Over the past few years President Obama has, almost to the point of nausea, preached that the rich need to pay more. He says that if the tax rates rise on the rich that the federal government will be able to use that money to pay down on our debt, and it will automatically mean more revenue will be coming into the federal government. So to challenge this argument I have done some research. I am not going to just use bumper sticker slogans and class warfare to get my point across, as the well versed politician Obama does. Rather I will use the facts to show:
1) THE RICH ARE ACTUALLY PAYING MORE AS A PERCENTAGE OF THE FEDERAL INDIVIDUAL INCOME TAX THAN THEY DID WHEN THE BUSH TAX CUTS WERE NOT IN EFFECT, NAMELY THE CLINTON YEARS, H.W. BUSH YEARS, AND REAGAN YEARS. The point is that, yes, the Bush tax cuts are to blame for our mess. But not for putting less of the tax burden on the tope 50% of earners, but for putting more of the burden on the top 50% of earners, and furthering the cradle to grave state for the bottom 50%.
2) That the individual income tax receipts of the Bush tax cut years were significantly higher than the Clinton years, therefore giving significant weight to my argument that in order to increase tax revenues, the labor participation rate needs to be increased and the tax base needs to be broadened rather than the brunt of the burden being placed on the rich as I am about to show you.
Between the years of 1980 and 2001, the bottom 50% of wage earners, paid on average, 5.6% of all federal income taxes. After the implementation of the Bush tax cuts in 2001, this is what happened to the percentage for the bottom 50%. Between the years of 2002 and 2010, the bottom 50% of wage earners paid on average, only 3.38% of all federal income taxes paid to the federal government. In 2010, the bottom 50% of wage earners only paid 2.36% of all federal income taxes collected. The top 50% of wage earners share of total federal income taxes collected in 1980 was 92.95%. In 2010 that number had ballooned to 97.64%. Any individual that is arguing that the cuts actually helped the rich more than the middle class or the poor is highly mistaken. Relatively speaking the middle class and poor have benefited more from the Bush tax cuts than the rich. As a percentage of their incomes, they have more take home pay than the rich. The bottom 50% of income earners actually paid $21 billion less in 2010 than they did in 2001, while the top 50% paid $85 billion more, and the top 1% paid $61 billion more, all during the same period 2001-2010. Between the years of 2000-2007, the top 1% of earners individual income tax rate increased 23%. So liberals explain to me again how the rich are paying less today than they did pre-Bush tax cuts. Now to my point, the Bush tax cuts did nothing more than allow the poor and lower middle class to receive tremendous amounts of benefits without having skin in the game. Everybody should pay some form of individual income tax, unless you do not work at all. The fact is that many people in this bottom 50% of earners group actually pay negative net income taxes. Meaning they receive more back in refunds than they pay. The Bush tax cuts are to blame for many of the freeloaders in our system today. If we are all in this together as Obama keeps spreading that socialist jargon, then if one persons rate go up, all rates should go up.
The individual income tax is the largest source of revenue for the federal government. The federal individual income tax has been the largest source of revenue for the federal government since 1950. Based on 2010 numbers, the federal government generated 42% of its revenue from the individual income tax. Now to the Clinton years. During the Clinton administration, the highest amount of federal individual income taxes collected by the IRS was $981 billion dollars. Now to the Bush years and the Bush tax cuts which should have effectively made government revenues decrease tremendously, right? Wrong! In fact, the federal government brought in over $1 trillion dollars in individual federal income tax revenue for the first time in our history. Not only did the federal government bring in $1 trillion dollars in federal individual income tax revenue, but they did it 3 years in a row (2006-$1.02 trillion, 2007-$1.112 trillion, and 2008-1.029 trillion). So when the Bush tax cuts were in full force, the revenue to the federal government (reminding you in good economic times, anything after 2008 will be affected by the great recession) was the highest it had been in the history of our country. I thought higher rates always meant higher revenues to the federal government. Seems not to be the case. Keeping tax rates where they are for everybody, or as a matter of fact lowering them for everybody would free up capital for job creators, and those that want to start a businesses. This would therefore increase the labor force participation rate back up into the 65%-66% range, rather than the abysmal 63% we are at now. More people working, means more people paying taxes and therefore more money to the federal government. Obama’s actions of providing more federal benefits is not doing anything to bring the job market back. It is doing nothing more than trapping lazy and once hard working people that would rather just get free food, healthcare, and livelihood, than go get a job. Putting more people on government benefits is not going to increase revenue to the government, therefore helping pay down our national debt, because less people are paying taxes.
With all that being said, the left wing and right wing media outlets are fooling you. They feed us these quick snippets of information because they (and the politicians) think we are too dumb to do our research and find out what is really going on. American voters have effectively become bumper sticker voters, that will faint because a man, such as President Obama utters the word “change.” Most are unfortunately, low information voters. The federal government does not need more money. The record high revenues during the Bush years show that SPENDING is the problem. The federal government was bringing in record setting revenue numbers and it could not even pay its bills then. We were still running fiscal year deficits in the hundreds of billions of dollars during our record setting revenue Bush years. If you do not think that spending is the problem just look to page 411 on the this link. http://www.whitehouse.gov/sites/default/files/microsites/ERP_2012_Complete.pdf.
This is President Obama’s Economic Report. Look at total federal outlays in column 2. Total federal spending under Bush went from an average of $2.7 trillion per FY between the years of 2006-2008, with an average FY deficit of $288 billion. Under Obama total federal spending skyrocketed to an average of $3.6 trillion per FY between 2009-2012, with an average of, get this $1.3 trillion FY deficits. If you do not think that our federal spending is the problem you are an idiot. Also, don’t blame it on the wars, we have been fighting them for quite a while now and have not even ran anything close to the deficits this incompetent President is running. The fact of the matter is that we have reached a threshold, where those receiving but not giving, have grown to a number exceeding the threshold of which the producers can live the American dream and support the takers at the same time. I don’t know about you, but I’ll take my American dream any day in that contest.
I do not like this trend because I expect and aspire to be in that top 50% one day. I still think that America is a land of opportunity. A place where you can be born nothing, and become a great success. Unfortunately, I do not think many of the bottom 50% of wage earners believe in that anymore. Otherwise, why would they be advocating tax plans which could possibly negatively effect them if they were to become part of the top 50% of wage earners? Either they believe they do not have what it takes to become great, or they believe that America is not that land of opportunity our fathers and grandfathers conquered. Many of them believe that the government can take care of them better than they can take care of themselves. Honestly, many of them are still children, and never grew up.