- Obama and his public relations team have made it appear
that his trillion dollars in higher taxes will fall only on "the rich."
Obama stresses that his tax increase is only for the richest 5 percent
of Americans while the other 95 percent receive a tax cut.
-
- The fact of the matter is that the income differences
within the top 5% are far wider than the differences between the lower
tax brackets and the "rich" American in the 96th percentile.
-
- For Obama, being "rich" begins with $250,000
in annual income, the bottom rung of the top 5 percent. Compare this "rich"
income to that of, for example, Hank Paulson, President George W. Bush's
Treasury Secretary when he was the head of Goldman Sachs.
-
- In 2005 Paulson was paid $38.3 million in salary, stock
and options. That is 153 times the annual income of the "rich"
$250,000 person.
-
- Despite his massive income, Paulson himself was not among
the super rich of that year, when a dozen hedge fund operators made $1,000
million. The hedge fund honchos incomes were 26 times greater than Paulson's
and 4,000 times greater than the "rich" man's or family's $250,000.
-
- For most Americans, a $250,000 income would be a godsend,
but envy can make us blind. A $250,000 income is not one that will support
a rich lifestyle. Moreover, many people prefer lesser incomes to the years
of education, long work hours and stress of personal liability that are
associated with many $250,000 incomes. In truth, those with $250,000 gross
incomes have more in common with those at the lower end of the income distribution
than with the rich. A $250,000 income is ten times greater than a $25,000
income, not hundreds or thousands of times greater. On an after-tax basis,
the difference shrinks to about 6 times.
-
- The American tax code taxes the $250,000 income at the
same rate as it taxes a $100,000,000 or higher income. On an after tax
basis, after the federal government grabs 30% in income taxes and state
government grabs 6%, the "rich" man or woman or family earning
$250,000 has $160,000. In New York City, where there is a city income tax
in addition to state and federal, this sum diminishes further. State sales
taxes take another 6 or more percent of most consumption expenditures.
-
- When all is said and done, the after-tax value of a $250,000
income in New York City is about $140,000.
-
- Is this rich? It might be in a small town in Alabama,
but not in New York City. The "rich" person or family won't be
purchasing a Manhattan apartment, much less a brownstone. They won't be
driving a luxury car. Indeed, they won't be able to afford a parking garage
for an economy car. If they fly anywhere, it won't be in a first class
seat.
-
- For the most part, $250,000 incomes are located in large
cities where the cost of living is high. For example, a husband and wife
who are associates at major law firms, each of whom works 60-hour weeks
and has no job security, earn $125,000 each. They might both have student
loans to pay down. For the Obama administration to lump these people in
with Hank Paulson or billionaire hedge fund operators is propagandistic.
-
- What is the difference between the $250,000 "rich"
income and the $245,000 "non-rich" income? After Obama's tax
scheme goes into effect, the $245,000 income will benefit from a tax cut,
and the $250,000 will have a tax increase. Will people in the 96th percentile
ask for pay cuts that will drop them into the 95th percentile?
-
- In America, the truly rich are those in the top 0.5%
of the income distribution. These are the people with yachts, private airplanes,
and who are still rich after they lose half their wealth in a stock market
collapse caused by government policy that accommodated financial gangsters.
-
- "Oh well, I was worth $600,000,000 last year and
only $300,000,000 this year. Perhaps we should stop drinking $1,000 bottles
of rare vintages and move down to $100 a bottle wines. Probably shouldn't
buy that new yacht or that villa in the south of France."
-
- The upper middle class with $250,000 gross incomes are
major losers of the financial collapse. Many of the people in this income
class are leveraged to the hilt in order to maintain appearances and can
be swept away as easily as the very poor. But those who were frugal and
invested for their future have lost 50% of their savings. These wiped out
people are the ones who will bear the brunt of Obama's tax increase.
-
- If the tax rate on a multi-million dollar annual income
goes up by 5 percentage points, the cutbacks won't really affect the lifestyle.
But for the $250,000 gross income group, it means no prospect of private
schools and Ivy League education for the children, who will be attending
state colleges with the rest of the non-rich.
-
- Obama is attacking the only income class that has any
independence the upper middle class professionals. The real rich
are few in number and seldom present any opposition to government. Recently,
the New York Times reported (March 23, 2009) that the 400 richest Americans'
"share of the nation's total wealth has nearly doubled to more than
22 percent." The average income of the 400 richest Americans is $263
million annually. That is 1,052 times the income of the "rich"
$250,000 income.
-
- What the Obama administration is really doing is taxing
ordinary people in order to bail out the super rich. The 95% of Americans
who get the tax cut will find that it is offset many times by the depreciation
in the dollar and the raging inflation that will result from monetizing
the multi-trillion dollar budget deficits made necessary by the bailouts
of the banksters.
-
- In the United States, government has become expert at
manipulating both left-wing and right-wing ideologies. It keeps those on
both ends of the spectrum set at each other's throats in order to ensure
the government's continuing independence from accountability.
- Historically, the definition of a free person is a person
who owns his own labor. Serfs were not free, because they owed their feudal
lords, the government of that time, a maximum of one-third of their labor.
Nineteenth century slaves were not free, because their owners could expropriate
50% of their labor.
-
- Today, no American is a free person. The lowest tax rate,
not counting state income, property tax and sales tax, is 15% Social Security
tax and 15% federal income tax. The "free American" starts off
with a 30% tax rate, the position of a medieval serf.
-
- In medieval Europe, when tax rates reached beyond 30%,
serfs rebelled and killed their masters.
-
-
- Paul Craig Roberts [send him mail] a former Assistant
Secretary of the US Treasury and former associate editor of the Wall Street
Journal, has been reporting shocking cases of prosecutorial abuse for two
decades. A new edition of his book, The Tyranny of Good Intentions, co-authored
with Lawrence Stratton, a documented account of how Americans lost the
protection of law, has just been released by Random House.
-
- Copyright © 2009 Creators Syndicate
|