So, once again I’m looking around the Internet, and I come across an article on the Obama Economic Plan.  it was a very interesting read – all about Obama’s socialist vision for the future of this nation.

So, I thought I’d provide a little context to go with the article.

The article is from the Wall Street Journal:

The Obama Rosetta Stone

Barack Obama has written two famous, widely read books of autobiography — “Dreams from My Father” and “The Audacity of Hope.” Let me introduce his third, a book that will touch everyone’s life: “A New Era of Responsibility: Renewing America’s Promise. The President’s Budget and Fiscal Preview” (Government Printing Office, 141 pages, $26; free on the Web). This is the U.S. budget for laymen, and it’s a must read.

Turn immediately to page 11. There sits a chart called Figure 9. This is the Rosetta Stone to the presidential mind of Barack Obama. Memorize Figure 9, and you will never be confused. Not happy, perhaps, but not confused.

One finds many charts in a federal budget, most attributed to such deep mines of data as the Census Bureau or the Bureau of Labor Statistics. The one on page 11 is attributed to “Piketty and Saez.”

Either you know instantly what “Piketty and Saez” means, or you don’t. If you do, you spent the past two years working to get Barack Obama into the White House. If you don’t, their posse has a six-week head start on you.

Thomas Piketty and Emmanuel Saez, French economists, are rock stars of the intellectual left. Their specialty is “earnings inequality” and “wealth concentration.”

Messrs. Piketty and Saez have produced the most politically potent squiggle along an axis since Arthur Laffer drew his famous curve on a napkin in the mid-1970s. Laffer’s was an economic argument for lowering tax rates for everyone. Piketty-Saez is a moral argument for raising taxes on the rich.

As described in Mr. Obama’s budget, these two economists have shown that by the end of 2004, the top 1% of taxpayers “took home” more than 22% of total national income. This trend, Fig. 9 notes, began during the Reagan presidency, skyrocketed through the Clinton years, dipped after George Bush beat Al Gore, then marched upward. Widening its own definition of money-grubbers, the budget says the top 10% of households “held” 70% of total wealth.

Alan Reynolds of the Cato Institute criticized the Piketty-Saez study on these pages in October 2007. Whatever its merits, their “Top 1%” chart has become a totemic obsession in progressive policy circles.

Turn to page five of Mr. Obama’s federal budget, and one may read these commentaries on the top 1% datum:

“While middle-class families have been playing by the rules, living up to their responsibilities as neighbors and citizens, those at the commanding heights of our economy have not.”

“Prudent investments in education, clean energy, health care and infrastructure were sacrificed for huge tax cuts for the wealthy and well-connected.”

“There’s nothing wrong with making money, but there is something wrong when we allow the playing field to be tilted so far in the favor of so few. . . . It’s a legacy of irresponsibility, and it is our duty to change it.”

Mr. Obama made clear in the campaign his intention to raise taxes on this income class by letting the Bush tax cuts expire. What is becoming clearer as his presidency unfolds is that something deeper is underway here than merely using higher taxes to fund his policy goals in health, education and energy.

The “top 1%” isn’t just going to pay for these policies. Many of them would assent to that. The rancorous language used to describe these taxpayers makes it clear that as a matter of public policy they will be made to “pay for” the fact of their wealth — no matter how many of them worked honestly and honorably to produce it. No Democratic president in 60 years has been this explicit.

Complaints have emerged recently, on the right and left, that the $787 billion stimulus bill will produce less growth and jobs than planned because too much of it goes to social programs and transfer payments, or “weak” Keynesian stimulus. The administration’s Romer-Bernstein study on the stimulus estimated by the end of next year it would increase jobs by 3.6 million and GDP by 3.7%.

One of the first technical examinations of the Romer-Bernstein projections has been released by Hoover Institution economists John Cogan and John Taylor, and German economists Tobias Cwik and Volker Wieland. They conclude that the growth and jobs stimulus will be only one-sixth what the administration predicts. In part, this is because people anticipate that the spending burst will have to be financed by higher taxes and so will spend less than anticipated.

New York’s Mike Bloomberg, mayor of an economically damaged city, has noted the pointlessness of raising taxes on the rich when their wealth is plummeting, or of eliminating the charitable deduction for people who have less to give anyway.

True but irrelevant. Mayor Bloomberg should read the Obama budget chapter, “Inheriting a Legacy of Misplaced Priorities.” The economy as most people understand it was a second-order concern of the stimulus strategy. The primary goal is a massive re-flowing of “wealth” from the top toward the bottom, to stop the moral failure they see in the budget’s “Top One Percent of Earners” chart.

The White House says its goal is simple “fairness.” That may be, as they understand fairness. But Figure 9 makes it clear that for the top earners, there will be blood. This presidency is going to be an act of retribution. In the words of the third book from Mr. Obama, “it is our duty to change it.”

Now I’ll tell you a little secret: the best way to shut a liberal up is to to look up numbers with either the Congessional Budget Office, the Census Bureau, or the Bureau of Economic Activity.  That’s because you can find and analyze any sort of numbers they record.  And usually, when you do that, you find information that contradicts what most liberals hold dear.  I just happened to locate the data used in the chart shown in the article I cited above.  Here’s a graph of that data:

Average Pre-Tax Income by Income Group

Average Pre-Tax Income by Income Group

Now, when you look at it, it all seems unfair: the top 20% of the nations household appear to have a disproportionate amount of income.  Right?

Hold on.  There’s more to the story.

Ok, now let’s look at the percentage of taxes each of these income brackets pay.  I used the same numbers (because they come from the same spreadsheet) available to the Leninist/Obamaist people:

Percentage Share of Income Taxes Paid by Income Group

Percentage Share of Income Taxes Paid by Income Group

Now, from the data I found – taken from the Congressional Budget Office (CBO)- only the top three quintiles (the top 60% of the nation’s households) had data to use.  I assume that this is because that the bottom 40% of households do not pay income tax.  Looking at the IRS statistics, this assumption looks to be correct (something like 50% of the wage-earners in this nation pay 95% of income tax burden).  So, notice the disproportionate tax burden these top three income brackets share, and the top 20% of this nation pay a VASTLY disproportionate share overall.

Keep that in mind.

Now, the information provided by the government shows pre-tax and after-tax incomes for all five income groups.  So, by simple subtraction, you are able to get the average amount of dollars paid by each income group since 1979:

Average Amount of Taxes Paid by Income Group

Average Amount of Taxes Paid by Income Group

Note how this graph essentially mirrors the income graph.  Yes, the upper 20% accumulates more wealth.  They’re also paying a butt-load of taxes for it as well.  In fact, they pay a VASTLY disproportionate amount of taxes for what they earn.

Which brings me to my next set of graphs: the income graphs.  The first graph I showed doesn’t really tell the full tale when it comes to income.  This is because the upper 20% skews the range so badly that the other plots seem flat by comparison.  So, I placed the lower three income groups into their own graphs.  Here’s the lowest 20%:

Average Income of the Lowest 20% Income Group

Average Income of the Lowest 20% Income Group

Notice how the income fluctuates up and down.  You can easily see a correlation between the income level of the lowest 20% and the amount of taxes paid by the top 20%.  This is easily explained: many of these households obviously rely on taxation for their income.  Now at first blush, this may seem like even more proof that we need to tax the livin’ crap out of the rich, right?

Wait.  Here’s the average income of next lowest 20%, all blown-up:

Average Income of the Next Lowest 20%

Average Income of the Next Lowest 20%

And now the income levels of the “official” middle-class:

Average Income of Middle Class Households (Middle 20% Income Group).

Average Income of Middle Class Households (Middle 20% Income Group).

Notice in the prior two graphs, income increases without regard for taxation.  In fact, the correlation that can be seen is AS THE TOP 20% OF HOUSEHOLD INCOMES INCREASE, SO DO ALL INCOME LEVELS.  Obviously, the socialists in the Obama administration “overlooked” this information.

The anomaly to my aforementioned declaration was the bottom 20% of household incomes, and that’s because – looking at the graphs – they seem tied irreversibly to taxing the top 20%.  But what more glaring about these numbers is the fact that MASSIVE TAXATION OF THE TOP 20% RESULTS IN NEAR-IRREVELANT CHANGES IN INCOME FOR THE BOTTOM 20% OF HOUSEHOLDS.  Something like a swing of $23,200.00 of taxation of the top 20% resulted in something like a $3,200.00 swing in income for the bottom 20%.  Thus, it requires over seven times the amount of taxation of the top 20% to see a lift in the bottom 20%. 

Yep…over seven-times the amount in taxes.  Cripes, the top 20% could voluntarily give that money away, and it would be FAR more effective than progressive taxation.

Here we have over thirty-years of data to show how dismally ineffective the type of progressive taxation (that Obama loves) has actually been.  Obama’s progressive taxation has proven to be an utter failure in the past.

None of this surprises me.  It is human nature for some people to put up with less when they’re guaranteed a living.  And it is just plain economic reality that when the rich do well, so does everyone else.  That’s because the focus of the rich is to make money, and that doesn’t happen by sticking their money under their mattresses.  And it does not surprise me at all that excessive taxation of the rich produces terribly anemic results.  That’s because when you clamp-down on earned income (not handouts), the people at the top start getting really conservative with their money.  It also has to do with the fact that wealth creation (or accumulation) is a function of time.  By and large, people don’t get wealthy overnight; it takes time.

Furthermore, the HUGE discrepancy between the income levels of the top 20% and all other income groups is no surprise to me either.  That’s because, in virtually all forms, progressive taxation results in the rich staying rich, and act as inhibitors to the other classes from narrowing the gap.  The reason for this?  Well, as the old axiom goes: it takes money to make money.  You can tax the ever-livin’ crap out of the top 20% who already have their wealth, and they’ll just preserve what they have, or already have enough wealth that they can take the tax hit without consequences.  However, for all of the people below the 20%, it creates a nasty little ceiling, preventing them from moving into that upper level – because they do not have the liquidity of those who already have large amounts of wealth.  The lower income groups cannot risk as much.

All of these effects are counter to what the nitwits in the Obama regime claim.  It is all very clear when you look at the graphs, and you don’t need to be a rocket scientist to figure any of this out; it’s simple math.

Then again, it surprises me little that a guy with a Ivory League degree could be so stupid.  This isn’t about effective taxation, nor is it about equity.  It is about punishing people for being productive and successful, and acting as parasites on the achievers so as to forward a failed social agenda.  A social agenda geared mainly to keep the inept or corrupt in power.

And, make no mistake: Obama and his stooges are either inept, corrupt, or both.


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