Raising Hackles Over Rising Taxes

Even for a president known for his dunderhead economic ideas, it was stunning to watch Barack Obama stump for raising taxes to the tune of $1.5 trillion to reduce the deficit. In a futile attempt to defend his soak the rich plan, the president dredged up feckless justifications.

Obama bellowed that it wasn't fair that secretaries coughed up more money for taxes than millionaires and billionaires, borrowing a line from gazillionaire Warren Buffett. There was only one problem with the Buffett-Obama assertion. It is factually incorrect.

Households earning more than $1 million pay an average of 29.1 percent of their income in federal taxes, while those with incomes of $50,000 pay an average of 12.5 percent. The numbers clearly underscore the fallacy of the president's argument about tax fairness.

According to the Congressional Budget Office, 10 percent of the households with the highest incomes pay more than 70 percent of federal income taxes. Meanwhile 51 percent of Americans pay no federal income tax. Where is the fairness in that?

Those aren't the only flaws with the president's wrong-headed plan. Obama claimed that his tax increases were aimed at millionaires and billionaires. However, his proposal actually would lift federal taxes for individuals with $200,000 and above in income.

There is ample evidence to suggest that raising taxes on any group while the economy sputters is a prescription for economic disaster. Instead of raising government revenue, a tax hike likely would have the opposite effect because it would cripple job creation thus worsening the economy and suppressing wage growth. Total tax revenue will decline under that scenario.

A robust economy is the most reliable way to fuel more jobs. However, the nation's economic growth in the most recent quarter was an anemic one percent. That followed growth of a puny 0.4 percent in the first quarter. Increasing taxes will strangle the tiny economic development the country has experienced.

Increasing taxes will stifle small business job growth. One-half of individual and household incomes above $250,000 annually are attributable to small businesses revenue. These firms create more than 60 percent of all new jobs in the economy. Raising taxes on these individuals will leave less money for them to invest in their firms.

Under the president's plan, higher taxes also would apply to investment partnerships. The tax will be acutely felt by real estate and oil and gas developers. That will quell capital deployment among small business partnerships in these industries, further suffocating job growth.

In addition, the president's plan targets tax-exempt income from municipal bonds issued by states and cities. By reducing the tax benefits for individuals, these bonds will become a less attractive investment. As a result, infrastructure projects, often cited by the president as job creators, will lack proper funding.

Despite the adverse economic impacts, the Obama-controlled media has swept these obvious deficiencies under the rug and donned a cheerleader outfit to extoll the benefits of forcing the wealthy to pay an even higher portion of their earnings to the government.

Unfortunately, there are too many Americans who think confiscating more money from the rich will solve the country's debt problems. Even if everyone earning $200,000 and above were taxed at 100 percent of their income, it would hardly make a dent in nation's $14 trillion debt.

America does not have an income problem. The country has a spending problem. Even the economically illiterate should be able to understand that. Too bad that logic still eludes the president.