Democrats want tax hikes to be the first item negotiated in “super committee” deficit-reduction talks, trying to force Republicans to confront an issue at the heart of this year’s budget fights, sources told Reuters.
The tough stance by Democratic members of the powerful 12-member congressional panel reflects the party’s wariness that Republicans might try to sideline the issue of revenue increases in the negotiations.
“They’ve raised the idea of doing taxes first,” a Republican aide involved in the discussions said on Friday on condition of anonymity.
Heh, when I first read this on Saturday afternoon, I couldn’t help but laugh… Democrats are as predictable as sunrise, they’ve spent the last several years demonizing “the rich” and trying to divide us along racial, cultural, socioeconomic lines. The numbers however tell a different story:
In 2007, 390,000 tax filers reported adjusted gross income of $1 million or more and paid $309 billion in taxes. In 2009, there were only 237,000 such filers, a decline of 39%. Almost four of 10 millionaires vanished in two years, and the total taxes they paid in 2009 declined to $178 billion, a drop of 42%.
Those with $10 million or more in reported income fell to 8,274 from 18,394 in 2007, a 55% drop. As a result, their tax payments tanked by 51%. These disappearing millionaires go a long way toward explaining why federal tax revenues have sunk to 15% of GDP in recent years. The loss of millionaires accounts for at least $130 billion of the higher federal budget deficit in 2009. If Warren Buffett wants to reduce the deficit, he should encourage policies to create more millionaires, not campaign to tax them more.
The millionaires who are left still pay a mountain of tax. Those who make $1 million accounted for about 0.2% of all tax returns but paid 20.4% of income taxes in 2009. Those with adjusted gross income above $200,000 a year were just under 3% of tax filers but paid 50.1% of the $866 billion in total personal income taxes. This means the top 3% paid more than the bottom 97%. Yet the 3% are the people that President Obama claims don’t pay their fair share. Before the recession, the $200,000 income group paid 54.5% of the income tax.
The “rich” as defined by President Obama and Democrats in congress are a very small majority of tax filers who already pay a disproportionate share of the total federal income tax bill. The notion that we solve our budget problems by raising taxes on that small majority is nuts.
I’m not saying we shouldn’t look at the revenue side, what I am saying have to do it in a comprehensive way that a) broadens the tax base and b) flattens tax rates… There just aren’t a enough “rich” people that can be taxed at a high enough rate to make a significant difference on difference on the revenue side.
The government has to cut spending and make comprehensive reforms to the tax… in short we need more people paying taxes, simply shifting more and more of the burden onto a small minority of taxpayers isn’t going to solve our budget problems.
- Recession Is the Outlook, Despite Manufacturing Report – Larry Kudlow, The New York Sun