The ink was not even dry on the emergency debt-ceiling bill Congress passed last month and President Obama was back in front of the teleprompter wordsmithing an appeal to reform the tax code so that the “wealthiest” Americans and biggest corporations pay their “fair share” of taxes.
It also means reforming our tax code so the wealthiest Americans and biggest corporations pay their fair share and it means getting rid of taxpayer subsidies to oil and gas companies and tax loopholes that help billionaires pay a lower tax rate than teachers and nurses.
What could be more reasonable than this? I mean, everybody should pay their “fair share,” right? And who wants billionaires to have tax loopholes at their disposal? The word “loophole” alone suggests something illicit and dishonest.
Unfortunately for America, millions nod approvingly at these specious words, feeling informed as they return to their union jobs, university tenure, or government employment. We need a “balanced” approach to our national debt crisis, he says. Fewer “harsh” spending cuts and more revenue increases. The words are carefully chosen. The logic is compelling; soothing even.
President Obama’s biggest political strength is a keen understanding of human nature. He knows that if he says something over and over that sounds good, the vast majority of his supporters who vote for a living but pay little or no taxes and even less attention to the issues will walk into the voting booth a year from now with a radically skewed perception of political reality. He’s betting on it. Sadly, it’s not a bad bet.
One thing you will never hear our president explain is precisely what he means when he uses the word “fair.” The word actually means “free from bias, dishonesty, or injustice.” What Obama means, however, is something quite different. What he is saying is that it is not fair that somebody earns more than another, owns more than another, or has more wealth than another. And he intends to make it “fair.”
Take for example two hypothetical neighbors — the Williamses and the Joneses — living in neighboring houses, with the same number of cars, the same number of children attending community schools, and the same demand for public services. The Williamses have a household pre-tax income of $500,000 while the Joneses earn only $50,000. The Williamses pay $100,000 in annual federal and state income taxes while the Joneses pay no income taxes after deductions, child tax credits, and an earned income tax credit. Is this situation fair?
Some would argue that it is not fair because the Williamses pay a lot of federal income taxes while the Joneses pay none at all. Others would argue that it is not fair for a completely different reason: The Williamses earn so much and could pay a lot more in taxes than they do. Our president looks at things this way.
He has been taught and truly believes that the higher wage-earning neighbor has “no skin in the game” and is not paying his “fair share.” He has announced that he will not balance the budget on the back of the Jones family and he has not hidden the fact that he intends to make life more “fair” by confiscating more of what the Williamses earn and giving it to the Joneses — either directly, as he has done through tax credits, or through social services, free health care, a “stimulus,” Social Security, Medicare, Medicaid, “affordable” housing programs, tax credits, or other entitlements.
It is true, and redistributionists like our president often counter, that federal income taxes are just a small part of the overall tax picture. There are still property taxes, state income taxes, payroll taxes, sales taxes and excise taxes, hotel taxes, rental car taxes, airport taxes, etc., just to name a few. But let’s be frank: whatever the Joneses pay in these other forms of taxes, surcharges, and fees, the Williamses pay ten times that amount. Is that fair?
Let’s assume that the father in the Jones family works for a small business owned by the father in the Williams family. It is true, as redistributionists claim, that about half of those who do not pay income tax are still paying the so-called FICA 7.65% payroll tax. But not so fast. Under the Federal Insurance Contributions Act, 12.4% of earned income up to an annual limit must be paid into Social Security, and an additional 2.9% must be paid into Medicare. Who pays it? Jones pays only half of his FICA bill (6.2% for Social Security plus 1.45% for Medicare), and that half is automatically withheld by Williams, who invests the time and manpower necessary to pay it to the government on Jones’ behalf.