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With ‘millionaire tax,’ Obama engages in class warfare

6 mins read

The 2012 presidential campaign has officially begun. The goal is no longer to fix an economy that is on the brink of a double-dip recession; it is no longer to grow jobs and rebuild America’s middle class; and, it is no longer to do anything meaningful in an effort to reduce our national debt.

With an approval rating hovering at or below 40 percent according to Gallup, President Obama is on track to lose the 2012 election based on historical precedent. From now until Election Day, every word the president utters, every policy he proposes, every trip he makes, is about getting reelected.

This grand spectacle was on display Monday in the Rose Garden, where the President offered a $3.6 trillion deficit reduction plan. The plan, complete with $1.5 trillion in revenue increases (meaning higher taxes), has no realistic chance of passing Congress. Republicans, as well as centrist Democrats like Sen. Ben Nelson (D-NE), have said they will oppose any legislation that raises taxes.

In fact, it would be hypocritical for the president to sign the increases following his 2009 statement that “you don’t raise taxes in the middle of a recession.” But, as I already mentioned, the president knows this deficit reduction plan will never make it to his desk. Although the administration denies it, Obama is playing the class warfare game to drum up popular support for the unpopular commander-in-chief.

Take the “Buffett rule” the President discussed in relation to the package, named for the multi-millionaire businessman who wrote an op-ed in the “New York Times” arguing for higher taxes for people like himself. Obama wants to make millionaires pay the same top thirty-five percent on their capital gains that is the top rate on other income. “The Atlantic” (hardly a conservative publication) noted that this floor on tax rates would actually not raise a significant amount of revenue. They calculated that this would raise $37 billion for the government (using 2009 numbers), which amounts to only 2.5% of the $1.5 trillion deficit the government faced that year.

According to Larry Kudlow writing in “Investor’s Business Daily,” the entire logic behind the proposal does not hold up. Both Buffett and Obama claimed that Buffett pays a lower rate than his secretary, when the reality is most millionaires pay about a thirty percent rate on all their income and the middle-class pays a 20 percent rate.

Buffett is using tactics that allow him to have “unrealized capital gains” and avoid paying taxes on the majority of his income, according to Kudlow. This is not the reality for the majority of millionaires who would be subject to Obama’s “millionaire tax.”

Couple these facts with the data that suggests lowering the capital gains tax, as many Republican presidential candidates have proposed, actually increases revenues. And raising the capital gains tax actually decreases revenues.

Why would Obama suggest the “Buffett rule,” then?

It is a class warfare tactic that the administration is using to score cheap political points. Plain and simple.

Also included as part of the revenue increases are allowing the expiration of the Bush tax cuts, in addition to other tax reforms. These include reducing allowed deductions for the people making over $200,000, causing more tax increases on the “wealthy.”

The President said that the wealthy need to take more of the burden on their backs. He forgets that the top one-percent of income earners pay forty percent of the income taxes. Fifty percent of wage earners do not even pay any income tax.

In the economy we are in today, we need the wealthy to invest their money in production so more jobs can be created and the economy can get moving again.

But, this policy argument is not worth it considering that Obama is never planning on his deficit reduction plan getting to his desk. This is the same situation with Obama’s nearly $500 billion jobs package he proposed to a joint-session of Congress two week ago. It is all about a campaign strategy to paint Obama as the man of the middle class and congressional Republicans as inhibiting the president’s middle class agenda.

I am tired of strategy. I am tired of the political games that go on in Washington just to keep politicians in office. Mr. Obama’s 2008 campaign was all about “hope, “change,” and bringing a different kind of politician into the White House. We are so far from that at this point. Obama has become a creature of Washington, and the most partisan president in the history of these United States.

Engaging in “class warfare” is not the solution to our problems. If anything, it is the theme of Obama’s doomed 2012 campaign.

Tyler is a sophomore. He can be reached at tbecker1@swarthmore.edu.

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