Obama’s “Tax The Rich” Mantra

President Obama’s stump speech to “tax the rich” is more rhetoric than fact. Let’s look at his statements and the facts before we all jump to the conclusion these taxes will fix our deficits/debt problems. He proposes to let expire the (Bush) tax cuts for those making over $250,000 per year. He claims these tax reductions:

  1. Have been a “major” contributor to our deficits
  2. Will raise $1 trillion over ten years for debt reduction
  3. Will not hurt businesses
  4. Will make the rich pay their fair share.

The facts are:

  1. These taxes amount to only 7.5% of the Obama year’s deficits and, while significant, they can hardly be a called a “major” contribution to the deficits. Here’s the math. $1 trillion in ten years is $100 billion per year or $400 billion for the Obama years. The deficits for the Obama years 2009 — (est.) 2012 total $5,323 billion.
  2. As stated the $1 trillion could be used to reduce the deficit (by $100 billion). However, the latest Obama Administration and the Presidents rhetoric suggest massive new government spending programs, but used optimistic growth assumptions to claim deficits will drop to about $600 billion per year over the next ten years.
  3. Businesses must meet owner/stakeholder financial expectations to stay in business. Any new taxes on businesses must be covered by growth and cutting costs typically resulting in fewer jobs and slower growth. Decoupling taxes and jobs is not the way it works!
  4. The top 5% income earners now pay over 55% of the federal taxes and the bottom 50% income earners now pay 2.25%. There are two questions to address
    1. Should the top 5% pay more?
    2. Should everyone receiving an income from any source (including entitlements) pay some income taxes? Now, without counting public sector workers, we have over 50% who have “no skin in the game” that can vote to tax the others!

Given these facts some might conclude politicians focus on reelections rather than our real long-term problems.

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Dr. Cleland’s Ph.D. is from Purdue University where he specialized in complex systems theory. His technical training and experiences includes analyses of many types of systems, involvement with numerous federal, state, and local agencies, and management of a broad set of set of professionals, services, and trades people. He has managed scientists, engineers, policemen, firefighters, environment, health, safety and emergency planning experts, building trades and maintenance crafts personnel, and others.

2 Responses to “Obama’s “Tax The Rich” Mantra”

  • I don’t think your calculations are correct about everything. You forgot the people with their hands in the till. In Indiana so many people in any government office are. I know this because my sister-in-law worked as township assessor and the previous assessor had been skimming $40,000.00 per year for 16 and didn’t pay any tax on it. My sister did the books and audited for her (she has a degree in economics with a minor in accounting) and found this in the records. When they sent their findings to the Prosecuting attorney and the tax commission, nothing was done. When they all have their hand in the till they surely wouldn’t want someone else to be prosecuted as it would uncover them all. If this country would stop giving away moneyes to other countries, stop giving aliens a ten year tax break on their business(something we Americans do not get) and giving pensions to politians that they didn’t pay for, then we may start to fix what is wrong. I paid for my SSDI for 40 years. I paid into my pensions for 30 years. I also paid for Medicare since it was required. This is something I should be receiving and am. I do not want this to be taken away! Have you read anything from the head of the legal department at Stanford? Might help

  • Susan:

    Thank you for your thoughtful comments. Sorry it took me so long to get back to you. You have made several good points and I certainly agree with you.

    Yes, corruption is a big problem. I believe it is now acceptable in our society to lie and cheat. After all, if our ‘so-called’ leaders (from Presidents on down) can lie and cheat, why shouldn’t everyone else? Politicians’ and their bureaucrats cannot expose errors or corruption without loosing their very favorable jobs. Every politician’s #1 priority is being reelected, and all other priorities are in support of priority #1. This results in all decisions being short-term based on priority #1. The long-term interest of citizens and the nation is way down the priority list.

    Unfortunately, unlike you, many citizens get their information from political rhetoric, biased media sound bites, and negative ads. Sadly they do little thinking. I applaud you for questioning the system. I feel we must continue to educate others with facts and believe you are doing so. Otherwise future generations will pay for today’s bad decisions.

    Many of your other comments are addressed with possible solutions and actions in my book.


    L. Lynn Cleland

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July 2012
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