Obama's "Bait and Switch Taxes"

[mirage62 0]

This artical lays out my biggest problem with the Obama tax hikes. PLEASE understand that I personally believe that tax increases, cutting spending along with growth in the economy are the only way to pay down our deficit.

Obama likes to sell the idea that he's only after the "millionaires" but history shows that these won't be the people that pay.



'Bait and Switch' Taxes
By Thomas Sowell - September 5, 2012


We have heard many times from President Barack Obama how he plans to raise taxes on "millionaires and billionaires," but not on the middle class. Apparently, if you don't happen to be a millionaire or billionaire, you don't have to worry.

But the numbers say otherwise -- and say so big time.

The actual tax increase plans being proposed by Obama do not start with people who have an income of a million dollars a year. They start with people with incomes of $250,000 and up.

That is more than most people make, but it is far short of a million dollars, and miles away from a billion dollars. How many of the people who stand to get hit with Obama's higher tax rate plan are in fact either millionaires or billionaires?

According to the Internal Revenue Service, there are more than 2,700,000 people who earn $250,000 a year or more -- and fewer than one-tenth of them earn a million dollars or more. So more than nine-tenths of the people who would be hit with the higher taxes supposedly aimed at "millionaires and billionaires" are neither.

When businesses advertise one thing and then actually sell something else, that is called "bait and switch" advertising. That is exactly what President Obama is doing with his proposed tax increases on "millionaires and billionaires."

It gets worse when you look at the potential economic consequences of the tax rate increases being proposed. The small proportion of the people targeted for Obama's higher tax rates who are in fact millionaires and billionaires have the least likelihood of actually paying the higher tax rates.

People with annual incomes in the millions or billions of dollars can live pretty high on the hog on a fraction of their income, leaving them with plenty of money to invest. And they can invest it in ways that keep it away from the tax collectors. In addition to tax-exempt bonds, they can invest in other countries that have lower tax rates.

Hard facts show this happening as far back as we have had a federal income tax.

The Constitution of the United States had to be amended in 1913 to permit the federal government to collect income taxes. Almost immediately, very high tax rates on people with very high incomes led to their taking steps to avoid paying those taxes.

In 1920, Secretary of the Treasury David Franklin Houston in the Democratic administration of Woodrow Wilson pointed out that the taxable income of people with incomes of $300,000 and up had been more than cut in half, just from 1916 to 1918. He did not believe that this was because the rich were becoming poorer but "almost certainly through investment by the richer taxpayers in tax-exempt properties."

President Woodrow Wilson himself urged Congress to reconsider whether very high tax rates are in fact "productive of revenue" to the government. He said that, beyond some point, "high rates of income and profits taxes discourage energy, remove the incentive to new enterprise, encourage extravagant expenditures, and produce industrial stagnation with consequent unemployment and other attendant evils." That sounds a lot like where we are today.

Both Democratic and Republican presidents once warned that high tax rates can reduce economic growth. And Secretaries of the Treasury under both Democratic and Republican administrations once pointed out that higher tax rates do not necessarily bring in more tax revenues than lower tax rates. Yet this lesson from more than 90 years ago has still not been learned by those who advocate higher taxes on "the rich" as the answer to our fiscal problems.

In today's global economy, it is even easier for genuine millionaires and billionaires to escape high tax rates by investing in other countries. Not so for the other nine-tenths of the people hit with higher tax rates, such as small business owners or independent professionals such as dentists or realtors, whose sources of income are necessarily local.

Those hardest hit by high tax rates that drive jobs overseas are likely to be those who are unemployed and need jobs here. Ironically, millionaires and billionaires may have the least to lose from higher tax rates on "the rich." But Barack Obama has the most to gain from class warfare rhetoric that wins votes from gullible people.

Copyright 2012, Creators Syndicate Inc.

Kevin Keenan is my hero, a double FUP, he does so much with so little

[kallend 1,853]

The fallacy in that article is so obvious I'm surprised that even you didn't catch it, Fortson.

...

The only sure way to survive a canopy collision is not to have one.

[mirage62 0]

Fine Kallend, being an educator please help this lowly person understand. It won't hurt my feelings - fire away.

Kevin Keenan is my hero, a double FUP, he does so much with so little

[RonD1120 59]

Quote

Fine Kallend, being an educator please help this lowly person understand. It won't hurt my feelings - fire away.

T. Sowell is right on target. The disgruntled true believing liberal citizen does not comprehend entrepreneurial or investor mindset. They do not understand the difference between avoiding taxes and evading taxes.

Look for the shiny things of God revealed by the Holy Spirit. They only last for an instant but it is a Holy Instant. Let your soul absorb them.

[Niki1 1]

I wish I was one of the people whose taxes are going to be raised. That means I would be making TEN times what I make now.

Most of the things worth doing in the world had been declared impossilbe before they were done.
Louis D Brandeis

Where are we going and why are we in this basket?

[billvon 2,772]

>According to the Internal Revenue Service, there are more than 2,700,000 people
>who earn $250,000 a year or more -- and fewer than one-tenth of them earn a million
>dollars or more. So more than nine-tenths of the people who would be hit with the
>higher taxes supposedly aimed at "millionaires and billionaires" are neither.

Uh, Fortson - are you claiming here that "millionaire" equals "someone who makes more than a million dollars a year?"

[kallend 1,853]

Quote

Fine Kallend, being an educator please help this lowly person understand. It won't hurt my feelings - fire away.

It uses an incorrect definition of "millionaire". No doubt it was quite deliberate in order to confuse gullible readers.

The thesis of the article is, therefore, INCORRECT.

...

The only sure way to survive a canopy collision is not to have one.

[mirage62 0]

Bill Kallend, I'm truly sorry but I don't get your point - or your reasoning....

You are taxed on your earnings - what you make - NOT your net worth.

The point of the artical what I took from it was that the taxes hit people making over 250K, but it is SOLD as people who make millions. "Fair share" is always pointed at millionaires...(Romney) truth is it is pointed and will be paid by people who make much less than the million Obama likes to sell. The real millionaires PEOPLE that make a million a year will hide it LEGALLY (some) will the people making say 300K won't have the same ability.

Obama could have gone after the millionaires he didn't but he acts like thats who he is after cause it plays well.

Kevin Keenan is my hero, a double FUP, he does so much with so little

[DanG 1]

I think Obama's always been quite clear that he thinks taxes should go up on people who make more than $250k. I don't remember him ever saying that the cutoff should be $1M.

- Dan G

[matthewcline 0]

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I think Obama's always been quite clear that he thinks taxes should go up on people who make more than $250k. I don't remember him ever saying that the cutoff should be $1M.

I think it is just a wording issue, he says; the rich, people making over 250k, and millionaires, plus fair share, all together, it kind of makes people focus on the "Millionaires" and "fair share", even though he doesn't really hide the threshold is 250k.

Matt

An Instructors first concern is student safety.
So, start being safe, first!!!

[billvon 2,772]

>You are taxed on your earnings - what you make - NOT your net worth.

Correct.

>The point of the artical what I took from it was that the taxes hit people making over
>250K, but it is SOLD as people who make millions.

Uh, no - not unless you listen to FOX News. It was not sold as a tax on people making over a million. It was sold as a tax on people who make over $250K. These people are, in general, millionaires. Thus the proposal will raise taxes on millionaires and billionaires, not people who make over a million (or people who make over a billion.)

[mirage62 0]

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Uh, no - not unless you listen to FOX News. It was not sold as a tax on people making over a million. It was sold as a tax on people who make over $250K. These people are, in general, millionaires.

First Bill drop the damn "FOX News" shit. Its benealth you - actually the old you.

You one and only warning.

At 250K less taxes it take awhile to make it to a real net worth of a million. Many loans I look at have lawyers and doctors that make +250K but their net worth is below a million.

Kevin Keenan is my hero, a double FUP, he does so much with so little

[kallend 1,853]

Quote

Quote

Uh, no - not unless you listen to FOX News. It was not sold as a tax on people making over a million. It was sold as a tax on people who make over $250K. These people are, in general, millionaires.

First Bill drop the damn "FOX News" shit. Its benealth you - actually the old you.

You one and only warning.

At 250K less taxes it take awhile to make it to a real net worth of a million. Many loans I look at have lawyers and doctors that make +250K but their net worth is below a million.

My net worth is over $1M and I make less than $250k. (And I didn't inherit any of it).

Anyone making >$250k who isn't worth at least $1M within a few years is clearly not trying.

The article is rubbish.

...

The only sure way to survive a canopy collision is not to have one.

[billvon 2,772]

>First Bill drop the damn "FOX News" shit.

?? Thomas Sowell is a frequent contributor to FOX News on conservative economics - and you just quoted him.

>At 250K less taxes it take awhile to make it to a real net worth of a million.

Agreed. But people making 250K, in general, were making 220K a few years back, and 200K a few years before that - and thus generally have net worths in the millions. The stats:

Over 7% of Americans have net worths over $1 million. 1.5% have an income of over $250,000. So not only is the "millionaire" a much easier barrier to cross, a tax on people making over $250,000 won't even touch most millionaires in the US; they will not see their taxes increase.

[kelpdiver 2]

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My net worth is over $1M and I make less than $250k. (And I didn't inherit any of it).

Anyone making >$250k who isn't worth at least $1M within a few years is clearly not trying.

The article is rubbish.

What's a few years? In high cost of living areas, the household income of 250k with a couple kids qualifies you for an average home around here. I think that family would be doing very well to save 50k per year in liquid+retirement assets, and then would be paying the 30 year mortgage on a 750k home. They certainly will become a millionaire household, but in 10-15 years, which is not what I would rate as a few. And when you consider that with Social Security in doubt and poorly paying anyway, someone making over 100k per year needs at least a a couple million in retirement savings to maintain during their elder years. But that's not money they should be touching now.

And if they're tech people, as they have a high likelihood to be around here, that income flow is not constant over a 10-15 year period. We have boom and busts, and one needs to reinvent themselves periodically to maintain that sort of salary.

There are two key problems in this proposal - the geographic inequities are obvious. 250k here is like 130k in Knoxville. And so far this appears to be a nice round number that most voters will be fine with...but over time will capture more and more, just as the AMT proved. It was written for a couple dozen families, now it attacks millions of upper middle income households.

The other oddity is that it's 250k for a married couple, but 200k for a single person. Around here, that may (will certainly) lead to some divorces and many more people deciding to just keep living together.

[mirage62 0]

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My net worth is over $1M and I make less than $250k. (And I didn't inherit any of it).

Kallend your what about 105 years old? A net worth of a million for a person of your age/Education really isn't that hard to imagine.

If you REALLY wanted to help in the discussion tell us HOW LONG it took you to have a net worth over a million.

For the record Kallend believes strongly in what he says. He would gladly pay more taxes I believe.

Having said that I don't believe that Kallend makes 250K a year so although he is a MILLIONAIRE a tax hike won't effect him.

Kevin Keenan is my hero, a double FUP, he does so much with so little