Obama’s $1.5 trillion in taxes on the rich will hurt the middle class most

Sen. Jim Demint
Sen. Jim Demint

Consider this editorial from senator Jim DeMint.

Excerpt:

Here are the facts.

Americans who make $200,000 or more a year make up about 3 percent of the country. Those 3 percent earn roughly 30 percent of our national income and pay 52 percent of all income taxes.

Raising taxes on these top brackets would mean that nearly 40 percent of all new tax revenue would be taken from hundreds of thousands of small businesses. About half of the top 3 percent, around 750,000 Americans, report business income on their personal returns.

The president talks about Warren Buffett, but his planned tax hikes would hit Mom & Pop businesses that employ your friends and family.

It boils down to simple economics. If we want the millions of jobs that small businesses create, then we cannot confiscate an even greater share of the incomes that generate those jobs.

When politicians talk about “the rich,” they want to conjure an image in your mind of an idle, entitled elite somehow exploiting the rest of us.  (That actually sounds more like the U.S. Senate.)

But the real picture is more like that of a man or woman who owns a small, local business, who started with little but has done well, and who now has a handful of employees with decent incomes and health insurance.

The fiction behind the “tax the rich” ideology is that these folks have extra money just lying around, and that the government can take a big chunk of it without harming anyone.

What the liberals fail to recognize is that the money isn’t just lying around, stuffed in a mattress.  It’s out in the world, growing the economy.  Rich people, like everyone else, put their money to productive use.

The top 5 percent of American earners account for 37 percent of all consumer spending, about as much as the bottom 80 percent put together.

The top 10 percent of families hold 64 percent of all major investment assets. Those making over $200,000 give 36 percent of all charitable contributions.

This is the heart of the liberals’ misunderstanding.  Raising taxes on America’s job creators who spend, invest and donate will punish  the middle class, not the rich.  It will hurt the local businesses they patronize, the companies they invest in, and the charities they support.

Money that used to create jobs, wealth, and opportunity will instead be sucked into the economic black hole of the federal bureaucracy, never to return.

The Bureau of Labor Statistics estimates that it costs businesses about $63,000 to create one job.  Put another way, every $63,000 in new taxes risks an American job.  And every $100 billion in tax increases – on the rich or anyone else – could threaten nearly 1.6 million jobs.

Now, who do you think loses those jobs?  Will it be “the rich,” or will it be the clerk at their grocery store, the mechanic at their gas station, and the receptionist at their dentist’s office?

Make no mistake: When the taxman aims at “the rich,” he ends up hitting everyone else instead.

Obama keeps talking about making people pay “their fair share”, so he has plenty of money to hand out hundreds of millions of bailout dollars to solar power companies linked to his Democrat fundraisers. But nearly half the people in this country don’t pay federal taxes. Are they paying their fair share? Why isn’t Obama going after them? Well, if what DeMint says is true, he will be going after them – but most of them don’t realize it.

There’s a reason why companies are not hiring domestically, but are instead expanding operations abroad, where corporate taxes are lower and regulations are less of a burden. Companies create jobs where they can make a profit. If the Obama administration attacks their profit-making ability, they will stop creating jobs here and move their production and capital elsewhere. Obama’s rhetoric isn’t going to change the way the world works.

4 thoughts on “Obama’s $1.5 trillion in taxes on the rich will hurt the middle class most”

  1. The most fundamental misunderstanding with these taxes is that they aren’t just taxes on the rich: “rich” means wealthy, not high income. If liberals really wanted to “tax the rich” they would be proposing a wealth tax, not an income tax rate increase for people with high income.

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  2. Half the people don’t pay federal income taxes – they still pay other federal taxes like FICA while still paying state taxes (unless you get low enough) and county/local taxes (school, property – even if you rent, this is factored in to rent as the landlord cannot eat these costs alone) and sales tax. If they drive, they pay gasoline taxes. The poor do pay a lot in taxes, there’s just not much left for federal income taxes.

    I do agree with Null – I think there is a huge misunderstanding between wealth and high income, especially if you’re self-employed or own your own small business (<50 people). Depending on how you have your corporation/business setup, it can look like you're making a lot more than you really are due to the legal requirements of how taxes are filed.

    I also like the idea on consumption (and luxury) taxes – we don't do enough of that here.

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  3. I think that President Obama’s tax attack on those who are most likely to succeed, invest, start new businesses, and create jobs is nothing more than nonsense. With an economy on the front end of another recession it certainly is not the best idea.

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