Obama Accounting Error: Why Taxing the Rich Will Not Solve Our Fiscal Crisis
That selfish 1%. They hold the solution to our fiscal crisis in the palms of their gilded, probably gloved, hands. Their wealth is our poverty; their happiness is our sorrow; their freedom is our slavery. All would be well, if only they would pay their fair share.
So says the Left. This refrain is now sung by everyone to the left of the aisle, from the intentionally unwashed masses of Occupy Wall Street to the dapper man sitting in the Oval Office. President Obama reminded us of his dedication to this cause in each presidential debate, demanding with obvious fervor that the wealthy “pay their fair share” and “do a little bit more.”
It’s a nice narrative. It’s an ever better electoral tool — pitting the many against the few is a sure-fire way to win votes. But unfortunately for the Left, it’s also a mathematical myth.
No matter how you do the math, the rich just aren’t as rich as the Left thinks they are. Forget, for a moment, that few liberals will tell us exactly what constitutes “a fair share” and “a little bit more.” Is that 5%? Or 25%? How about 75%, like in newly-socialist France? If only we knew.
Let’s say 100%, at least for the sake of argument. Suppose everyone in the top 1.5% — everyone making over $250,000 — gave every cent they made over that total to the federal government. Surely the resulting revenue would save our sinking ship.
Not even. Taking every penny of the wealthy’s money would only pay the government’s bills for three months. That wouldn’t even cover our yearly trillion-dollar deficits, to say nothing of the $16 trillion debt. Paul Ryan handily trotted this fact out during the vice presidential debate, yet few picked up on it. Joe Biden’s laugh must have drowned it out.
Maybe we’re not being egalitarian enough. Suppose we tax the top 10% at the highest possible level. Surely those people making $114,000 per year don’t need the extra cushion. Yet even then, we can’t cover the government’s yearly expenditures. That last $500 billion isn’t exactly chump change.
If only the Left would crunch these numbers. They’re always keen to remind us that they’re the party of “science” and “logic” (compared to the “superstitious” and “medieval” Right), yet they’re inexplicably unable to count the nickles and dimes — okay, the hundreds and the gold chips — that their fabled tax on the wealthy would raise. Apparently basic addition wasn’t an intro level course in this brave new world.
Thankfully, only the most ardent leftists — trust fund kids at a public university who sit at the feet of their well-spoken socialist professors, otherwise known as “Occupy Wall Street” — want a 100% tax rate. No sane politician has thrown their weight behind such measures, including the president.
But think what that means. If 100% rates would only pay for the government for three months, then how much revenue will lower rates bring? A 66% rate would cover two months, a 33% rate only one. Anything less than that — which, realistically, is all that the president would ever get passed — would only feed the federal spending monster for a few weeks or days.
That spending monster is the real problem. It’s a monster that, like the federally-funded cookie monster, suffers from a crippling addiction. It’s a fiscal addiction that requires withdrawal — the rich don’t have enough stuff to keep its buzz going. But like any good junkie, it only wants more, regardless of what it takes and who it hurts in the process.
Meanwhile, this president’s anti-1% rhetoric is nothing but talk. And once you add up the numbers, his talk is surprisingly cheap. If only the same could be said of his policies.