  • If it doesn’t have anything to do with the deficit, it’s plainly about politics. But it’s the same “eat the rich” politics that Obama and the Democrats tried in 2010 — and which cost them spectacularly in the midterm elections. Maybe he thinks it will play better this time because his opponent is (like him) a rich guy, but I suspect most Americans still care more about what each candidate’s policies mean for their own wallets than those of other people.
  • Even other top Democrats think $250,000 is too low of a threshold: House Minority Leader Nancy Pelosi and Sen. Chuck Schumer previously argued for keeping rates steady for anyone earning up to $1 million. Obama is out of step with his own party’s leadership and trying to lead Democrats even further to the left on this issue.
  • This president still doesn’t have any new ideas. Tax the rich, borrow and spend more money, make government bigger with proposals that in some cases have been around for decades — these are the same things he’s been trotting out for four years, with the result of mediocre approval ratings and an electorate sour on the direction the nation is taking.
  • There is an enormous opportunity for Romney to talk about the need to avoid the path on which Obama would take us — to explain the benefits of free enterprise and the fairness of rewarding people for the work they do and the risks they take. But he must make that case, and not count on a strategy of criticizing Obama’s class-warfare rhetoric.

The basic campaign messages of each side so far amount to:

Romney: Obama has failed!

Obama: Never mind that; Romney is an evil, rich capitalist!

Of the two, Romney’s message has the better chance of resonating with American voters. But he must pair it with a vision of what success would look like and how he would lead us there. Obama is giving him yet another opportunity to do that. He has to start acting on those opportunities.

– By Kyle Wingfield

Find me on Facebook or follow me on Twitter

335 comments Add your comment

Lil' Barry Bailout (Unexpectedly Revised Downward--Again)

July 10th, 2012
6:10 pm

Compromise? Like Obozo’s threat to veto a Bush-tax-cut-extending bill that doesn’t raise taxes on the productive?

Michael H. Smith

July 10th, 2012
6:19 pm

The cram it down their throat Democrats compromise? :lol:

Tomorrow folks, I’m out of here for now

Lil' Barry Bailout (Unexpectedly Revised Downward--Again)

July 10th, 2012
6:22 pm

Obozo: “My way or the highway”.

Nice compromise.

JDW

July 10th, 2012
6:26 pm

@LBB…”The productive class (loosely defined as the top 20%) are paying their way and most of yours.”

See that’s the problem LBB, we have destroyed the livelihood of those between 20% and 80%. For our society to be productive that’s the issue that must be fixed.

Hillbilly D

July 10th, 2012
6:26 pm

I’ve been noticing this the last couple of weeks. If you click “Show All”, it of course, shows all the posts. However, if you refresh and the post total has required a new page, it goes back to the page setup and you have to click “Show All” again, to go back to all the posts.

I don’t think it did that until recently. Anybody else noticed this?

JDW

July 10th, 2012
6:30 pm

@Tiberius…”why?”

Because every serious candidate, including Obama, since George Romney has released 10 years of returns. Plus I want to know just how one legally builds a IRA worth over $100+ million…given contribution limits and all.

BTW if Romney had maxed out both his and the company’s legal contributions since 1974 and sustained a 10% return (which would have been remarkable) the account would be worth about $12 million.

Michael

July 10th, 2012
6:44 pm

JDW – I think it’s likely that Romney had to put some of his carried interests in the IRA at little or no value. That’s probably the only way to explain these extraordinary returns, especially including the bear market of 07-09.
If that is the case, it will show that the low 15% tax rate on carried interests was too high for Romney. His solution was to put quasi-investments in the IRA, so he could defer taxes indefinitely.
It appears likely that he will be the poster boy for tax avoidance in the US.

td

July 10th, 2012
6:49 pm

JDW

July 10th, 2012
6:26 pm

@LBB…”The productive class (loosely defined as the top 20%) are paying their way and most of yours.”

See that’s the problem LBB, we have destroyed the livelihood of those between 20% and 80%. For our society to be productive that’s the issue that must be fixed.

We have destroyed the livelihood of people making between $23,000 to $60,000 (roughly 20 to 80%) per year? May I ask how?

It seems to me that the real problem that no one wants to talk about is that we have too many households with only one parent. 2 parents making minimum wage almost falls into the top 50% of wage earners ($30, 157 per year). How long will both parents only make $7.25 per hour?

I submit that we do not have a wage problem in this country but instead we have a social problem.

MarkV

July 10th, 2012
6:53 pm

Kyle Wingfield @ 5:52 pm

Kyle,

I do not speak for progressives, but I do not mind answering your question. But first, your argument is based on ignoring the reality – while the US has a very progressive tax system, it also has one of the highest income inequalities among the developed nations. The progressiveness of the tax is to overcome some of this inequality, but does not do it effectively.

So to answer your question, in my view the tax progressivity should be such that the changes in the income of the various groups with time were about the same. This clearly has not been the case for some time.

td

July 10th, 2012
6:55 pm

JDW

July 10th, 2012
6:30 pm

@Tiberius…”why?”

“Because every serious candidate, including Obama, since George Romney has released 10 years of returns.”

Is it also true that every serious candidate released their college and even HS grades and papers written? Are you calling for Obama to do the same?

td

July 10th, 2012
6:57 pm

MarkV

July 10th, 2012
6:53 pm

“it also has one of the highest income inequalities among the developed nations. ”

Proof please?

Lil' Barry Bailout (Unexpectedly Revised Downward--Again)

July 10th, 2012
7:00 pm

JDW: I want to know just how one legally builds a IRA worth over $100+ million
————————–

I want to know why you think it’s any of your business.

Just as an aside, my IRA is worth a lot more than what I contributed to it.

Tiberius - pulling the tail of the left AND right when needed

July 10th, 2012
7:03 pm

JDW, if you knew as much about Romney’s personal finances as you’ve displayed regarding political issues . . .

. . . you’d be wrong about even more things than you already are.

You’re kinda like a Peeping Tom, always wanting to look into somebody’s windows, and hoping you’ll catch them doing something wrong.

Bottom-line, Romney and his finances have been vetted by people much, much smarter than you, and if I were Romney, I wouldn’t give you your cheap thrill.

Dusty

July 10th, 2012
7:03 pm

Well, Kyle must have done the right thing. Looks like every liberal in town is here preaching the good news of Obama and the bad news for the rest of us. And all the middle of the roaders being very careful not to step over any political line, have any religion, or possess riches. What a way to go!

But the good news is (trumpet blast) BRUNO is with us again. There’s a doctor in the house!!! And he carries a sharp scalpel!

So adieu adieu adieu……I asked a question this morning that no one answers. How did Obama get so rich in a hurry? JDW promptly rattled off about Romney’s riches! OH well…doesn’t matter. After the next election and exit from Washington, he can write another book. I’m sure it will be “How I saved America!”

I’ll say one thing for the president. He has a great imagination! Better than Alice in Wonderland.

md

July 10th, 2012
7:18 pm

“Maybe everybody is wrong. But I know there is God. I know that Jesus walked the Earth.”

No, you don’t…..you “believe” there is a god and that Jesus walked the earth……there is a difference in “knowing” and “believing”…….hence the reason the naysayers are in the same boat…….

Tiberius - pulling the tail of the left AND right when needed

July 10th, 2012
7:18 pm

Interview with a liberal:

“So, what do you think about Obama’s worsening unemployment numbers?”

“But, but, but. . . Romney hasn’t released his taxes!”

Is there any cuts in spending you’d like to see Obama make?”

“But, but, but . . . Romney is a MORMON!”

Tell us how you’d like to see Obama address our deficit.”

” But, but, but . . . Romney is a BULLY! And RAISE TAXES on the rich like Romney!”

How Inciteful Is That!

July 10th, 2012
7:19 pm

Kyle,

As I mentioned in an earlier post, you could always take away the personal exemption and standard deduction from the millions that earn minimum wage, such as college-age people and social security recipients trying to make ends meet by picking up a minimum wage job, if that makes you feel better. Squeeze a little more than just payroll taxes from them so that progressive tax code is less of a burden for the wealthiest that you seem to idolize.

md

July 10th, 2012
7:21 pm

“Considering that they have 80% of the wealth, sounds like a pretty good deal for them…”

80% of what wealth?? There you go again…..80% of what happened to be in this country at that given point in time.

Don’t make the mistake of thinking we are living in a closed system……money moves in and out by the second…….it is a false pretense to say those that have 80 took it from those that have the 20, when it very well could be coming from Uganda…..while the money from the 20 could very well be going to some guy in Indonesia………..

MarkV

July 10th, 2012
7:24 pm

td @6:57 pm: “Proof please?”

Can’t you find it by yourself?

http://en.wikipedia.org/wiki/List_of_countries_by_income_equality

md

July 10th, 2012
7:27 pm

“so he could defer taxes indefinitely.”

I do believe “defer” is the operative word……..which is what we all do in our 401k’s and pensions…..defer until we start taking it out. Why should Romney have to be any different?

Bruno

July 10th, 2012
7:30 pm

I don’t know if we’re safely “off-topic” yet, but I did want to address Dusty’s post from a few days ago:

And where is Bruno? I read that physicists are sure they have discovered the “God particle”. They said that the Higgs boson might be it or something!! This is the kind of thing that Bruno loves. Not me. I’m sorta the “What in the world is that?” Bruno knows!!

For starters, Dusty, the person who proposed the existence of the Higgs Boson, Peter Higgs, was opposed to naming it “God’s Particle” for two reasons. (1) It greatly overstates the importance of the particle in terms of leading to a proverbial “Theory of Everything” and (2) Although he is an atheist himself, Mr. Higgs didn’t want to offend anyone who had strong religious beliefs. The name “God’s Particle” came from the title of a 1993 book on particle physics, “The God Particle: If the Universe Is the Answer, What Is the Question?” by physicist Leon Lederman and science writer Dick Teresi. Obviously they understood that a controversial title sells more books than a dull title.

As for the importance of the alleged discovery of the Higgs Boson, I’m not really certain. Particle Physics is a very strange field of endeavor, in which human constructs are so intertwined with actual experimental results, it’s very hard to separate fact from fiction. For example, various properties are assigned to quarks, such as “isospin, strangeness and charm”. Whether these represent actual physical properties of sub-atomic particles or whether they are simply mathematical constructs designed to make the theories match the experimental results is hard to say. Central to the Higgs Boson proposal is the existence of a “Higgs Field” which has non-zero values even in a vacuum and is reminiscent of the famously discarded “ether field” which was proposed many years ago to be the medium of proposition for electro-magnetic radiation. The fact is that quarks have never been directly observed, and likely never will be due to their micro-micro-microscopic size. In fact, not even electrons have ever been directly observed, though we like to think that we know a lot about them.

The bottom line is that there are “charged particles” in our Universe of different polarity (positive and negative). How and why this is so will forever remain a mystery, no matter how sophisticated our experiments and mathematical descriptions become. It is once again the unbridgeable divide between Absolute Truth and our meager, man-made descriptions of the Absolute Truth. Wise people understand that critical difference.

http://en.wikipedia.org/wiki/Quark_model

If Erwin’s Cat checks in later, maybe he can shed a little more light on the topic for us.

@@

July 10th, 2012
7:35 pm

Mitt Romney’s gonna speak at the NAACP tomorrow. Now THAT takes courage. Newt did it.

Given the high unemployment among blacks, Obama’s dream (act) AND opposition to same-sex marriage within the black community, he may gain some converts. Free men (and women) if they so will.

Kyle @ 5:27

Whatever!

Lil' Barry Bailout (Unexpectedly Revised Downward--Again)

July 10th, 2012
8:25 pm

Brad Pitt’s gets death threats for penning anti-Obama letter to the editor
By Hollie McKay
Published July 10, 2012
FoxNews.com
———————————–

That’s real nice, Democrats. At least you’re consistent–consistently filled with hate for real Americans.

Love me some Reagan

July 10th, 2012
8:29 pm

Hope this is all about civil discourse and not civil suits………….

Everyone knows how certain people can be these days, especially on blogs

Love me some Reagan

July 10th, 2012
8:30 pm

“You’re kinda like a Peeping Tom, always wanting to look into somebody’s windows, and hoping you’ll catch them doing something wrong.”

Sounds like the social conservative movement to some degree

AmVet

July 10th, 2012
8:46 pm

“it also has one of the highest income inequalities among the developed nations. ”

td: Proof please?

Really?

This is widely known and basic stuff that you should know.

The burgeoning American plutocracy has very few peers.

Yep thanks to the forty year destruction of the middle class we are WELL on a way to a nation of haves and have nots…

The U.S., in purple with a Gini coefficient of 0.450, ranks near the extreme end of the inequality scale. Looking for the other countries marked in purple gives you a quick sense of countries with comparable income inequality, and it’s an unflattering list: Cameroon, Madagascar, Rwanda, Uganda, Ecuador. A number are currently embroiled in or just emerging from deeply destabilizing conflicts, some of them linked to income inequality: Mexico, Côte d’Ivoire, Sri Lanka, Nepal, Serbia.

Perhaps most damning is China, significantly more equal than the U.S. with a Gini coefficient of 0.415, where the severe income gap has been a source of worsening political instability for almost 20 years. Leagues ahead of the U.S. on income inequality is India, Gini coefficient 0.368, where outrage over corruption and income inequality recently inspired a protest movement that shook the world’s largest democracy.

http://www.theatlantic.com/international/archive/2011/09/map-us-ranks-near-bottom-on-income-inequality/245315/

getalife

July 10th, 2012
8:51 pm

New sheriiff in town said no cheating gop.

No poll tax cons.

Ray

July 10th, 2012
9:29 pm

Looking at “pre-tax” dollars to total taxes paid, hides the disproportionate amount of tax benefits the top 1% reaps because the tax code is specifically written to their great advantage (ask Jack Abramoff how it was done). Gross income, before deductions would have been more revealing, and provide a truer income to tax ratio.

Gravy Train

July 10th, 2012
9:34 pm

Who died and made you Judge of Kyle’s blog, Tiberius? Pompous much?

The only thing Romney had done by very smart people is have his books cooked and hidden and they’ve attempted to craft a message for him that will appeal to the lowest common denominator (you). If Romney wants to win, he will have to neutralize at least two things. 1. His financial records. He is going to get reamed on that unless he does. 2. Lack of compassion and lack of character. He is a human waffle in a stuffed suit with a overpriced haircut. Most folks see right through him on the right and left. He appears to have no fixed position, to be moved by popular opinion of a perceived “base.”. No true fundamentals that have stood throughout his career other than a lust for money and power.

Who has vetted his finances and how have they done so when it’s supposedly sealed away and is now part of a “blind” trust that even you say he has no idea where it’s at? None of those things can be true at the same time.

For me, I am smart enough to get into Tech but wise enough not to go there. Sure, there are people much smarter than me. However, you aren’t one of them. Being smart and having common sense don’t necessarily go together, as your posts today have proven. You can have the smarts to memorize as many facts and statistics as you wish but without wisdom and common sense to apply that knowledge you sound like a bitter herb. Sort of Newt like if you will. Also, you don’t have to be smart to be wealthy, look at the Bush boys and Donald Trump.

Are you ready to admit that Willard claimed to march with his dad and MLK? Detroit Free Press 1978

Happy reading pal.

yuzeyurbrane

July 10th, 2012
10:31 pm

Pretty good analysis although your conservative point of view distorts your view somewhat. Obama is not a John Kerry or Mike Dukakis nor are his key advisors. My own view is he is connecting a lot better than Romney. But who knows–maybe my view is distorted because of what I perceive as the pandering and intellectual emptiness of Romney’s campaign.

JDW

July 10th, 2012
10:54 pm

@LBB…”I want to know why you think it’s any of your business.”

Mathematically impossible returns in the IRA of a Presidential Candidate are everyone’s business.

Old Timer

July 11th, 2012
12:39 am

Narcissist Obama has his own little county he is ruling in his own mind. His handlers can’t even handle him. Tax and spend, tax and spend.

[...] the discussion about President Obama’s desire to raise taxes on “the rich” — i.e., families earning more than $250,000 a year [...]

Lil' Barry Bailout (Revised Downward)

July 11th, 2012
7:53 am

JDW, go ahead and give us the details on President Romney’s IRA.

Didn’t think so.

Like Obozo, all you have is hatred of the productive class, deflection, and envy.

[...] Senate leader Harry Reid: “More than 99 percent of business would qualify for this extravagant tax break even if they don’t create a single new job or raise wages for one single new employee.  In fact, fabulously rich so-called `small-business owners’ like Kim Kardashian and Paris Hilton could qualify for these wasteful giveaways even though three-quarters of Americans oppose tax breaks for the wealthiest few – nearly half the benefits of this $46 billion proposal would go to millionaires and billionaires.”  So there is no misunderstanding, this is not a tax break, it is continuing the tax rates as they have been for the past 7 years, which are too high right now.  If these tax rates are raised, that will allow the government to run for an additional 8 days every year. [...]