More False Claims from Obama About Taxes and Spending

by Hans Bader on September 21, 2011 · 2 comments

in Economy, Stimulus to Nowhere

The Associated Press fact checkers say that President Obama misstated the facts when he erroneously claimed that middle-class people pay higher tax rates than millionaires and billionaires, and that Obama was misleading when he suggested that millionaires are taxed at lower rates than their secretaries.

As the AP notes, “On average, the wealthiest people in America pay a lot more taxes than the middle class or the poor, according to private and government data. They pay at a higher rate, and as a group, they contribute a much larger share of the overall taxes collected by the federal government. The 10 percent of households with the highest incomes pay more than half of all federal taxes. They pay more than 70 percent of federal income taxes, according to the Congressional Budget Office.” By contrast, “46 percent of households, mostly low- and medium-income households, will pay no federal income taxes this year.”

Obama’s misleading class-warfare rhetoric seems to be designed to divert attention from his failure to come up with any meaningful plan to trim skyrocketing deficits or wasteful government spending.

Meanwhile, reported The Washington Post, “independent budget experts said the blueprint that Obama unveiled Monday” to supposedly cut the deficit “appears to fall short of his target. The plan also relies on an array of well-worn budget ploys that do little to advance the cause of bipartisan cooperation in taming the nation’s spiraling debt, the experts said. . .The latest Obama plan ‘doesn’t produce any more in realistic savings than the plan they offered in April,’ said Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget. “They’ve . . . repackaged it and replaced one gimmick with another. They don’t even stabilize the debt. This is just not enough.’ The most disheartening development, MacGuineas and others said, is Obama’s decision to count $1.1 trillion in savings from the drawdown of troops in Iraq and Afghanistan toward his debt-reduction total. Because Obama has no intention of continuing war spending at last year’s elevated levels, that $1.1 trillion would never have been spent.”

Obama’s proposed “Buffett Tax,” which was based on false claims about how much taxes the wealthy pay, would raise less additional revenue than he claims while reducing the size of the economy and enriching tax lawyers and accountants by complicating the tax code.

Obama has made many other false claims about taxes and spending in the past, thereby breaking campaign promises.  He flouted his campaign pledge to implement a “net spending cut,” through trillions in new deficit spending. And he violated his promise not to increase taxes on people making less than $250,000 by raising excise taxes, and by imposing a new tax on investment income and new Medicare taxes that will go into effect starting in 2013.

Obama’s recent $450 billion “jobs” proposal, the American Jobs Act, is yet another failed big-government money-wasting scheme like his $800 billion stimulus package, which was supposed to keep unemployment under 8 percent, but didn’t keep it from reaching 10 percent in late 2009. The so-called American Jobs Act would fail to reduce unemployment, increase the skyrocketing national debt, and waste money on failed  programs that expand welfare dependency. It would also subsidize boondoggles and failed green-jobs schemes.  Meanwhile, Obama ignores costless ways to create jobs, like regulatory reform.

Erik September 21, 2011 at 12:51 pm

This article is ridiculously misleading:
- Yes, the rich pay more total money, because they HAVE MORE MONEY.
- Yes, they pay at a higher rate officially (at least on wages), but there are so many loopholes and deductions that in effect they pay substantially less.
- Capital gains are taxed at 15%, a very, very low tax rate. A huge proportion of the nation’s wealthy get their income this way.
- Low income people pay no income taxes because they don’t make enough money. Regardless an large percentage of their income is paid in payroll taxes anyways. It’s not like they are free-riding.

Literally nothing you are quoting from AP contradicts something that Obama said. Taken all together, these points are not evidence that the rich are taxed more, but evidence of how bad inequality already is. You, as well as the AP, simply took the numbers way out of context.

He said this was a plan to REDUCE the deficit, not eliminate it, so I don’t see why falling short of goals is a good argument against the proposal. Shall I argue to not make entitlement cuts because modest cuts don’t solve the entire deficit problem?

Mebane September 21, 2011 at 9:39 pm

As the Associated Press noted, the wealthy pay not just more taxes, but also higher tax rates and a higher percentage of their income in taxes.

Capital gains taxes are not low. They are imposed based partly on imaginary income, like inflation. Real, inflation-adjusted taxes on capital gains are high — often over 40%.

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