American Elephants


Straw Men, Prevarications, Falsehoods and Plain Old Lies. by The Elephant's Child

President Obama’s class warfare scheme seems to be working.  Polls indicate that people think that the rich should pay more taxes.  Of course they want more taxes paid by someone else.

The rich have more choices than the rest of us because they are not dependent on all their income like most of us are. If the government plans a tax on expensive yachts, they can easily fly to the Bahamas and buy their boat there. They can invest in a growing company that pays no dividends and wait for years to cash in the investment when capital gains taxes are lower.

The “Buffet Rule”, as defined by Obama, is that people making more than $1 million a year should not pay a smaller share of their income in taxes than middle-class families pay.  This is the familiar” straw man argument,” that Obama uses so often. He creates an imaginary villain — a straw man — and then rails against him.

The Americans in the bottom 20 percent of earners, the lowest quintile paid a minus 3.8 percent of the total federal income tax burden. In other words they got money back from the government, more back in credits than they paid in.  Those in the middle quintile, the center of the middle class who had an average income of $44,000, paid 3.9 percent of the total federal income tax burden. In other words they paid about $1 out of every $25 dollars of income taxes paid nationwide.

Those in the fourth quintile, with incomes ranging from $58,000 to $102,000 paid about one dollar paid 15.1 percent of the total federal income tax burden.  The eighty percent of Americans whose income placed them in the first four quintiles of income earners combined paid about $1 our of every $9 that is paid in federal income taxes nationwide.

The top earners, with income of at least $1.974 million, the tippy-top 0.1 percent of earners, paid more toward the workings of the government than the bottom 80 percent did.  That’s in spite of the fact that the bottom 80 percent collectively made more than six times as much money as the top 0.1 percent did.

A member of the small group that belong to the top 0.1 percent of earners paid roughly $1,147,616 in annual income taxes. When the fat cats, the filthy rich, are paying more taxes than 80 percent of the population is collectively paying, Obama’s straw man ploy becomes a little pathetic.

Warren Buffett is a special case. He has made his money as an investor, and as a long term investor at that. His firm, Berkshire-Hathaway is a major tax shelter. He receives only a modest salary. And is notably donating most of his wealth to Bill Gates Foundation in charitable deductions.

Berkshire Hathaway is embroiled in a tax battle with the IRS, where the IRS is trying to collect millions in back taxes. There is something particularly phony about the Buffet Rule.

Unfortunately, this is an old trick of the left, and it usually works. The left, from the moment that the Bush tax cuts were debated proclaimed loudly, in unison, “Tax cuts for the rich.” The left depends on the public believing that Republicans are mean, cold people who protect the rich and pick on poor people.  Explanations are lengthy, and are easily trumped with short, bumper-sticker phrases like “Tax cuts for the rich.” Hard to get people to read a long explanation when you are easily swayed by a frequently repeated phrase.  Sigh.

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