Why does Obama want to raise taxes for people making over $250,000?

Question

I plan to take advantage of capitalism and rise to that someday. Why should I have to pay a higher percentage than anyone else in taxes? Isn't flat tax for all income brakets the only fair way to do things?

Answer 1

Pretty simple, really.  The Federal government is DROWNING in deficit due to the irresponsible fiscal policies of the current administration.  The interest on that debt is about equal to the entire annual budget of the Department of Defense!

When you're drowning in debt, you have 3 options:  Cut expenditures, increase revenues, or a combination of the two.  If you were drowning in credit card debt, would you take a job that paid less money to get out of debt?  Of course not!  Neither can the government!

Wealthy individuals have the means to pay higher taxes so they are the target of most tax increases.  It's basic math.  A 5% increase in the top tax rate generates $500,000 in tax revenue from a person earning $10 million a year.  Increasing the base rate by 5% only generates $500 from a person earning $10,000 per year.  And someone making $10k per year would be clobbered by an additional $500 in taxes whereas someone making $10 mil can fairly easily pay the additional tax.

A "flat tax" is grossly unfair.  To raise the same revenue as the current graduated income tax, you'd need to levy at about 25%.  Only the wealthiest of taxpayers pay anywhere near that in net taxes.  

A flat 25% levy would crush the typical single mother with 2 children struggling by on $17k per year.  Due to the EIC and other credits, she has about $20k in cash flow per year and barely gets by.  With a 25% levy (and no more EIC, Child Tax Credit, Additional Child Tax Credit, exemptions or deductions) her cash flow would plummet to less than $13,000 per year and she and her kids would quickly be tossed into the streets.  How can anyone call that "fair?"

I'm in a 28% marginal bracket now and frankly it doesn't bother me in the least.  My net rate is still around 16% or so.  I well remember the days when I paid no income tax at all and struggled from paycheck to paycheck.  The relative pittance I received in EIC payments made survival possible and I honestly don't have a problem with paying my "fair share" as my income continues to rise.  But a flat 25% levy would clean my clock as well as that single mother's.  Basically it would mean that nothing would be saved towards my retirement and I'd have to live on Alpo in my "Golden Years."  What the h**l is "fair" about that??

The wealthiest of taxpayers have been riding a gravy train for 7 years now.  Regardless of who wins the White House this fall, massive tax increases WILL be necessary to bring down the deficit.  That will be political suicide for Senator McCain, just as it was for Bush Sr.  Remember his campaign words, "Read my lips, NO NEW TAXES!"

Answer 2

The concept of fairness varies according to how one sees society. The progressive tax principle is intended to raise taxes from those who benefit most from the  stability of the economy, the rich.

The problem with flat tax rates from a government perspective is that they have to anger a lot more voters for the same amount of revenue.

We set up the rules of society and enforce them so as to favor those with more, and those who get more. So to offset this stacked deck we put in place progressive taxation to reduce the disparity our stacked rules produce.

Neither stacking the deck in favor of capital nor progressive tax rates are perfectly fair, but then they tend to offset each other's unfairness.

Answer 3

"Fair" is a matter of opinion and generally involves the one with the opinion thinking nothing is fair unless he pays less tax than everybody else.

Not only are the tax brackets steeped for people in those income levels, credits that the rest of us get are phased out, itemized deductions and dependent exemptions are reduced, and you even get a whole second system of taxation, called the alternative minimum tax to make sure you somehow didn't sneak away without "enough" taxes being levied.

Our tax systems has always punished success and it probably always will.  I have no love for Obama, but he isn't doing anything new - and punishing the few wealthy who already pay most of the taxes anyway gets you a lot of good media coverage.

Answer 4

You are absolutely RIGHT!

Answer 5

You bring up an interesting question, and I'd like to put in my two cents worth.  A flat tax sounds fair at first glance, but let's look at cases.  Assume a flat 10% rate on all income, which has often been suggested as a fair system.  An unmarried childless taxpayer making $8950 would pay no tax under our current system, but would pay $895 under a flat tax.  A person making over $250,00 would currently have an average tax rate of over 10%, but would have it reduced to 10% under the flat tax system.  Whether or not this is fair would be a matter of opinion of course, but it would undeniably raise taxes on the lowest incomes rather than the highest.

Answer 6

Becuase if he kept things the way they were then the scenario where:

'The rich get richer and the poor get poorer'.

Would happen.

I think this makes it more fair since people making over that much obviously have enough to spare on their expenses and pleasure including taxes.