I like to think that American voters are smart enough to know that both President Obama and his critics are engaging in outrageous hyperbole when discussing proposed tax increases for the rich.
Obama has called his proposal the Buffett tax, after Warren Buffett, who is one billionaire who supports taxing the rich at a higher rate.
Buffett is fond of pointing out that he is taxed at a lower rate than his secretary.
On the other side, Republicans are crying “class warfare,” accusing Obama of pitting the rich against the poor, while thumping their chests and pointing out that the richest 1 percent already pay 40 percent of the taxes.
Both sides are trying to use catchy phrases to spin the news their way. Terms like “Buffett tax” and “class warfare” are just attempts to hide the real facts.
Fact one: Obama is proposing an increase in the capital gains tax rate. Most rich people make their money buying and selling securities; the earnings are taxed as capital gains, at 15 percent. That’s considerably lower than the 25-35 percent most of us pay on our wages.
Fact two. Yes, the richest 1 percent of Americans pay about 40 percent of all federal taxes. But that’s because they earn more than 40 percent of the money made by Americans each year. And their share of the wealth has been increasing for more than 20 years. Census data clearly shows that the rich are getting richer while the middle class and poor are losing ground.
If the rich are earning more of the money, doesn’t it make sense they should pay more of the taxes?
If Americans are smart about how they listen to politicians on both sides – cutting through the hyperbole and demanding facts, we have a chance to get government back on track in the next few months.
Washington has been at a stalemate, with both parties digging deep trenches and refusing to budge.
But the excessive spending of the last decade – two wars we couldn’t afford (paid for by borrowing, mostly from China) and a gigantic stimulus package to get us out of a recession – has led to trillion-dollar deficits that have everyone frightened.
Republicans and Democrats alike realize that we’ve reached the borrowing ceiling. Our national credit card is maxed out. We can’t keep mortgaging our grandchildren’s future.
Sounds like a dark cloud, right.
But I’m an eternal optimist. Maybe the cloud is dark enough to get Congress to see the light. Our nation needs to cut spending dramatically, and to carefully raise taxes enough to get us back to balancing the federal budget.
We can’t cut our way out of this. The Iraq and Afghanistan wars and the recession stimulus were too costly.
We also can’t raise taxes enough to cover the deficit. That would be suicide for the economy.
A balanced approach is the only thing that makes sense.
And we’ll only get there if voters turn deaf ears to the spinning coming from both sides.
It’s not about class warfare. It’s not about Warren Buffett’s secretary.
It’s about doing the right thing – paying your bills.