Monday, January 30, 2012

State of the Union Lies

I didn't listen to the State of the Union speech because like most political speeches, it would be full of lies and a total waste of time. However, I read some comments on the Internet and had to check for myself:
But in return, we need to change our tax code so that people like me, and an awful lot of members of Congress, pay our fair share of taxes.

Tax reform should follow the Buffett Rule. If you make more than $1 million a year, you should not pay less than 30 percent in taxes. And my Republican friend Tom Coburn is right: Washington should stop subsidizing millionaires. In fact, if you’re earning a million dollars a year, you shouldn’t get special tax subsidies or deductions. On the other hand, if you make under $250,000 a year, like 98 percent of American families, your taxes shouldn’t go up. You’re the ones struggling with rising costs and stagnant wages. You’re the ones who need relief.

Now, you can call this class warfare all you want. But asking a billionaire to pay at least as much as his secretary in taxes? Most Americans would call that common sense.

What is fair? Taxes pay for government services. The ultimate "fairness" is to pay for what you use, i.e., usage fees instead of indiscriminate taxes. Small example: abolish taxes for national parks and increase the entrance fee to cover costs. Big example: have parents pay for the children's schooling costs instead of taxing all their childless neighbors. I'm not suggesting that these are good/bad ideas... of course, there is a role for government (national defense, public safety, etc) but there needs to be a robust discussion on how much is too much. Obama equates fairness as at least 30% if you make >$1M. Why 30%? Does 30% of everyone's life depend on the federal government? Why not make everyone pay 30%? We know half of America pays almost no federal income taxes. How is that fair?

The last part of the quote is a complete lie. Obama is confounding tax dollars paid and average tax rate on purpose, unless he is trying to tell us that the amount on line 61 of Warren Buffet's 1040 form is less than the amount found on his secretary's tax return. I read that Buffet paid ~17% on his taxes while supposedly his secretary paid ~36%. Since the median taxpayer paid only 12.8%, and the top marginal tax rate is only 35%, common sense suggests something is wrong. Buffet and his secretary should release their taxes since Obama is using them for political purposes.

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