Obama’s False, but Seductive Solution

In the United States, one must not look for political logic (in the noble sense of the term) behind the candidates’ proposals.

In the United States, as well, one must not look for political logic (in the noble sense of the term) behind the candidates’ proposals.

The important thing is not to propose solutions to the alarming problems at hand; the important thing is to make voters believe that symbolic, simple measures will painlessly resolve the problems that worry them.

America’s best example of this illness, which falsifies the democratic process, is President Obama’s determination to increase the marginal tax rate of those who derive the majority of their income from capital gains.

One starts by provoking the anger of the average voter by explaining to him that he pays more taxes than the very rich.

This is false, but no matter.

In order to get away with this outrageous idea, Barack Obama explains, with the talent and smiling ease that he is known for, that the effective tax rate of the 22,000 households that declared an income of at least one million dollars in 2009 was less than 15 percent.

The second argument, destined to shock the naive voter, consists of explaining that the middle class is taxed at higher rates. To illustrate this argument and to make it more believable, the president cites Warren Buffett. The wealthy investor, who is a financial contributor to Obama’s campaign, has reiterated for years that his tax rate is less than his secretary’s.

The conclusion: Barack Obama proposes the “Buffett Rule,” which requires that all millionaires be obligated to pay at least 30 percent of their income to the Internal Revenue Service.

Naturally those in opposition to this apparently simple, equitable and reasonable rule can be nothing less than horrible capitalists, enemies of the middle class, profit-thirsty and contemptuous of the difficult condition in which lower class Americans find themselves.

And most of all, any person who opposes the Buffett Rule could not possibly be a true patriot. Indeed, to reduce the budget deficit, is it not urgent that the rich pay more?

There you go. The demonstration is complete. Obama is a nice, reasonable president. The Republicans are malicious profiteers, insensitive to the elementary principles of social justice.

The problem: Reality is not at all as the White House has described it.

First of all, half of the poorest Americans do not pay any income tax. Barack Obama especially wants to avoid this incontrovertible fact in any discussion regarding fiscal fairness.

Second, the average effective federal income tax rate for the average American is 11 percent. The average effective tax rate on those declaring an income of at least one million dollars is 25 percent. The average effective tax rate on those declaring between $200,000-500,000 is 19 percent. By mixing up tax rates and tax brackets, one can create the illusion of gross inequality.

Third, the federal taxation system is already very progressive. 40 percent of tax revenue comes from the wealthiest one percent of taxpayers; nearly 100 percent of revenue comes from the wealthiest 20 percent.

Fourth, the “Buffett Rule” would garner $47 billion for the IRS over the course of 10 years… and this estimate is not disputed by the president.

In general, millionaires already pay much more than the middle class in proportion to their income. The rule set forth by Obama would barely raise the effective tax on the rich.

Let us remember that the federal budget deficit in a single year exceeds one trillion dollars! Therefore, the fight against deficit and debt would require measures much more serious than one that brings in $47 billion over 10 years.

The solution is not in taxation of the rich, as proposed by the incumbent president. Or, if it is, it would require taxation to reach “European” levels of 50 percent or more.

As no one — even among the Democratic Party — dares to propose, the solution lies, alas, in heavier taxation of the middle class. This group comprises the majority of the population, and this is where one finds money.

Taxing the rich is a much more spectacular campaign slogan than it is a practical solution to the problem of overwhelming debt in the United States. In addition, this solution will bypass the reduction of public expenditure, including social benefits (retirement and health) that are totally unchecked and even automatic (meaning they are not voted on by Congress).