Category Archives: Barack Obama

Who’s Really Not Paying Their “Fair Share”?

If I had to pick one thing that has been annoying me most about our President’s speeches recently, it would have to be his use of classist rhetoric to blame our government’s economic failings on the wealthy in our country. Last night’s State of the Union, to no one’s surprise, included his tagline complaint that some aren’t “paying their fair share”. Although on the surface it should be obvious that there is no logical reason to believe this anti-rich rhetoric, it hasn’t stopped a lot of people from doing exactly that, so I decided to look into it a little more depth. In all reality, all of President Obama’s anti-“rich” tax speech can be boiled down to two questions.

1- Who are the “rich” in our society? and 2- Do they pay their “fair share”?

1- The first question has had a few different answers over the past few years, but the only answer that matters right now is what the president thinks “rich” means. President Obama has been calling for a tax increase on all families making over $250,000 a year and an even more significant increase on people earning over $1,000,000 a year. The president has said this would leave taxes the same for 99% of families. Unfortunately, that’s just false. $250,000 a year may sound like a lot to you or me, but it doesn’t put you in the top 1% of taxpayers. It takes an annual income of $380,354 to be one of top top 1% (or $343,927 depending on the recent year of IRS stats you use). It used to be quite a bit higher before the recession hit hard, in 2007 it was $424,413, but it has been on the decline while the economy suffers. So here’s my first big issue with the President’s rhetoric: It’s founded on one blatant lie and one implied one. The first is that it will only affect the top 1% of taxpayers, which as you can see is just not true. Are these people still in the highest brackets of income? Yes, but the impact of the tax increases will not be not near as isolated as the President tries to make it sound. The second, more subtle, lie is that the “rich” have not been affected by the tough times our country is going through and therefore can afford to pay more taxes while the rest of us are suffering. That’s also clearly false, as is evidenced by the drastic decline in the amount of earnings it takes to be in the top 1%. There’s also the underlying concern I have with saying that anyone that makes more than $250,000 a year is rich. You and I all know people, probably a lot of them, that make more than that and most of them don’t qualify as rich in my book. They don’t own private planes, drive Lamborghinis, or have a vacation house on the beach. Depending on where you live, $250,000 a year might not even cover a nicer than average house. The $250,000+ a year is a category that a lot of your friends may fall into. Many small business owners, attorneys, physicians, realtors, and other professionals may be in this income category. These people make a good living, but they’re not isolated from the effects of a bad economy and they still have to go to work to make ends meet. They’re not sitting around counting their money or living purely off investments, they put years into building their businesses and practices to make a good living and presumably work hard for their money. More importantly is that these are the people that hire the rest of us. They invest in their businesses and by doing so allow many of us to earn a paycheck. If we increase their taxes, do you honestly believe that is going to help create more jobs? Even if we only increased the taxes on the “wealthy” that make millions a year and are job creators on a much larger scale, the logic still stands: Business owners don’t hire more people when you take more of their money away each year. Since many people agree that the most important part of getting our economy back on track is getting people back to work, why are we suddenly attacking these people as not paying their fair share?

2- Is it because there is some truth to the President’s claim that they aren’t paying their fair share? He has been quite willing to have Warren Buffett, one the wealthiest men in the world, use the media as a way to promote the “rich should pay more” message and build resentment against the “rich” that disagree with his view. If Mr. Buffett thinks the rich should pay more taxes those that say they already pay their fair share are just being greedy, right? Surely one of the wealthiest men in the U.S. wouldn’t be offering to pay more taxes if there wasn’t some system in place favoring the “rich” Obama is rallying against, correct? Wrong. Warren Buffett is the third richest man in the world with a net worth of $50 billion dollars. In 2010, he made nearly $63 million in income. He has said in the past his effective tax rate is around 19% and that he should pay more taxes. His lower tax rate, much like Mitt Romney’s, is because his income doesn’t come from a paycheck each year like most Americans, or even most of those earnign over $250,000 a year, but from investments. This is the first critical point that people need to understand- increasing income taxes won’t affect Warren Buffett, Bill Gates, or even Mitt Romney much at all, it will just hurt those that rely on paychecks to make a living. So why is President Obama using Warren Buffett to justify increases in income taxes? Well… I don’t know of any reason that doesn’t assume we’re idiots or have purely political motives. But even if the tax increases were going to affect him, Warren Buffett has as little in common with someone earning $250,000 a year as a person earning $250,000 a year does with a homeless person. His annual income is 252 times that of what President Obama is classifying as rich. To put that in context, the family earning $250,000 a year makes five times the average household income of $50,221. Who do you think they feel closest to on the income scale- Mr. Buffett or the average family? To answer this “are they paying their fair share” question though we need to use some real numbers, not fight rhetoric with rhetoric, so here goes… In 2009, the top 50% of Americans, those earning over $32,396 a year paid 97.75% of ALL taxes. The top 10%, (>$112,124) paid 70.47% of all taxes. The top 5% (>$154,643) paid 58.66% of all taxes, and the top 1% (>$343,927) paid 36.73% of ALL taxes. So if you earned between $32,396 and $112,124, you make up 40% of Americans that pay 27% of all taxes. If you made less, you make up 50% of all Americans that pay 2.25% of all taxes. For the graph lovers among us, here’s a pie chart: Total Taxes Paid by Income

So there you have it, a total breakdown of who pays the bulk of the taxes under current laws. The top 1% of people pay 37% of all our country’s taxes, and the top 5% pay nearly 60% of all the taxes each year. But is what they’re paying “fair”? That’s a much more difficult question that has no objective answer, so I’ll turn to historical data to give us a better idea of what these people have paid over time.  Below is a chart showing the effective household tax rates for the past 30 years:

Houshold Effective Tax Rates

As you can see, the highest earners have seen a mild drop in total taxes when compared to 1979 numbers, but they have not enjoyed as much of a drop in effective tax rates as any of the other quintiles over the past 30 years. Yet they’re the ones being targeted. If anything, the nearly half of Americans who pay no net income taxes should look up the definition of the word “fair” in the dictionary before complaining about how much the rich pay. The highest earners pay the highest effective tax rates among American families and pay over half of all our country’s tax income. So what gives?

If the President wants to increase taxes on the rich (a mistake, in my opinion), he shouldn’t be doing it on the premise that they’re not paying their fair share or are somehow eluding paying their taxes- the numbers clearly show they pay more taxes than the rest of us combined and have the highest effective tax rates. He also shouldn’t be using billionaires who don’t pay any significant amount of income taxes to justify raising taxes on those that do rely on a paycheck for a living. Investment income and paycheck income aren’t taxed the same (the theory has always been that we like to encourage people to invest their money, not punish them), so why are Mr. Buffett and President Obama pushing these proposed increases on the working “rich” who pay income taxes using investment income as the example? If someone as unimportant as me can demonstrate his premise to be wrong, then imagine what his political opponents can do. Call it what it is- a “we’re broke so we’re going to punish the people that make the most money to pay for our lack of budget skills” tax increase. The use of anti-rich rhetoric and playing off the sympathies for the Occupy Wall Street movement is nothing more than an attempt to incite class warfare in an election year and the Obama campaign team knows it. The populist tone has been a theme of the campaign from day one, but at least it was based on happy, if somewhat empty, ideas like “hope” and “change”. Now that they need someone to blame for the mess they and their predecessors have gotten our country into, they’ve decided to pick up their pitchforks and torches and go after the so-called rich under the illusion that it’s somehow partly their fault because they’re not paying enough right now. If the President thinks punishing the people that generally hire the rest of us and stimulate the economy is the best way to pay for our country’s irresponsible amount of debt, so be it, but let’s not pretend it’s because they’re not paying their fair share.

-Matt

All tax data used in this post comes from the Internal Revenue Service. If you’d like to look at some of the data yourself, the IRS and the Tax Policy Center are good resources.

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Filed under 2012 Election, Barack Obama, Economy, Politics

Does media bias exist against Ron Paul, for Romney, and for Obama? My response to Beer Barrel Politics:

Today another political blog called Beer Barrel Politics posted a graph and short reflection about the Media “Bias” in politics. I enjoy reading their posts and though it would be interesting, but their take on this troubled me simply because the way they interpreted that graph is part of the problem with our country right now. We like to jump to snap conclusions based off very little information or just enough information to agree with what we want to believe regardless of what more adequate information would actually show us. You can view their post and graph here: http://beerbarrelpolitics.wordpress.com/2012/01/21/media-bias-in-one-chart .

The quote that they summed up their graph with was:

“Here are some common perceptions that this graph dispels:

1) Ron Paul gets abused by the media, is treated unfairly, and does not get the respect he deserves.

2) The media loves establishment politicians like Romney.

3) Back Obama is beloved by the media, and gets disproportionately positive coverage.”

This graph is interesting, but it doesn’t dispel any of those perceptions simply because the sample size is far too small to claim those perceptions are false or unreasonable. One week of coverage is not nearly enough to claim people that believe any of those perceptions are wrong. I don’t necessarily agree or disagree with any of those perceptions, but let me give three quick reasons you don’t address with a one-week graph that those things might be true:

1– Ron Paul has received much more positive coverage in the last few weeks since his strong showings in Iowa and New Hampshire than I’ve ever heard before. However, I, like many others, have heard him repeatedly dismissed as a “fringe” candidate and “unelectable” by a variety of political media pundits.I was actually a Paul supporter back in the 08 primaries and all I heard from the pundits and anchors back then was how he wasn’t a realistic candidate, if they remembered to mention him at all. Being ignored totally in a process where name recognition is so crucial could certainly be considered negative by some people. In fact, until recently, was notorious for being ignored at debates. I think a graph showing the amount of time each candidate spoke at a debate, or the number of questions they were asked, would be more relevant to the Ron Paul perception, otherwise you need data going back pre-2008 showing the same information.

2– During the last couple weeks the Bain Capital stories and issues about Romney’s taxes have been hot topics, so of course the press about him is mostly negative recently. That doesn’t mean it always has been. Romney has long been viewed as the “inevitable” candidate by the media due to his resources and name recognition, and I find it hard to believe that having almost all of the media calling you the likely nominee and talking about your future campaign against Barack Obama like the primaries have already been decided isn’t positive coverage. Based off what I’ve seen about Romney in the press over the last several months, the media has spent a lot more time talking about the strength of his campaign than they have criticizing it. Having major news networks proclaiming you the likely/probable/inevitable/etc. nominee is certainly good news for your campaign (although the Romney camp has done a very poor job at capitalizing off of that), but more importantly it is bad news for all the other candidates who then have to spend time proving they’re still competitive to undecided voters. Causing his opponents to have to spend extra time and resources explaining how well they’ve actually been doing in the polls compared to Romney and trying to tear down that aura of inevitability surrounding his campaign is certainly a good thing for Romney, regardless of whether you consider that positive coverage or not. That doesn’t mean they “love establishment politicians”, but it does seem to indicate they don’t find a lot to criticize about Romney himself that they can turn into media friendly soundbites.

3– For your Obama perception you would need media coverage that covers the last four years. President Obama’s level of media appeal and charisma have been declining pretty much since he took office and as such the media has much less incentive to talk about him in a positive light. With his current approval ratings and an upcoming election, I wouldn’t expect there to be a lot of positive press for Obama this year, but that doesn’t mean you’re correct in saying that the perception that the media likes Barack Obama is false, just that the energy, passion, and rhetoric the media seemed to like so much in 2008 is gone and as such they don’t spend time talking about it. I don’t know if the media is pro-Obama or not, but I think that he’s going to have a much harder time in 2012 campaigning on warm fuzzy feelings and completely abstract (and I’d argue mostly empty) promises of “hope” and “change” when the media has spent the last few years reminding Americans how bad the economy is and running stories about his promises that didn’t happen or didn’t work like he’d hoped they would. I think the media will actually be a stumbling block to his reelection campaign, but that has more to do with current events than the way they have portrayed him in the past. There’s simply not enough information in the graph to have any influence on that perception.

The bottom line is this: I don’t have the necessary data to go through and counter your graph or I would out of curiosity, but a graph covering six days of data has little to no bearing on any of those perceptions. If you visited Little Rock this past week and saw it was in the 50s and 60s all week, you might say “Well that just dispels the perception that it actually gets cold in the winter down here.” and although your observation is true for this tiny window of time, it’s certainly false overall. I appreciate the time you put into your posts and the graphs are always fun, but making blanket statements based off too little data never leads to good results. You may think those perceptions are illogical, but your attempt to dispel them is equally so. You can’t put sanity back into politics without being informed, and you just don’t have enough information here to tell all these other people they’re wrong.

-M

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Filed under 2012 Election, Bain Capital, Barack Obama, Candidate, GOP, Paul, Politics, President, Romney, Ron Paul

Why I Watch Debates and You Should Too…

Earlier today I commented to an acquaintance that I planned on watching tonight’s GOP Debate, to which they responded:

I think debates are useless for party-faithful.  They’re more useful for “independents” who don’t know jack about what’s going on and vote based on candidates image.

This wasn’t the first time I’d heard statements like this, so I had to explain to him why debates actually matter in the process of choosing a nominee. Simply put, I disagree on both counts. I am one of the (some would argue naive) people that actually is trying to see if potential candidates can actually back their platforms and get a sense for how they would perform under pressure. I don’t care for Obama as a president much at all, but I’m also not willing to vote for some random guy off the street just because he isn’t Obama, which is what some of the Republican candidates seem to be banking on. I’m paying as much attention to debates as possible and if a potential candidate can’t defend their positions, comes across as clueless, or just seems like the same empty suit toting the party-line rhetoric, they’re not going to get my interest or support. I think the debates serve a pretty important purpose when it comes to seeing how the candidates interact with each other, defend (or don’t) their positions, and respond to criticism. I don’t really consider myself an independent, but I don’t think being as informed as possible about your potential options is a useless exercise. 


The first step towards putting some sanity back into politics is to actually pay attention to what is going on. If you’re not making sure you do enough research into a candidate, especially someone you are trusting to run the country for four years, to have some real concrete reasons for voting for them you’re part of the problem with the US and our political system in general. Don’t vote for a candidate based off 30 second TV ads. Don’t vote for a candidate because of the party letter by their name. Don’t vote for a candidate because they use some flashy rhetoric that makes you feel good. Do your research. Know the issues and where you stand on them. Vote for someone you think represents those issues. Democracy only gets good results when you are an informed voter. There’s no room for laziness.

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Filed under 2012 Election, Barack Obama, Debates, GOP, Politics, President