When Johnathan Swift suggested feeding poor Irish children to the rich (in an attempt to reduce the burden they place on impoverished Irish families) he was writing satire. When President Obama suggests soaking the rich with higher tax rates and increased regulation, he seems a bit more sincere. His latest pivot toward the economy has predictably proven to be little more than a re-ignition of the class warfare that sparked Occupy Wall Street, the entitlement society, and Obama’s miraculous popularity among over-privileged white children of guilt. Which got this numbers guy thinking: Where would we be without the top one percent? (And don’t say unemployed. I know that is true, as do many of you, but it’s a secret we’re apparently keeping from the White House.)
So, what if the top one percent had expatriated their wealth, families, and honor to another country when America’s first truly progressive President since FDR was elected? The good news: We’d have far fewer people in Congress. (There’s always a silver lining.) But aside from the expatriation of virtually all rich liberal elites, we’d be in poor shape as a nation. It has been said that the top one, ten, and twenty percent of wage earners pay the most in federal taxes. And while few of them are bound to accept food stamps, OBAMAPHONES, or housing assistance, it’s probably safe to assume their consumption of government resources (with the exception of Solyndra, Abound, GM, and other leftist pet projects) is relatively small. So, here is a back-of-the-envelope estimation of where America would be without those greedy Wall Street tycoons and oil billionaires.
Since President Barack Obama was elected, the federal government has collected more than $11.8 trillion dollars in federal revenues. While you and I could do a fair amount of damage on such an income, our government still managed to rack up well over $6 trillion worth of debt. This President’s ultimate legacy might end up being his administration’s ability to spend more than a drunken sailor with a government credit card. But, what was paid into the federal revenue was due – in no small part – to those evil capitalists who make millions while working from their high-rise Manhattan office buildings. (Yes. . . Bloomberg, I’m looking at you.)
In fact, almost half of all federal revenue comes from personal income taxes. (For the 47% percent of you that pay no federal income taxes, that’s what the rest of us get so worked up about on April 15th of each year.)
What’s interesting about federal revenue sources, is that despite drastic changes to the tax code over the decades, personal income taxes have always accounted for roughly the same amount of total federal revenues. While the top marginal tax rate has fluctuated between 90 percent of a person’s income to 28 percent (Currently it is 39.6 percent), the Internal Revenue Service has never been capable of bringing in enough revenue to cover more than 50 percent of total government receipts. Among the many reasons for this anomaly, is the historically backed concept that there is a limitation to how much the government can extract in revenue from its citizenry.
But what percentage of this income tax is paid by that evil one percent group? According to historical data, roughly 37 percent. Ironically, this is set to drop in 2013 as higher tax rates hit the wealthy. As the new rates (thanks Obama) hit more Americans, more of the wealthy (described as anyone making over roughly $300,000 per year) are expected to put their money into more tax advantageous vehicles.
So where would America be without our “one percenters”? Well:
According to data gathered from the IRS, Congressional Budget Office, and the Census office, Federal personal income tax receipts were at $1.4 trillion dollars in 2009, and increased to a projected $1.9 trillion in 2013. (Personal income taxes, after all, only account for a portion of total tax revenue. We still tax corporations, cigarettes, gasoline, and other inflation-exempt items.) In 2009 the top one percent paid roughly $518 billion dollars in federal taxes. But yeah, Obama was right. . . They need to pay their fair share.
In 2010 they paid $520 billion. In 2011 they paid $592 billion. Over the course of Obama’s tenure, with the estimated revenue of 2013 included, the top one percent paid nearly $3 trillion to Treasury. But, to put this into perspective, consider if they had all died out at the beginning of Obama’s first term.
Assuming that our government had spent every dime, despite not having nearly as much revenue (so far this isn’t taking much imagination) since 2009, they would have collected roughly $3 trillion less. Of course, the national debt climbs up each year more than our deficit as we continue to finance our interest payments and subject new debts to further interest. So while the nation would have added over half a trillion more dollars to its deficit each year, the total national debt would have climbed even more.
With another debt fight looming, it’s all but certain Obama and the Democrats will be able to raise the debt limit once again. Assuming they are able to do so, the National debt by the end of FY 2013 is expected to be $17.2 trillion dollars. Had the top one percent of wage earners not paid their fair share over his tenure, our national debt would be close to $21 trillion after taking into account 2 percent interest on all debt incurred.
To put that further into focus, that increase in the National Debt would be just shy of the total debt added to our balance sheet during President George W Bush.
So for all the class warfare our current (1 percenter) President is engaged in, it might behoove the rest of us to look fully at their contribution toward funding the government. And for those on the left who insist the Apple’s, Exxon’s, and Boeing’s of the world are to blame for moving their money overseas: Only 8 percent of total Federal revenues come from corporate taxes.
By every metric imaginable, the wealthiest members of American Society carry the lion’s share of our tax burden. However, the most ironic part of all of this, is that President Obama’s rate increase on high income earners is set to reduce their overall tax contributions. The Bush tax cuts, as maligned as they were in the media, actually increased the percentage of federal revenues for which wealthy households were responsible. In 2013, the richest percentile are expected to pay only 30 percent of all revenues, down from its historic 37 percent. In large part this is due to the wealthy’s ability to move their higher income into more tax advantaged vehicles and accept alternative forms of compensation.
It’s the rest of us that will pay for the President’s war on wealth as higher deficits are accrued. So, go ahead, Mr. Obama. . . Eat the rich.