Obama’s Perilous Assault on the Rich.docVIP

Obama?s Perilous Assault on the Rich When Barack Obama talks aboutfiscal control, the idea he emphasizesoften the only one he offers with conviction-is raising taxes on the rich. Thisgets ovations from Democrats, thrilledthat the US president has not sold out entirely. Equally constant is the Republicanresponse: accusations of class warfareand economic vandalism. For all Mr.Obama’s fine talk, says the Grand OldParty, Democrats fall back on their traditional job-killing cure-all. The outlook for US public debtmakes the Republican position on taxesno increases, regardless-grossly irresponsible. Higher revenues will be neededto balance the books The GOP’s politicaljudgment is questionable too. This president smiles too much to make a convincingclass warrior, though you could not say thesame of every Democrat Misguided as their opponents maybe, however, Democrats are wrong tothink that “soak the rich” is both good economic policy and a sure-fire electoralwinner. It is neither. Consider the economics first. USincome tax “rates are not far out of linewith other countries’. George W. Bush,Mr. Obama’s predecessor, cut the toprate on employment income from almost40 per cent to 35 per cent, which thepresident wants to reverse. However, add in state income taxes,the Medicare tax, the withdrawal ofsome tax exemptions as income rises andthe interaction of the altemailve mini-mum tax(don’t ask), and the highestmarginal rates already spike at more than50 per cent--before Mr. Obama addsback the Bush cut. The US income tax system isanomalous not because its rates are lowbut because, given its middling rates, itcollects so little revenue. Between 2004and 2008, US taxpayers surrendered, onaverage, a little over 12 per cent of theirincome in federal income tax. The bottom50 per cent of households faced an average tax rate of roughly 3 per cent; the top50 per cent an average tax of 14 per cent;the top 5 per cent a tax of 21 per cent; andthe top 1 per cent a tax of 23