Paying for Obama’s jobs bill with 5.6% tax on millionaires
As far as I can tell, President Obama’s newest federal stimulus boondoggle job-killing bill relies exclusively on a 5.6 percent surtax on millionaires. Supporters and the CBO are telling us the surtax will pay for the $447 billion in spending in 10 years. These are the numbers you need to look at … these are the questions that should be asked.
First of all, I guaranty you almost all of the spending in this bill is completely unconstitutional. The federal government has no authority to provide funding for – as an example – funding modernization and funding of elementary and secondary schools. There’s no argument here, expecially when I explain local and state funds can be spent on these projects, but the federal government has no role in this funding. For more, read my symptom of the disease series.
In 2009 – the last year the IRS has data for – there were just under 237,000 individual tax returns with adjusted gross incomes of $1 million or more. (Source Excel data) In total, those taxpayers – less than .3 percent of total taxpayers – contributed about $177.5 billion in federal income tax to the Treasury, and had a total AGI of $727 billion. There are more than 370 pages in S.1660, the Senate version of Obama’s current spending plan, and all of it is spending, except for the last couple of pages.
Assuming the first $1 million earned is exempt from the 5.6 percent surtax, that leaves about $490 billion in adjusted gross income that would be subject to the surtax, which totals $27.4 billion per year.
The CBO says the bill is paid for in 10 years. Even if the government continued to collect the $27.4 billion for each of the next 10 years, that totals $274 billion – far short of the $447 billion in spending. For 2010, I’m pretty certain the number of millionaires and the taxes they pay will be lower than 2009. On top of that, the IRS would not start collecting this surtax for 15 months.
How is the CBO scoring this bill and coming up with a “pay off” date in 10 years? What assumptions is the CBO making concerning the number of individual taxpayers who will make $1 million or more during the next ten years? Does the CBO – or anyone else – ask how this surtax will effect the investments these taxpayers make in their business or the stock market?
Here is the full section in the Senate version of the bill that supposedly will be voted on today. I have a tough time with this stupid legislative language, so if you have comments or corrections, please chime in.
SEC. 59B. SURTAX ON MILLIONAIRES.
(a) General Rule- In the case of a taxpayer other than a corporation for any taxable year beginning after 2012, there is hereby imposed (in addition to any other tax imposed by this subtitle) a tax equal to 5.6 percent of so much of the modified adjusted gross income of the taxpayer for such taxable year as exceeds $1,000,000 ($500,000, in the case of a married individual filing a separate return).
(b) Inflation Adjustment-
(1) IN GENERAL- In the case of any taxable year beginning after 2013, each dollar amount under subsection (a) shall be increased by an amount equal to–
(A) such dollar amount, multiplied by
(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting ‘calendar year 2011’ for ‘calendar year 1992’ in subparagraph (B) thereof.
(2) ROUNDING- If any amount as adjusted under paragraph (1) is not a multiple of $10,000, such amount shall be rounded to the next highest multiple of $10,000.
(c) Modified Adjusted Gross Income- For purposes of this section, the term ‘modified adjusted gross income’ means adjusted gross income reduced by any deduction (not taken into account in determining adjusted gross income) allowed for investment interest (as defined in section 163(d)). In the case of an estate or trust, adjusted gross income shall be determined as provided in section 67(e).
(d) Special Rules-
(1) NONRESIDENT ALIEN- In the case of a nonresident alien individual, only amounts taken into account in connection with the tax imposed under section 871(b) shall be taken into account under this section.
(2) CITIZENS AND RESIDENTS LIVING ABROAD- The dollar amount in effect under subsection (a) shall be decreased by the excess of–
(A) the amounts excluded from the taxpayer’s gross income under section 911, over
(B) the amounts of any deductions or exclusions disallowed under section 911(d)(6) with respect to the amounts described in subparagraph (A).
(3) CHARITABLE TRUSTS- Subsection (a) shall not apply to a trust all the unexpired interests in which are devoted to one or more of the purposes described in section 170(c)(2)(B).
(4) NOT TREATED AS TAX IMPOSED BY THIS CHAPTER FOR CERTAIN PURPOSES- The tax imposed under this section shall not be treated as tax imposed by this chapter for purposes of determining the amount of any credit under this chapter or for purposes of section 55.
(b) Clerical Amendment- The table of parts for subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:
PART VIII. SURTAX ON MILLIONAIRES
(c) Section 15 Not to Apply- The amendment made by subsection (a) shall not be treated as a change in a rate of tax for purposes of section 15 of the Internal Revenue Code of 1986.
(d) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2012.
For a bunch that throws around the word “fair” as much as they do, they sure have a poor concept of the definition of the word.? “Progressive” is about as far from the word “fair” as you can get, bordering on punitive.? Lefties are afraid to admit that their redefinition of fair means some Robin Hood like social justice, and worse, redistributive policies that Marx would be proud of.
Everyone needs to have the same amount of skin in the game, and an equal percentage of their income is the only way to do that.
Interesting to note…? When I first heard of Bobo’s latest attempt to push his tax bill (new name, same crap!) down our throats, I wrote to my two senators and my congressman.? No name, but his initials are Joe Courtney.? I asked them all to run, not walk, away from this charade.? All three replied that the bill was really, really needed, yadda da yadda da, et cetera.? I’m sure you all noticed how quickly the Three Stooges all jumped to present the Bobo bill to congress.? Oh, they didn’t?? Gee.
?I guess it’s dead now & there was nothing useful in it in the first place.
looks like Joe, the weatherman, Lieberman saw which way the wind was blowing.? He’s a better forecaster than the furry caterpillar!
“The CBO says the bill is paid for in 10 years. Even if the government continued to collect the $27.4 billion for each of the next 10 years, that totals $274 billion ? far short of the $447 billion in spending.”
That’s the money line.? This would be a tax on middle class that ?bama and the Dems are always accusing the Republicans of wanting to impose.