I have a hunch my newsreader feed will once again be populated with posts about this afternoon’s Washington Post story referencing House Speaker John Boehner’s (R-Ohio) refreshed openness to accepting new revenue. Oh joy.
First a message. I absolutely need your help. Writing a post like this can easily take an hour or two to research and put together. I’m not asking for donations or for you to click on an advertiser’s link (although that would be nice). I’m asking you to send this post to a Democrat. A liberal. Someone who voted for President Obama. Share it on Facebook. I want my posts to start a discussion … share among those who you agree with, but more importantly those you don’t agree with. You must work outside of your comfort zone and explain why conservative ideals work, and why “taxing the rich” is a joke. Onward.
Republicans are “willing to accept new revenue” to tame the soaring national debt and avert an ugly battle over the approaching “fiscal cliff,” House Speaker John A. Boehner said Wednesday in a speech that offered a potential path to compromise in year-end budget negotiations.
With President Obama reelected and Republicans returned to a slightly smaller majority in the House, Boehner (R-Ohio) said Tuesday’s election amounted to a plea from voters for the parties to lay down their weapons of the past two years and “do what’s best for our country.”
As a reminder, Boehner actually went to the opposition leadership and the Obama administration offering higher taxes…
… during the 2011 debt-limit battle. At that time, Boehner had tentatively agreed to support $800 billion in additional revenue over the next decade in exchange for Obama’s commitment to let the top tax rate fall below the current 35 percent.
That was a compromise. And the Democrats outright rejected it.
Obama and other Democrats have long insisted that the George W. Bush-era tax cuts should be permitted to expire for the nation’s top earners, raising the top rate to 39.4 percent.
To provide more detail, Obama wants to leave the lower three tax brackets – those including income of less than $217,450 (married couple filing jointly) – in place with the highest marginal rate of 28 percent. For those in the top two brackets which include families making more than $217,450, he wants to increase the marginal rates by 3 percent and 4.6 percent respectively.
So how much revenue will this generate?
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 this post any and every way you can and discuss below or among yourselves.
- Big Government: SPEAKER BOEHNER ROLLS OVER, TAX HIKES ON THE TABLE NOW
- Hot Air: Boehner: I’m not open to tax hikes, but I am open to new revenue