UNDER President Barack Obama, the nation has experienced deficits so large they defy easy comprehension. For four consecutive years now, the federal deficit has been over $1 trillion. National debt now totals $16 trillion.
Obama says the solution is to increase taxes on those earning more than $250,000. A look at the Forbes 400, a list of the richest people in America, demonstrates the folly of that plan.
The combined net worth of the entire Forbes 400 list is $1.7 trillion. Even if the president ordered the outright seizure of those individuals' earnings, the national debt would still be over $14 trillion. And you couldn't repeat that trick a second time; the wealth would be gone but the debt would remain.
Think about that: Under Obama, we've reached a point where grabbing all assets of the leaders of Microsoft, Oracle, Walmart, Bloomberg LP, Amazon, Google and other corporate giants doesn't even come close to wiping out our national debt.
A new study by Douglas Holtz-Eakin for the American Action Forum further underscores the problems of Obama's tax-increase plan. Holtz-Eakin finds it is mathematically impossible to eliminate the deficit solely with taxes on millionaires; middle-class families will almost certainly take a hit.
If spending plans remain unchanged, Holtz-Eakin notes that erasing the deficit entirely through tax increases on millionaires “is infeasible” because it requires a tax rate of 123.9 percent. If tax increases are limited to those earning more than $500,000, the rate must surge to 95.5 percent, which Holtz-Eakin calls “an increase in excess of any economic reality.”
Holtz-Eakin finds those earning as little as $30,000 could face tax increases of as much as $1,500 annually — and that's if just half of deficit reduction is done through tax increases.
According to 2008 exit polls, 64 percent of Oklahoma voters had income of $30,000 or more.
A tax rate of 123.9 percent is impossible; a 100 percent seizure of the assets of the rich should be a non-starter. That would destroy the companies involved, increase unemployment and snuff out economic growth. Obama's call to hike taxes on the rich is not based on fiscal prudence, but merely designed to punish success. The result ultimately will be lost jobs and a heavier tax burden for the middle class.
Republican presidential nominee Mitt Romney has noted that Obama's economic policies have already generated the following results: new business startups are at a 30-year low; middle-class incomes have declined; prices have increased for gasoline, electricity, food, and health care; unemployment exceeded 8 percent for 43 straight months; 47 million are on food stamps, and economic growth is slowing.
Romney said that's a result of Obama's “trickle-down government approach which has government thinking it can do a better job than free people pursuing their dreams. And it's not working.”
Romney is right. Obama's tax-hike plan will only exacerbate the economic problems he has created — with little impact on national debt.
Failure to reduce the deficit and the resulting national debt will stifle future economic growth, reduce opportunity and harm Americans at all income levels. Holtz-Eakin's study shows Obama's fiscal recklessness makes avoiding that fate extremely difficult. Those who stress tax increases over budget cuts are simply not facing reality.