Sign Up For Our Mailing Lists

InsiderOnline Blog: September 2011

Policy A-Go-Go: Tax Increases on the Wealthy

After proposing last week to increase taxes by $447 billion over ten years to pay for his jobs bill, President Obama this week proposed to increase taxes by an additional $1.5 trillion over 10 years as part of what he describes as “balanced” deficit reduction. Here’s what folks are saying about the president’s proposals:

Curtis DuBay: President Obama wants tax reform to adhere to his newly formulated “Buffett Rule” which states: Families and small businesses making more than $1 million should not pay a smaller share of their income in taxes than a middle income family. But the Congressional Budget Office shows that Buffett Rule is already in effect. The highest earners pay more than double the amount of taxes as a share of their income than middle income earners. The top 1 percent of earners currently pays 29.5 percent of their income in all federal taxes while middle income families pay 14.3 percent. [Heritage Responds to Obama’s Debt Reduction and Tax Proposal, The Heritage Foundation, September 19, 2011.]

Scott Hodge: During his Rose Garden speech yesterday, President Obama once again fueled the general misperception that people who pay the 15 percent tax rate on their capital gains and dividend income are paying a lower rate than salaried workers who pay at the individual rate […] . The reality is that capital gains and dividends are taxed at a lower rate at the individual level because this income has already been taxed at 35 percent at the corporate level before it was distributed to shareholders. Both Mr. Obama and his tax advisor Warren Buffett seem unaware that the U.S. has the 4th highest overall tax rate on dividend income among the largest industrialized countries in the OECD at 52.1 percent. [Correcting Obama and Buffett: U.S. Capital Taxes Among Highest in OECD, Tax Foundation, September 20, 2011.]

Dan Mitchell: Raising the tax burden is not the same as raising revenue. […] [P]eople with more than $1 million of adjusted gross income get only 33 percent of their income from wages and salaries. And the same IRS data shows that the super-rich, those with income above $10 million, rely on wages and salaries for only 19 percent of their income. This means that they […] have tremendous ability to control the timing, level, and composition of their income. [One Simple Reason (and Two Easy Steps) to Show Why Obama’s Soak-the-Rich Tax Hikes Won’t Work, Cato Institute, September 20, 2011.]

Keith Hennessey: You could be forgiven for thinking that the President is claiming that his new proposals are balanced, and that “the larger plan that’s balanced” is what he has proposed this month, consisting of equal-sized spending cuts and tax increases. That is the incorrect conclusion to which you are led, but technically the President is not claiming that. The “larger plan that’s balanced” is one that includes spending cuts enacted over the past six months. [The President’s “Balanced” Misdirection, Keith Hennessey, September 19, 2011.]

Emily Ekins: Results from the Reason-Rupe poll actually demonstrate a willingness by a majority of Americans to increase taxes on the “wealthy.” However these preferences depend greatly on how one defines wealthy. The poll asked the standard question “Do you think the federal government should increase taxes on the wealthy,” with 69 percent in favor and 28 percent opposed. However, respondents in favor were then asked what household income they would use to define someone who is wealthy and should therefore pay higher taxes. Respondents consistently listed incomes that were above their own, even high-income respondents, suggesting that people may want to raise taxes, but just not on themselves. [Tax the Rich, Reason, September 19, 2011.]

Posted on 09/23/11 02:21 PM by Alex Adrianson

Heritage FoundationInsiderOnline is a product of The Heritage Foundation.
214 Massachusetts Avenue NE | Washington DC 20002-4999
ph 202.546.4400 | fax 202.546.8328
© 1995 - 2015 The Heritage Foundation