John Rossomando
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President Obama’s soak the rich strategy makes for good populist soundbites for his left-wing base, but it equals terrible fiscal policy.
“This is not class warfare – it’s math,” Obama said in his tax address.
But the truth is that Obama can’t add or subtract. If he or his staffers could do so they would have seen that the IRS’s tax data for the past 25 years shows that the Bush tax rate reductions caused income tax receipts from the top 10 percent to increase at a faster rate.
Tax receipts from the top 10 percent or those making in excess of $100,000, as defined by the IRS, almost doubled in the years following the 2001 and 2003 Bush tax rate reductions.
After the 1990 tax hike that cost George H. W. Bush re-election, taxes from top earners increased by 19 percent between 1991 and 1993, and their receipt into the treasury remained flat. The same remained true in the four years that followed the 1993 Clinton tax hikes, during which time receipts from the top 10 percent increased by 44.5 percent.
And Democrats who demagogue the Clinton tax hikes as an example of a great economy amid higher tax rates ignore the fact they were offset by the 1997 capital gains tax cuts. This contributed to the first balanced-budget in almost 40 years and the economic boom of the late 1990s.
This contrasts with the roughly 52 percent increase in the years between 2002 and 2007 before the onset of the current depression.
Income tax receipts increased by $270.6 billion in that same five-year time period compared with $258.2 billion between 1994 and 2001. After five years of the Clinton tax hikes, tax receipts from the top 10 percent of earners increased by only approximately $195 billion.
The Bush tax cuts also increased the top 10 percent’s tax burden from 41.7 percent in 2002 to 48.5 percent in 2007 – a roughly six percentage point increase. This contrasts with the 1993 Clinton tax hikes, which increased the top 10 percent’s burden by four percentage points from 39.1 percent to 43.1 percent.
The only thing Obama will accomplish with his tax plan is flatlining tax receipts from the top earners as happened after the 1990 and 1994.
I sincerely doubt that Mr. Obama has taken the time to read the IRS tax tables for a comparison of the effect tax hikes have on the money the federal government receives from the top 10 percent
If Obama really wanted to soak the rich, he would cut taxes on their incomes not raise them.
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