“President Obama announced plans Monday to fund his $447 billion jobs bill largely by raising taxes on wealthier families.”
– Washington Post lead article on 9/13/2011
Bravo! It’s about time a national leader had the courage to use the T word. There is no solution to the federal debt fiasco that does not involve raising taxes on the well-off. Washington’s decade-long allergy to the word tax – or its reliance on silly euphemisms like “surcharge” or “revenue enhancement” – must end. Barack Obama did the country a service by putting this on the table.
Here’s the part the left will not like. Assume the president’s jobs bill is enacted, and is funded not by yet more borrowing but by raising taxes on the well-off. That will pretty much tap out “tax the rich” as a political strategy and rally cry. Unless the economy really takes off, further progress against the debt will need to come from entitlement cuts and raising taxes on the middle class.
Internal Revenue Service data show that in 1992, the effective federal income tax rate on the well-off was 26 percent. Today, after two tax cuts under George W. Bush, the effective rate is about 17 percent.
Obama’s latest proposal would raise the effective income rate on the affluent by about 2 percent. Bear in mind the ObamaCare legislation, most of which does not take effect until 2013 – just after Obama stands for reelection – already is scheduled to raise the effective tax rate on the well-off by about 4 percent. (I’m simplifying rates and policies that are designed to be incomprehensible.)