Obama’s Income Cap

Obama’s Income Cap
Don Pettygrove 2010

I find myself becoming more and more disgusted with the liberal left haters in this country. It seems the primary objection that they have is that there are others, not them, that have been blessed with abilities that they have put to their fullest and best use and made significant sums of money.

I arrive at this perspective by listening to the objections of the Obama administration and virtually all of his supporters that I have spoken to. Virtually all of them express anger at the “large corporations”, “military industrial complex”, “big business”, “rich”, “wealthy”, “fortunate”, “big oil”, and any number of other “bigs”. This all appears to be nothing more than pure and simple jealousy that some have made it big and done so well in life while they have been relegated to the mediocre, mundane “average”.

The president wants to punish all of those that have succeeded in life as if they have come into others homes and stolen what they have from the “less fortunate”. He is going to punish the bankers, the oil barons, the investment advisors and as he put it in his campaign, anyone that makes more than $250,000 (or $200,000 depending on the instance). That, apparently, is where he draws the line between anything that is a responsible wage and those that are just in it to selfishly take from others even though they already have “enough”.

Doing a little research on the Treasury Department web page, one can come up with some interesting facts, though the complainers do not like facts because they tend to disprove much that they have built their jealous hatred upon. The latest data available is from the 2007 tax year.

My quest concerned what would the effect of Obama’s desire to cap pay at some arbitrary level as he has indicated he would. I was interested in this because Obama wants to redistribute the wealth and give it to others less “fortunate”. Suspecting that those who make significant wages pay the bulk of income taxes in the country, I wanted to determine how much of the federal income would be destroyed were Obama to succeed.

I chose arbitrarily, the magical $1 million dollar income level to evaluate. This is four times his stated value of “wealthy” but an interesting point to evaluate as it turns out. Treasury Department records show that the point at which half the total income is above and half below turns out to be roughly $160,000 annual income. At that point roughly $3 trillion dollars of income lies above that earnings level and the same amount below.

The division point that I chose ($250,000) has roughly 21% of the total above and the remaining 79% below. At that income level, those above that point pay roughly 28% of the total income tax collected. This, contrary to common perception, is well more than their fair share of taxes. If Obama decided he wanted to cap the income of individuals at $1 million, that would translate to a reduction of income taxes paid to the federal treasury of roughly $310 billion. Total income taxes paid in 2007 was $1.115 trillion. This results in the treasury loosing 27.8% of its revenue by not allowing anyone to make more than $1 million. This would affect the tax returns of only 391,261 out of 96,270,000 total returns or 0.4% of the total returns.

I found it quite amazing that the top 0.4% of income earners in this country paid 27.8% of the total individual income tax paid. Who says that they don’t pay their fair share of taxes? I am offended that anyone could ever make such a totally wrong headed and idiotic statement. Another amazing fact is that all income earners below $200,000 taxable income pay roughly the same amount of total tax but it takes 91.7 million returns to provide the same amount as the top 391,000 taxpayers do. What is fair about that?

Another interesting fact is that of the 48.5 million tax returns filed by individuals making $50,000 or less, only slightly more than 3 million actually pay any taxes at all. Keep in mind that that is $50,000 in taxable income, after all deductions.

The end result of all this is that were Obama to be successful in his desires to punish the “rich” and cap their income, even at the “exorbitant” level of $1 million, he would end up with an additional annual debt of $310 billion dollars by in effect, taxing it away. Does this jealousy make any sense to you?

The looters talk about the greed of the "rich" yet one definition of greed is covetousness of what someone else has and has earned. The looters don't care about what one earns. To them, if they have more, it is ill-gotten gain. They must redistribute it because someone else would have had it if the person that has it hadn't. How ludicrous that argument is. There are millions of new dollars of new wealth created every day through the work and toil of people. Nothing is lost, it is all gained by work.