New Fox News piece: Obama Gets the Numbers Wrong In His Tax Plan!
My newest piece at Fox News starts this way:
The justification for President Obama's new proposed tax on the wealthy is wrong on the numbers. Despite the president's claims, millionaires don't pay lower tax rates than middle class workers. His proposed surcharge on capital gains and dividend taxes will raise already high tax rates on high income individuals and force even more investment outside the United States. The so-called "Buffett rule" is based on Warren Buffett's claim:"The 400 of us [here] pay a lower part of our income in taxes than our receptionists do, or our cleaning ladies, for that matter. If you’re in the luckiest 1 per cent of humanity, you owe it to the rest of humanity to think about the other 99 per cent.”
It is true that the 15 percent capital gains and dividend tax rates are lower than the marginal income tax rate paid by a lot of workers. Of course, this ignores that because of deductions the average tax rate for the middle class is much lower than the marginal rate. . . .
UPDATE: Obama is still claiming that the wealthy pay lower tax rates than the middle class.
"If asking a billionaire to pay the same rate as a plumber or a teacher makes me a warrior for the middle class, I wear that charge as a badge of honor. I wear it as a badge of honor, because the only class warfare I’ve seen is the battle that’s been waged against middle class folks in this country for a decade now."
Labels: book, ObamaDishonest, obamadoesntunderstandeconomics, op-ed
posted by John Lott at 11:09 AM
2 Comments:
Nice try John - but you're not being entirely honest either. Capital gains is the realized "gain" in the value of a held asset when it is sold. That is not the company's income. A company's stock value can multiply and the company not pay any tax - can anyone say General Electric?
Dear Sheep Goat:
Thanks for the comment. But if the company keeps money rather than pay it out, the value of the stock rises by the amount of money kept. Think of it this way, everything else equal, if a company keeps more cash on hand, what happens to how much more someone else is willing to pay to buy the company? As the value of the stock rises, the capital gains tax that you have to pay goes up, right? GE didn't pay taxes largely because of prior loses. The same thing happens with your own taxes. If you lose a lot of money in selling assets, you can spread out the losses over multiple years. If your losses are large enough, it is possible that it can offset most or all of your income. You thus have a positive income during one year and don't pay taxes, but when you consider your income over a couple of years you wouldn't have had a positive income.
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