Obama Is Serious About Making the Rich Pay Higher Taxes

By Joshua Holland, AlterNet. Posted February 27, 2009.

The New York Times noted in January: 

The income of the 400 wealthiest Americans swelled in 2006, soaring nearly 23 percent from the previous year, to an average of $263 million, according to data released Thursday by the Internal Revenue Service. Since 1996, this group has nearly doubled its share of all income earned in the United States. 

The top 400 paid just more than $18 billion in federal income taxes in 2006, or an average of $45 million, on a record $105 billion in total income — the lowest effective tax rate in the 15 years since the agency began releasing such data. 

If Obama's plan passes Congress, that trend will come to an end. An analysis by the Tax Policy Center concludes: 

If you are blue-collar wage earner, a low-income family with children or a college student, you should love President Obama's tax plan. On the other hand, if you are making more than $250,000, you may not be so happy: By 2011, you'd be paying a lot more tax than you've gotten used to over the past few years. 

... The 2001 tax cuts raised after-tax income for those earners in the top 1 percent by more than 7 percent and for those in the top one-tenth of 1 percent by 8.4 percent. Under this plan, those days would end. For those who benefited so much from the Bush tax cuts, 2011 would look more like 2000 than 2008.  

The pre-2001 tax rates for top-bracket earners would be restored, along with the circa-1990 phase-outs of the personal exemption and the standard deduction. On top of that, Obama has proposed capping the value of all itemized deductions at 28 percent. And he'd raise the capital gains rate on couples earning $250,000 or more to 20 percent from 15 percent. 

Of course, corporate America and the wealthiest individuals have a lot of political influence, and, the Wall Street Journal notes, they're gearing up for a fight: 

Mr. Obama's ambitious agenda -- ranging from expanding health care coverage to cutting farm subsidies to cutting wasteful defense projects -- touches almost every part of the U.S. economy. It threatens to disrupt the business models of a broad swath of America's biggest companies. 

Opinion polls indicate that Mr. Obama's broad goals enjoy popular support. But crucial details of the president's agenda will be decided in coming months by close-in legislative fighting, where big industries and the members of Congress that support them have plenty of clout. At the same time, threatened interests are gearing up to shape the coming debates with multimillion-dollar public-relations and lobbying campaigns.

To be sure, Obama's proposals are far from perfect, with increases in military spending on top of an already incredibly bloated "defense" budget. But he promised to end the reverse Robin Hood policies of the Bush administration, and the president's first budget certainly reflects that goal.

See more stories tagged with: obama, taxes, budget

Joshua Holland is an editor and senior writer at AlterNet.

Liked this story? Get top stories in your inbox each week from AlterNet! Sign up now »