Peruse the official Web site of the Obama administration and you will find an impressive array of President Obama's position statements. Each policy area includes a sub-section entitled "Guiding Principles," an effort by the Obama administration to help explain when, why and how he came to these positions. On most pages, the Guiding Principles section is rather artfully constructed and contains at least a modicum of thoughtful analysis based on objective reality. The major exception to this rule is found in the section detailing one issue for which Obama received criticism during the 2008 elections, and one which has received less and less attention over the passing months: the Obama tax plan.
The White House Web site plainly states the following information under the Guiding Principles section, beneath a subtitle that reads auspiciously, "Restoring Fairness:" "For too long, the U.S. tax code has benefited the wealthy and well-connected at the expense of the vast majority of Americans. President [Obama] aims to restore fairness to the tax system by providing the Making Work Pay tax cut to 95 percent of working families while closing loopholes that prevent wealthy companies and individuals from paying a fair share." That sounds like a very noble cause taken up by the administration, and an honorable, patriotic issue to pursue — if it were actually true.
Research at RealClearMarkets.com — the financial sister site of the nonpartisan, independent RealClearPolitics.com — indicates that in 2005, the top five percent of income earners in the United States accounted for 60 percent of total U.S. income tax revenue. While the latter percentage has been increasing steadily each year since the Carter administration, the middle class now accounts for only 11 percent of tax revenue — down 50 percent since the days of Jimmy Carter's cardigans. This tax code does not particularly strike me as one that benefits the wealthy and well-connected. The five percent who will see their taxes rise are forecast to account for a whopping 70 percent of U.S. income tax revenue; the middle class is expected to account for less than 10 percent.
But the Obama administration is not just taxing the high-earners more. As the White House Web site states, "70 percent of the tax benefits goes to the middle 60 percent of American workers." Plugging the numbers into the Obama tax plan, 70 percent of total U.S. income tax revenue — of which 70 percent is forecast to be paid by five percent of Americans following a tax raise — will subsidize the tax cut received by the 60 percent of Americans paying less than 10 percent.
This is not partisan analysis, nor is it any sort of politically motivated smearing of Obama's tax policy; this analysis comes simply from taking the pre-existing financial reality of the United States and applying it to Obama's clearly stated tax plan. Cries of socialism are divisive. Pegging Obama as an advocate of redistributing America's wealth isn't particularly useful, either. Obama isn't evil. But he is mistaken.
It would be best to qualify Obama's tax plan as highly dangerous, potentially toxic to U.S. economic recovery — stymieing growth potential from the top — and completely against the principles of free-market enterprise and capitalism upon which this country was founded. It eliminates incentives for those in the top bracket to invest or even calculatedly risk capital — a potentially fatal blow to hopes for a speedy economic recovery. Ultimately, the goal of "Restoring Fairness" is most certainly not achieved through this tax hike on the high-earning. Rather, Obama is further reinforcing the unfairness of a system that was already inequitable to the country's highest earners — a crusade that ensures "fairness" to the middle class by compelling those who already shoulder the majority of the national tax burden to take on even more of the load. That's not fairness. That's not even reality. That's just irrational.
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Teddy Minch is a senior majoring in political science. He hosts "The Rundown," a talk show from 3 to 5 p.m. every Friday on WMFO. He can be reached at Theodore.Minch@tufts.edu.
