Obama's Fuzzy Tax Math
I'm still recovering from having served a two-week sentence in Chicago – in February. After much consideration, I've decided I need a new booking agent.
I've read through many of the State of the Union that really wasn't the State of the Union reviews. Obama spent a good deal of time throwing numbers and figures around whilst engaging in a revision of automotive history for which W would have been laughed off the lectern. While Henry Ford may have invented the automobile assembly line, it was a German that actually invented the horseless carriage. His name escapes me at present.
The problem with playing fast, loose, and furious with figures is eventually somebody with a big brain comes along with a spreadsheet and starts checking your math. Well, the guys with the green eye shades over at the Wall Street Journal have gotten out their slide rules and taken Obama to task on some of his soaring and baseless rhetoric. I highly recommend reading the whole thing, but I'll give you some of the best graphs with my emphasis added.
On Obama's "read my lips" pledge that anyone making $250 large or less will not see "one dime" in tax increases:
On soaking the richest 2% of Americans to fund his reckless expansion of an already bloated government:
This is going to be some trick. Even the most basic inspection of the IRS income tax statistics shows that raising taxes on the salaries, dividends and capital gains of those making more than $250,000 can't possibly raise enough revenue to fund Mr. Obama's new spending ambitions.
During the campaign, Obama's definition of "wealthy" slide from $300 large all the way down to $150 large. I don't think it's presumptuous of me to say there are those in Congress – The Pelosi, Barney Frank, Maxine Waters, etc. – who have a much lower "wealthy" threshold than does Obama. As we've already seen, Barry is more likely than not to acquiesce to them than they are to him. It's his way of voting "present".
Note that federal income taxes are already "progressive" with a 35% top marginal rate, and that Mr. Obama is (so far) proposing to raise it only to 39.6%, plus another two percentage points in hidden deduction phase-outs. He'd also raise capital gains and dividend rates, but those both yield far less revenue than the income tax. These combined increases won't come close to raising the hundreds of billions of dollars in revenue that Mr. Obama is going to need.
So, the WSJ guys ran some experimental numbers on what threshold would be necessary to meet the $4 trillion budget Team Obama plans to spend in Fiscal Year 2010 (which starts on October 1, 2009). Here's what they came up with:
Simply put, Obama's math doesn't add up. NRO's CampaignSpot blogger Jim Geraghty has coined the phrase that "all statements made by Barack Obama come with an expiration date. All of them."
Even taking every taxable "dime" of everyone earning more than $75,000 in 2006 would have barely yielded enough to cover that $4 trillion.
Fast forward to this year (and 2010) when the Wall Street meltdown and recession are going to mean far few taxpayers earning more than $500,000. Profits are plunging, businesses are cutting or eliminating dividends, hedge funds are rolling up, and, most of all, capital nationwide is on strike. Raising taxes now will thus yield far less revenue than it would have in 2006.
The bottom line is that Mr. Obama is selling the country on a 2% illusion. Unwinding the U.S. commitment in Iraq and allowing the Bush tax cuts to expire can't possibly pay for his agenda. Taxes on the not-so-rich will need to rise as well.
Check your wallet, dear reader. You've probably got milk in your refrigerator that will last longer than Obama's "not one dime" pledge will.
Check my math. Is $208,850 still less than $250 large?
Here endeth the lesson.