I have wanted to write a new blog on immigration for some time now. Especially since I think there are politicians in both parties using it as a political scare tactic rather than looking for real and tough solutions that keep us a rule of law nation without ignoring the human impact of decisions about what to do about the 12 million people here illegally.
Then, today I saw a speech by Marco Rubio in which he said everything that I wanted to say, and much more elloquently and impactfully than I could ever say it. If this isn’t Purple Ground, I don’t know what is.
Thanks for this post Jamie; I think Senator Rubio makes a fair and compelling argument for sensible immigration reform and, most importantly, the need for level-headed DISCUSSION over the subject. As a Democrat, I support his position and perspective on this issue.
My only disappointment is that he had to BEGIN his argument by accusing our President of being “as divisive as any figure in modern history” because of his call to increase taxes on the wealthy. His call, and those that support him, is only for those who have succeeded in America to pay their fair share of taxes on their income. The current tax law has been manipulated SO MUCH by those with money and power, that somehow it became considered “fair” that when you succeed in America and make more money than others, you have the right to hide and shelter your money from taxes.
The Senator makes this point regarding the immigration discussion: “This is a difficult issue, and sometimes those of us in public service need to stop pretending like difficult issues have easy answers. They don’t. It’ll require an open conversation across this country about what we want to do.” This is EXACTLY the same sentiment he should have toward tax reform and what the rich pay or don’t pay. Wrapping oneself in “wealth distribution” and “socialism” accusations in this discussion does the debate a disservice.
I can’t speak for Marco Rubio, but the reason that I think that our president is politicizing the issue of taxes is in his explanation of “fair”.
The 1.4 million Americans in the IRS’ top taxpayer category in 2009 reported nearly 17 percent of all the country’s taxable income. From those filers, the IRS collected $318 billion or almost 37 percent of all the individual taxes paid. How is that not more than their “fair share”?
I have never heard the president explain that the amount of million dollar earners paying less of a percentage in taxes than middle class earners is about 1,500 households, less than 1 percent of the nearly 237,000 returns with incomes above $1 million.
I have also never heard him mention that most of those folks made their money of investment income (Like Mitt Romeny) and that is why they pay a 15% tax rate on that income. There are 5 main reasons why investment income (capital gains) is taxed at the lower 15% rate:
1. Income is already taxed at normal rates and then re-taxed when it is invested. (Like if you took some of your post-tax income and invested in the stock market or your friend’s start up
2. Investment income carries risk. You pay 15% taxes on your gains, but can only write off $3,000 per year in losses
3. (Main reason) We need people to invest! Invest in companies, stocks, start-ups, etc. We need capital to grow our economy, so we offer a 15% tax rate on gains from invested capital.
4. We need to be competitive with other country’s tax rates on investments to get global investors to invest their money here in the USA. At a 15% long-term capital gains tax rate, the United States ranks higher than countries with lower, more competitive rates including Canada (14.5%), Italy (12.5%) and Japan (7%). Many countries have a capital gains tax rate of zero (0%) including Germany, Mexico, India, Malaysia, Taiwan and Honk Kong.
5. Past history shows that raising the capital gains tax reduces investment in American business and actually reduces tax money coming into the treasury and lowering it does the opposite. Clinton lowered the rates from 30% to 20% and revenues from capital gains went up. Bush then lowered the rate to 15% and revenue increased again. When Charlie Gibson from ABC pointed this out to the President in an interview, the President said that he would raise the rates anyway “for the purpose of fairness”.
Now, if the President is going to make the moral argument for higher taxes on the wealthy that make their money through capital gains, I want to hear him explain to the American people the difference between income tax and capital gains tax rates and why they are at the rates they are at and what would be the effect if the rates were raised. Then, I will no longer say that he is politicizing the issue.
The President’s new “Buffett Rule” tax proposal – got fact checked by AP about the claim that secretaries pay more in taxes than their bosses. Obama: “Middle-class families shouldn’t pay higher taxes than millionaires and billionaires,”
That’s pretty straightforward. It’s hard to argue against that. When put that way, yes that is hard to argue against. However…
(From the Associated Press) – “The data tells a different story. On average, the wealthiest people in America pay a lot more taxes than the middle class or the poor, according to private and government data. They pay at a higher rate, and as a group, they contribute a much larger share of the overall taxes collected by the federal government.”
But of course, Obama’s new plan to hike taxes on millionaires and billionaires – the “Buffett Rule” – is not without a prop.
Obama: “Warren Buffett‘s secretary shouldn’t pay a higher tax rate than Warren Buffett. There is no justification for it. It is wrong that in the United States of America, a teacher or a nurse or a construction worker who earns $50,000 should pay higher tax rates than somebody pulling in $50 million.”
Obama’s and Buffett’s claim is that millionaires pay less in taxes because investments (where much of the wealthy’s income stems from) are taxed at lower rates – capital gains, dividends, etc. But these two economic degenerates are propagating on a very simplistic measure – and AP called them out on it.
From the AP:
• This year, households making more than $1 million will pay an average of 29.1 percent of their income in federal taxes, including income taxes and payroll taxes.
• Households making between $50,000 and $75,000 will pay 15 percent of their income in federal taxes.
• Households making between $40,000 and $50,000 will pay an average of 12.5 percent of their income in federal taxes. Households making between $20,000 and $30,000 will pay 5.7 percent.
• Those making $100,000 to $125,000 will pay on average 9.9 percent in federal income taxes. Those making $50,000 to $60,000 will pay an average of 6.3 percent.
Percentiles Ranked by AGI AGI Threshold on Percentiles Percentage of Federal Personal Income Tax Paid
Tax Payer Income Percent of income tax collected nationally
Top 1% $343,927 36.73
Top 5% $154,643 58.66
Top 10% $112,124 70.47
Top 25% $66,193 87.30
Top 50% $32,396 97.75
Bottom 50% <$32,396 2.25