Thursday, December 31, 2015

Obama Taxes the Rich

Under President Obama, rich Americans really are paying more in taxes:
Data released by the I.R.S. on Wednesday shows that tax rates on the income of America’s 400 wealthiest taxpayers rose sharply to 22.9 percent in 2013, erasing a majority of the last two decades’ decline in their effective tax rate.

. . . tax rates on America’s 400 wealthiest taxpayers fell sharply from the late 1990s through 2012, when their average effective income tax rate fell to 16.7 percent from 26.4 percent.

The reason behind the reversal is instructive. Broadly, if tax shelters are a problem, there are two ways to fix it. One is to outlaw them. The other way is to change the tax rate rules, so money inside the shelter is not treated so differently from money outside the shelter.

The spike in the wealthiest people’s tax rates was mostly achieved the second way, and mostly through initiatives of President Obama. Two laws that he championed became effective in 2013, raising tax rates on high earners and limiting the value of tax deductions they are entitled to take.
So there you have the difference between the tax policies of Democrats and Republicans. Under Republicans, the tax rate of the rich fell from 26.4% to 16.7%; under Democrats it has been pushed back up to 22.9%.

If you are a real leftist, you scoff at this tiny difference and think it does nothing to break the hold of the elite on our nation's resources. If you are a small government conservative, you think this proves Democrats really are just about stealing from the rich to fund expansion of the bureaucracy.

My take would be that 1) there is a real difference between the two parties, and 2) within the whole spectrum of available political philosophies the difference between Democrats and Republicans is not really so great. For good or ill there are no revolutionary options in American politics.

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