OMB director: “We’re not saying there’s anything wrong with people earning a lot”

posted at 4:05 pm on September 19, 2011 by Tina Korbe

Jack Lew today couldn’t say how an additional tax on millionaires and billionaires will create jobs — and barely confirmed that he thinks such a tax will at least contribute to deficit reduction. The director of the Office of Management and Budget appeared this morning on Fox News’ “Happening Now” to defend the president’s just-announced proposals to trim the deficit — proposals that are a part of his overall jobs plan. Fox’s Jenna Lee asked Lew how the tax will reduce the nation’s high rate of unemployment.

“Today’s plan puts into place a balanced, fair approach to doing the $4 trillion of deficit reduction we need to get to a point where our deficit as a percentage of the economy is at a sustainable level,” Lew told her. “Whichever way you go is a hard choice. There’s a Republican budget in the House that would make severe changes in Medicare and turn it into a voucher program. It would reduce spending on things like education and research and development to the point where we couldn’t invest in what we need for the future.”

Better to tax the super rich, Lew suggested.

“We believe there’s a fundamental unfairness to have middle class people paying higher marginal tax rates than millionaires and billionaires,” Lew said. “We’re not saying we should have a confiscatory tax rate; we’re saying it’s just not fair to have a world where it’s so unbalanced.”

Lee conceded fairness in the tax code is a laudable goal, but again pressed Lew as to how the tax will grow jobs. She wondered: Which of the president’s proposals specifically will improve the jobs situation? Lew didn’t have an answer.

“If you look at the overall package, the things that will create jobs are, first of all, passing the Americans Jobs Act by doing the things that would create demand now and directly create jobs through public works like roads and bridges and keeping teachers and firemen and policemen on the rolls,” Lew said.

At that point, Lee stopped trying and took the tack of this question instead: The revenues from the tax will at least go straight to deficit reduction, right? Well, sure, Lew (sort of) said.

“Well, obviously, it’s a package that overall will reduce the deficit,” he said. “The overall revenue is connected to the overall spending and if you net are bringing down your deficit, yes, it’s very much contributing to bringing down the deficit.”

Seemingly sensing that he had rejected the only two reasonable justifications for the tax — that it will either create jobs or reduce the deficit — Lew fell back on the “it’s not fair” argument.

“We’re not saying that there’s anything wrong with people earning a lot and being very successful,” he concluded lamely. “What we’re saying is it’s not fair to say those people should pay lower taxes than people who are earning much less.”

But while the president says Warren Buffett is paying less in taxes than his secretary, it’s not exactly accurate to say all millionaires and billionaires pay lower taxes than people who are earning less.

In 2009, 236,883 people reported more than $1 million in income — and paid $177 billion in federal income taxes, according to an infograph on Fox. That represents 0.2 percent of all federal tax returns, but makes up more than 20 percent of all income tax payments.


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“….as long as they aren’t allowed to keep it, of course.”

Vashta.Nerada on September 19, 2011 at 4:09 PM

“We’re not saying that there’s anything wrong with people earning a lot and being very successful,” he concluded lamely. “What we’re saying is it’s not fair to say those people should pay lower taxes than people who are earning much less.”

How are they paying less? If we’re talking federal income tax rates, they’re in a higher bracket than the middle class income earners. Now if they’re like Buffett and earn their money from capital gains, then of course their rate will be lower because that’s not taxed as ordinary income. And if you start to tax capital gains as ordinary income, you can forget about anyone investing here ever again.

Doughboy on September 19, 2011 at 4:11 PM

“At some point I think you’ve made enough money.”

Ted Torgerson on September 19, 2011 at 4:11 PM

Obama trots out all of these billionaires who allegedly tell him, “Please raise our taxes.” Rather than spending everyone else’s money, ifthey feel so generous, rather than raising taxes, why not just have them donate to reduce the debt?

http://www.treasurydirect.gov/govt/reports/pd/gift/gift.htm

VastRightWingConspirator on September 19, 2011 at 4:12 PM

It would reduce spending on things like education and research and development to the point where we couldn’t invest in what we need for the future.

I’d like to see a specific accounting of the research and development the government is “investing” in.

Same goes for “education” spending.

forest on September 19, 2011 at 4:12 PM

I’ll bet that Buffett’s secretary who he claims is in the 15 percent tax bracket only pays about 6 or 7 percent after deductions.

Dasher on September 19, 2011 at 4:14 PM

“We’re not saying there’s anything wrong with people earning a lot”

After all we need someone to take from…

Scrappy on September 19, 2011 at 4:15 PM

The dirty little secret is that investment income is based on money that has already been taxed (you had to make the money at some point in order to have it to invest).

What they want is to tax it at income rates twice.

That’s fair, huh?

Bat Chain Puller on September 19, 2011 at 4:15 PM

Warren Buffet owes back taxes on Berkshire Hathaway going all the way back to 2002.

tetriskid on September 19, 2011 at 4:16 PM

How are they paying less?

Doughboy on September 19, 2011 at 4:11 PM

They aren’t paying less. It’s just another progressive lie.

Vashta.Nerada on September 19, 2011 at 4:16 PM

and keeping teachers and firemen and policemen on the rolls,” Lew said.

Right, because the first budget-cut targets are always the cops and firemen, never the armies of clerks in layers of bureaucracy that are redundant to the point of utter ridiculousness.

How about laying off some of the 40+ personal attendants that Moochy has flitting about her at all times.

Bishop on September 19, 2011 at 4:18 PM

That’s not what El Presidente (Spread the wealth around) Downgrade thinks.

He thinks that people should be punished for being successful and he thinks that people will take it and ask: Thank you sir, May I gave another!

Chip on September 19, 2011 at 4:19 PM

If these liberal Democrat bums were forced to revert to some lower level of animal life it surely would be the blood sucking leach.

rplat on September 19, 2011 at 4:20 PM

Doughboy on September 19, 2011 at 4:11 PM

Yes DB, but us peasants are supposed to understand things like that. We’re not even supposed to know what ‘capital gains’ are don’t you know.

catmman on September 19, 2011 at 4:20 PM

And on top of that, Surprise! You get to pay the millionare tax as well. My favorite one is the new tax of $4 per acre that does not produce oil or gas that may contain oil or gas. It sure helps raise money on that when the feds are keeping people from drilling for oil

ConservativePartyNow on September 19, 2011 at 4:20 PM

Reduce smoking? Tax it.

Reduce energy use? Tax it.

Reduce grocery bags? Tax it.

See a pattern?

Now, explain this:

Increase income? Tax it. Huh?

BobMbx on September 19, 2011 at 4:20 PM

Thank you sir, May I have another!

Chip on September 19, 2011 at 4:21 PM

Warren Buffet owes back taxes on Berkshire Hathaway going all the way back to 2002.

tetriskid on September 19, 2011 at 4:16 PM

The TurboTax defense.

Tim to Warren: “just wait out the statute of limitations, dude.”

BobMbx on September 19, 2011 at 4:22 PM

Well if it simply a question of fairness, then why not cut the middle-class tax rate as well? Make it more in line? Wouldn’t that be fair?

catmman on September 19, 2011 at 4:23 PM

BobMbx on September 19, 2011 at 4:20 PM

You forgot:
See a pattern? Tax it!

ConservativePartyNow on September 19, 2011 at 4:23 PM

“We believe there’s a fundamental unfairness to have middle class people paying higher marginal tax rates than millionaires and billionaires,” Lew said. “We’re not saying we should have a confiscatory tax rate; we’re saying it’s just not fair to have a world where it’s so unbalanced.”

Can I suggest a tax on poor people for being poor?

Want to reduce the number of poor people? Tax them.

BobMbx on September 19, 2011 at 4:24 PM

48% of all people filing IRS returns had a tax liability of $0.

Want to talk about a FAIR tax system, how about making those people pay their fair share?

angryed on September 19, 2011 at 4:24 PM

Has anybody considered that maybe Buffett overpays his secretary? If Buffett is taking a $100,000 salary and is paying his secretary $200,000, doesn’t it stand to reason that his secretary pays more?

John Deaux on September 19, 2011 at 4:26 PM

OBAMA SELLS “ISM”:

http://www.youtube.com/watch?v=mVh75ylAUXY&feature=player_embedded

andy85719 on September 19, 2011 at 4:26 PM

So increasing the fines for speeding through construction zones is also implying that, “We’re not saying there’s anything wrong with [that].”

WashJeff on September 19, 2011 at 4:27 PM

I still want to see this alleged secretary of Buffett who is paying a higher % in taxes than he is. I don’t believe she exists.

Ed/Allah/Tina…how about looking into this.

angryed on September 19, 2011 at 4:27 PM

Fact is, unlike most other folks, Warren Buffett gets most of his ‘income’ from dividends and capital gains, which are nominally taxed at 15 percent.

Fallon on September 19, 2011 at 4:28 PM

It just strikes me, all the reference to the “middle class bearing so much of the burden” so we have to raise taxes on the rich yet there is no corresponding talk about reducing said burden on the middle class.

Simply raising taxes on the wealthy doesn’t reduce the burden of those in the middle if those rates aren’t reduced, right? Wouldn’t the true fair thing be to reduce the rate of the middle-class then raise the rate on the evil rich?

catmman on September 19, 2011 at 4:29 PM

obama decries the millionares and then holds a $38K plate fundraiser that only they can attend. the doofus is trying to have it both ways

ConservativePartyNow on September 19, 2011 at 4:30 PM

And Tina, we really need a link back to the material your referencing.

catmman on September 19, 2011 at 4:30 PM

Has anybody considered that maybe Buffett overpays his secretary? If Buffett is taking a $100,000 salary and is paying his secretary $200,000, doesn’t it stand to reason that his secretary pays more?

John Deaux on September 19, 2011 at 4:26 PM

He pays a lower rate..that is, when he pays at all. In whole dollars, he pays a big number. Why does he get a discount that you and I aren’t getting?

Another way of looking at it this: We subsidize the taxes he would be paying if he was taxed at the same rate we are. So, we pay our taxes, and the taxes he doesn’t have to.

BobMbx on September 19, 2011 at 4:32 PM

Now if they’re like Buffett and earn their money from capital gains, then of course their rate will be lower because that’s not taxed as ordinary income.

Buffett and Obama like to use this a lot. They pay way more in taxes than Buffett’s secretary, but like you said, the tax rate is lower.

They hope that no one understands the difference.

tommer74 on September 19, 2011 at 4:32 PM

Fact is, unlike most other folks, Warren Buffett gets most of his ‘income’ from dividends and capital gains, which are nominally taxed at 15 percent.

Fallon on September 19, 2011 at 4:28 PM

That is, when he actually Pays taxes..

Chip on September 19, 2011 at 4:33 PM

What it creates is an unscalable wall for the middle class to climb and become the “wealthy”.
As the middle class enters the realm of the “wealthy”, they are beaten back by high taxes.
The people already there, they can dodge and maneuver to avoid the taxes, or “ride them out” with added investments.
This is not to “tax the wealthy” but to keep the middle class in their place…

right2bright on September 19, 2011 at 4:36 PM

Maybe he is trying to avoid saying it, but Obama is “perfectly clear” about it.

Mr. Law can weasel around all he wants. His boss ain’t kidding and never has when it comes to this subject. I suspect Law is trying to avoid trying to defend the hilarliously indefensible.

Harry Schell on September 19, 2011 at 4:37 PM

By the way … who IS Warren Buffet’s secretary anyway?

HondaV65 on September 19, 2011 at 4:38 PM

Equal or Fair?

If we are all equal under the law, then we should all have one vote and pay the same taxes.

If we are going to be fair, then we should pay taxes based on our incomes and have the quantity of votes based on how much we pay.

So, should we be Equal or Fair?

I support a national sales tax or even the 999 Cain plan.

barnone on September 19, 2011 at 4:39 PM

Obama and his gaggle of idiots are seriously dangerous. This is a ploy to ensure a massive redistribution of wealth . . . it is in fact Marxism/communism at its worst and it must be stopped.

rplat on September 19, 2011 at 4:40 PM

48% of all people filing IRS returns had a tax liability of $0.

Want to talk about a FAIR tax system, how about making those people pay their fair share?

angryed on September 19, 2011 at 4:24 PM

I believe that figure is skewed…thrown out a lot, but I think it is based on tax returns, and many people pay throughout the year, so their tax liability at the end of the year is $0 or they receive some back. But they paid taxes every paycheck.
The more accurate figure would be, how many actually paid any taxes at all…

right2bright on September 19, 2011 at 4:40 PM

He pays a lower rate..that is, when he pays at all. In whole dollars, he pays a big number. Why does he get a discount that you and I aren’t getting?

Another way of looking at it this: We subsidize the taxes he would be paying if he was taxed at the same rate we are. So, we pay our taxes, and the taxes he doesn’t have to.

He is taxed at the same rates as you are, he just has more income in the lower tax rate categories. If all your income was from investment then your rate would be 15% also.

Ann on September 19, 2011 at 4:41 PM

By the way … who IS Warren Buffet’s secretary anyway?

HondaV65 on September 19, 2011 at 4:38 PM

(I love these setups)
Obama!

right2bright on September 19, 2011 at 4:41 PM

Reduce smoking? Tax it.

Reduce energy use? Tax it.

Reduce grocery bags? Tax it.

See a pattern?

Now, explain this:

Increase income? Tax it. Huh?

BobMbx on September 19, 2011 at 4:20 PM

Consider that they can never seem to explain the contradiction that a tax will diminish an ‘sin’ activity in some cases, but supposedly won’t in other cases.

They have this mythical idea that only a few more percent screwing of the rich won’t be punitive enough to decrease economic activity.

They think that 20 – 30 % more will do it but somehow 2- 3 % won’t.

Chip on September 19, 2011 at 4:42 PM

Fairtax?

RDE2010 on September 19, 2011 at 4:45 PM

I think that Mr. Buffet’s secretary needs to demand a raise. After all shouldn’t she be in the upper tax bracket???

kringeesmom on September 19, 2011 at 4:45 PM

OMB director: “We’re not saying there’s anything wrong with people earning a lot”

We just want the lions share of it.

heshtesh on September 19, 2011 at 4:45 PM

48% of all people filing IRS returns had a tax liability of $0.

Want to talk about a FAIR tax system, how about making those people pay their fair share?

angryed on September 19, 2011 at 4:24 PM
I believe that figure is skewed…thrown out a lot, but I think it is based on tax returns, and many people pay throughout the year, so their tax liability at the end of the year is $0 or they receive some back. But they paid taxes every paycheck.
The more accurate figure would be, how many actually paid any taxes at all…

right2bright on September 19, 2011 at 4:40 PM

Sorry but your comment doesn’t make sense.

The statistics on taxes are not based on the refund amount or tax payment due but on the total tax however paid. Any other way would be meaningless. My goal as an accountant is to have my clients pay in the correct amount and have neither a refund or a payment due when they file.

Ann on September 19, 2011 at 4:46 PM

Fact is, unlike most other folks, Warren Buffett gets most of his ‘income’ from dividends and capital gains, which are nominally taxed at 15 percent.

Fallon on September 19, 2011 at 4:28 PM

Exactly…so to address O’Bonehead’s hand-wringing concern that Buffett is paying a lower effective tax rate than his janitor, we should do one of two things:

1. Pass a flat tax and eliminate all forms of deduction, or
2. Pass an alternative minimum billionaire tax rate, so that those Buffett-boys who are able to avoid taxes by taking dividends and capital gains and not ordinary income are taxed at the higher of the Federal income or capital gains rate.

This will result in a very targeted tax increase on only those who O’Bonehead and Buffett claim are getting away with murder, and of course will solve exactly nothing. And Buffett will pay millionaire tax lawyers a lot of money to avoid that increase, of course, and then not pay the bill when his lawyering fails.

Jaibones on September 19, 2011 at 4:48 PM

The only question I want answer for regarding all of this talk about millionaires and billionaires is this:

When the Obama’s wrote that check payable to the United States Treasury, how much was it for?

Wait, they didn’t write a check payable to the United States Treasury?

Then I don’t want to hear his garbage about how “people like him” need to pay their “fair share”.

ButterflyDragon on September 19, 2011 at 4:48 PM

I believe that figure is skewed…thrown out a lot, but I think it is based on tax returns, and many people pay throughout the year, so their tax liability at the end of the year is $0 or they receive some back. But they paid taxes every paycheck.
The more accurate figure would be, how many actually paid any taxes at all…

right2bright on September 19, 2011 at 4:40 PM

LMAO

Your comment shows you have probably never filed taxes or held a job.

ButterflyDragon on September 19, 2011 at 4:50 PM

48% of all people filing IRS returns had a tax liability of $0.

Want to talk about a FAIR tax system, how about making those people pay their fair share?

angryed on September 19, 2011 at 4:24 PM

The shocker is how many of them still got a refund from the IRS based on deductions they would have received if they had owed taxes.

Franklyn on September 19, 2011 at 4:56 PM

“What we’re saying is it’s not fair to say those people should pay lower taxes than people who are earning much less.”

Even assuming your premise is true (and it’s not), you’re still taking the wrong approach. Lower the taxes on the people earning much less, don’t raise taxes on the people earning more.

hawksruleva on September 19, 2011 at 4:56 PM

So the fact that .2 of the population pay 20% of income taxes, and about 50% pay NONE = fair?

How about you pay NO income tax, you don’t get to vote. That could also be construed as fair.

GarandFan on September 19, 2011 at 5:11 PM

I wonder, does Obama believe in “From each according to his ability, to each according to his need.” Isn’t that what this whole “fair share” argument comes from? Someone should corner him with that question so he can rightfully be linked with that other guy who made that slogan popular.

AverageJoe on September 19, 2011 at 5:12 PM

Well if it simply a question of fairness, then why not cut the middle-class tax rate as well? Make it more in line? Wouldn’t that be fair?

catmman on September 19, 2011 at 4:23 PM

You took the words right out of my mouth (or rather, from my keyboard).

Not only that, but start taxing the 47% of Americans who aren’t paying taxes right now, until everyone is paying the 17% marginal rate that Buffett thinks is too low.

Fair is fair, right?

UltimateBob on September 19, 2011 at 5:13 PM

This is typical liberal sleight of hand. Millionaires do not pay less taxes than “those who make less money.” That, truly, would be unfair. Millionaires pay less taxes as a percentage of total income than those who make less money. It’s a huge difference.

A system where billionaire Warren Buffet paid $30,000 and I paid $35,000 would lead me to kill Warren Buffet where he stood. But if I pay $35,000 (say 25% on $140,000) and Warren Buffet pays $10M (20% on $50M)–that’s not necessarily unfair.

If you think every one owes a percent to the government of every dollar they make (after making allowances for basic living expenses) then you will think the current system unfair. (Logically, you should also be for a flat tax, but liberals never are).

If, however, you think every person above the poverty level has a duty to support the government up to a certain point, and after that, they get to keep what they made through their own hard work and ingenuity, then you are a greedy, racist, bastard who wants people to die faster.

DailyDanet on September 19, 2011 at 5:20 PM

But while the president says Warren Buffett is paying less in taxes than his secretary, it’s not exactly accurate to say all millionaires and billionaires pay lower taxes than people who are earning less.

Not exactly accurate? No kidding! How about it’s an “abject falsehood”? Heck, even Buffett doesn’t claim they pay less taxes – just that they pay taxes at a lower rate.

Buy Danish on September 19, 2011 at 5:39 PM

I still want to see this alleged secretary of Buffett who is paying a higher % in taxes than he is. I don’t believe she exists.

Ed/Allah/Tina…how about looking into this.

angryed on September 19, 2011 at 4:27 PM

It does sound like a dead Chicago fish story. Considering the source is cheek to cheek with Obama and Obama has such a solid reputation for telling the truth, honest, it has to be true. Just ask dingy Harry, he’ll vouch for it and the dame too!

Franklyn on September 19, 2011 at 5:51 PM

Forget it pal, we have ridiculously smart accountants with horns and cloven hoof, **poof** suddenly I will be below whatever cut off bracket you set.

Alden Pyle on September 19, 2011 at 5:59 PM

How about laying off some of the 40+ personal attendants that Moochy has flitting about her at all times.

Bishop on September 19, 2011 at 4:18 PM

They certainly are not very helpful in helping her choose a wardrobe. A friend sent me an email showing some of her fashion choices—–not good.

arnold ziffel on September 19, 2011 at 6:02 PM

America’s wealth imbalance is utterly unsustainable.

Right now, 0.0002% of America’s population control approximately half of the country’s wealth. And they all live in Washington, DC.

logis on September 19, 2011 at 6:19 PM

I don’t know – sounds like more “shovel-ready” Bullsh!t to me.

Just sayin…

realitycheck on September 19, 2011 at 6:29 PM

Lets see, My stepfather was a millionaire and my father was an average man who worked for a paycheck and for a while was on welfare. It was a unique experince of life but one that afforded me live at both ends of the economic spectrum. My over all observation is that the rich have the same bills as everyone else, just bigger.

It is probably reasonable to assume that the lower class make up most of that 46%+ that do not pay taxes and recieve the automatic deductions as a tax refund. The lower class essentially drains tax revenue paid by the other tax payers without much of a contribution to the economy. They are surviors but generally happier than most.

The lower middle income earners are paying 25% of their income, or less if they managed to wipe out the tax they owe with a large number of dependents or allowed deductions. For the most part they are hoping that the taxes taken out of their paychecks will cover the tax bill and give a little bit back, which is taxed again as income for the next year.

This is the class that the Obama’s economic advisors believe will revitalize the economy if they have more money to spend. This ecomomic model is found in the first few pages of any text on economics as a “basic” example of an economic cycle. I usually reached that example in the first fifteen minutes of my classes. I can easily see his advisors as the kid who was already catching up on missed sleep by that time.

The upper middle is the class, the 200-250K Obama millionairs that Obama thinks has all his money is, in a basic sense, split into two catagories, both important to our economy.

The first are the small business owners. This part of the upper middle class are the entrepreneurs, usually not rich or posses a high level of education, that are taking a risk in hopes of creating a better life for themselves. They are ones that create the jobs that the majority of Americans have. Not all are successful. A large number due to poor planing, location, poor busness decisions, or simply not planning or have the ablility to plan for the future cost of business, will fail within the first year. Many more will fail if taxes are increased for lack of expendable revenue to keep the business going. With the jobs goes the income that Obama and his nitwits are trying to create with the stimulus paid for by the tax increases.

The second group consist of those who have education or skills that allow them to earn an income without the risk of the entrepreneurs. This group tends to be affluent as compared to the first group. They can afford tax services and shelters to keep more of their income. They have more expendable income that can buy more products and services and be invested in other facets of the ecomomy. This group could absorb a higher tax rate with a lowered life style and the loss of expendable income that was available for investment before the tax increase, which has a negative ripple effect on the entire economy.

The upper class is not likely to suffer much from a tax increase. They usually can afford to find ways to protect their income now with investments and shelters until a later time when they can take advantage of less taxable income. The need to shelter income reduces the expendable income that would have been invested in ways that grow the ecomony. Particulialy hurt will be the small businesses who depended on the upper class investments to allow them the funding needed to open or run their business.

How they think that raising taxes on the middle class will result in a stable economic modle with equal percentages of taxes paid is puzzling. Equally puzzling is the assumption that some how this creates jobs and expancs the economy. Obviously considering the source will explain goes a long way to explaining it.

If there really is some logical thought to rasing middle class taxes it must be in the reality that socialism must fail to suceed so that the command economy of communsim will be accepted.

Franklyn on September 19, 2011 at 9:26 PM