Last night, John Hinderaker called out President Obama on his ability to calculate the results of his tax plan. I did the same thing on Nov. 7, and I’m hoping* the media will also take a few minutes to run the numbers based on tax data collected.
So let’s do the math. How plausible is Obama’s claim that increasing income taxes on “the rich,” defined by him as families with incomes over $250,000, will get the nation’s fiscal crisis under control? …
The Joint Committee on Taxation has done the math. Raising the top two rates as proposed by Obama would increase revenue by $22.35 billion in FY 2013, assuming that no economic activity is deterred by the higher rates.
Wow, $22.35 billion? Heck, I guess I spotted the president $17 billion or so per year.
The IRS does not provide a table broken up by tax brackets, so why don’t we just take a look at the number of returns and taxable income of those who made more than $200,000 in the most recent year we have for data – 2009 (Excel, 59KB). To keep the math simple, we’ll enhance the Obama plan to the point where every single dollar of taxable income over $200,000 is taxed at 39.6 percent instead of the current 33 percent and 35 percent. In other words, I’m totally stacking the deck in Obama’s favor, and ignoring the fact taxable income is less than it was in 2009.
The total taxable income for those making $200k + was $1.626 trillion from a total of 3.913 million returns. Subtract out the first $200k earned (taxed at a lower marginal rate) and you come up with $843.4 billion (1.626 trillion – $782.6 billion) in income that would be taxed at the new, higher rate.
35 percent of $843.4 billion is a revenue stream of $295 billion.
39.6 percent of $843.4 billion is a “new, Obama-approved” revenue stream of $334 billion. That’s a whopping extra $40 billion dollars. The federal government spent $71.5 billon a week in 2010, so the tax increase would cover a few days of federal spending if all things remained the same, and they would not.
- More people will look for legal tax shelters and manage their money more carefully to reduce their tax burden … including Warren Buffet.
- Tax revenue and income are down in 2011 and 2012 as compared to 2009.
- I totally stacked the deck in Obama’s favor with the numbers.
There are simply not enough people that earn money in Obama’s targeted bracket to make any sort of difference. It’s a rounding error when it comes to the size of the federal budget.
Please share with those you know support Democrats and the left. A good way to do this might be Facebook or Google +. Remember, we don’t want to just preach to the choir or discuss among ourselves, we need to reach out and have conversations and learn a bit from each other.
* The media love for this One is strong. I’m not holding my breath expecting them to actually calculate – or even estimate – the revenue that
will will not be generated.