"When you spread the wealth around, it's good for everybody," Barack Obama explained to Joe Wurzelbacher in Ohio earlier this week. But Joe the Plumber, as he has become known thanks to Wednesday night's presidential debate where his name was invoked no fewer than a half dozen times by both candidates, isn't buying it. And Wurzelbacher is right to be skeptical.
In an interview with CBS' Katie Couric after the debate, Wurzelbacher said he was worried that Obama would be the one deciding who was wealthy and, therefore, should be taxed more. Obama says only those earning more than $250,000 will see their taxes go up. But Wurzelbacher worries, "When's he going to decide that $100,000 is too much, you know? I mean, you're on a slippery slope here."
Wurzelbacher's fears are well founded. Obama was unable to name a single significant program that he would scale back when asked by debate moderate Bob Schieffer to do so. Obama will have to come up with the money to pay for some trillion dollars in new spending in his first term -- including what he calls a "tax cut" but which will really be a check from those who do pay taxes to low-income Americans who already don't pay any federal income taxes.
The wealthy already pay a hugely disproportionate share of all federal income taxes. According to an analysis by the non-partisan Tax Foundation using the latest IRS figures (for 2006), taxpayers with an adjusted gross income (AGI) of $153,542 and above made up the nation's top 5 percent of earners. But this top 5 percent paid nearly 60 percent of all the income taxes collected in 2006, while earning about 37 percent of AGI. For all the talk of middle-income earners paying most of the taxes, the facts suggest otherwise. Those in the 26-50 percentiles of AGI pay about 11 percent of taxes and earn 19 percent of income.
So when Barack Obama says he wants to "spread the wealth around," what he's really talking about is redistributing wealth through the tax system by forcing higher income earners not only to pay a disproportionate share of taxes but to fund cash transfers to those earning less. Sen. Obama's proposed tax plan includes provisions for what he calls refundable "tax credits" for low-income Americans, many of whom don't pay any federal income taxes. In other words, those who already pay no taxes would be sent a government check equal to the "credits" in Obama's plan, including 6.2 percent of income of those earning up to $8,100 and a refundable "credit" of 10 percent of mortgage interest paid by those who don't itemize.
Linda Chavez is chairman of the Center for Equal Opportunity and author of Betrayal: How Union Bosses Shake Down Their Members and Corrupt American Politics .
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