President Obama offered few concrete suggestions for spending cuts this week in his much-anticipated speech on reducing the federal debt, but he had lots to say about raising taxes.
"As a country that values fairness, wealthier individuals have traditionally borne a greater share of this burden than the middle class or those less fortunate. Everybody pays, but the wealthier have borne a little more," the president said. So he wants to raise the top marginal tax rate to 39.6 percent and eliminate itemized deductions for the top 2 percent of earners.
What the president didn't say is that he has taken full advantage of each and every tax deduction available to him in order to lower his taxes on his more than $5 million per year income. No one forces Obama to take these deductions, which he objects to so strenuously for everyone else in his income bracket. So let's take a look at the deductions he took last year (the president's 2009 return and that of Vice President Joe Biden are available online):
In 2009, Obama took itemized deductions of $514,819, a foreign tax credit of $59,372, and a deduction for interest on his home of $52,195. He was also able to take a deduction for $49,000 he contributed to his self-employed retirement fund. If he had not taken these deductions, he would have paid taxes on an additional $675,386, which in his income bracket would have meant he owed somewhere in the neighborhood of $200,000 more in taxes at the top marginal tax rate of 35 percent.
Furthermore, he instructed the Nobel committee to donate his entire $1.4 million Nobel Prize directly to 10 charities, thereby avoiding the necessity of declaring the money as income on which he would have owed an additional $490,000 in taxes.
If the president is so appalled at the rich and their ability to hire accountants to take advantage of each and every deduction, why doesn't he simply take the standard deduction on his tax return, like most Americans? In 2009, he could have claimed an $11,400 standard deduction for married couples, as well as an additional $7,300 for his two daughters. Admittedly, that's a loss of more than $650,000 in deductions -- but at least he could avoid looking like a hypocrite by advocating one thing for everyone else and doing quite another himself.
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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