Obama's Math: More Fuzz Than a Peach

[bonnie]

Obama's Math: More Fuzz Than a Peach

By Mercer Tyson

He's looking more like a bobblehead every time he speaks. From left to right, nose in the air, all the while talking down to those of us he views as stupid. Well, we may be stupid, but we certainly can add, subtract, multiply, and divide better than the POTUS can.

In Obama's fist-pounding, finger-pointing, bellyaching repeat of many previous speeches, he put forth a "plan" to bring down the deficit. And what an original non-plan it was. Raise taxes, fake spending cuts -- just like all his other non-plans. Nothing written, you understand, just promises to cut out fraud and waste. And, of course, tax the rich. This time he prefaced his "tax the rich" part by saying, "This is not class warfare; it's math." Math? Mrs. Davies, my 1st-grade teacher, would probably take exception to that. Now, it seems, even arithmetic has joined the sciences taken over and rearranged by the liberal left.

The president: "They should have to defend that unfairness -- explain why somebody who's making $50 million a year in the financial markets should be paying 15 percent on their taxes, when a teacher making $50,000 a year is paying more than that -- paying a higher rate."

Since we all have a tendency (yes, even conservatives) to rush to judgment before we know the facts and what we are talking about (and because I admit I don't believe anything this guy says anymore), I forced myself to have a conversation with my accountant before I went on my rant. He e-mailed me this:

I ran a 2011 tax projection for the two situations he outlines and this is what it shows:

-Taxpayer earning $50K - pays $4,156 in federal income taxes, or 8.3% effective tax rate (not higher than 15% as erroneously bellowed by the illustrious campaigner)

-Taxpayer earning $50M - pays $17,466,318 in federal income taxes or 34.9% effective tax rate (considerably higher than, well, you know)

Two questions for our brilliant Prez:

1. Where did you learn math?

2. Who in your example is paying their "fair share"? (Note: there are two potentially correct answers here for those challenged by the obvious -- certainly "the taxpayer earning $50M" is correct, but "both taxpayers" is also a correct answer.)

Two observations:

1. Mr. Obama should be "called out" for being an idiot.

2. What the heck, man?

Now I am sure my accountant doesn't really want Obama and others like him to learn how to read a tax table -- after all, they might start doing their own taxes. However, it seems reasonable to expect the president to check with his accountant (like I did) before he goes on national television and makes a fool of himself.

But then, he's used to that.

What? Pardon me? You are saying I misrepresented the whole thing by counting only ordinary income? Click here if you don't know the difference between ordinary income and capital gain and don't trust my synopsis. Otherwise, please accept my brief explanation.

Ordinary income is money earned from your job. This can be wages from cleaning windows to being the CEO of a major corporation. There are other inclusions, but it is essentially as I have described. Capital gain, on the other hand, is profit from invested capital. What's the difference, and why is there different tax treatment for the two?

First off, invested capital is, in itself, the remains of earned income after taxes have been removed. Get it? Taxes have already been paid on the invested income before the capital was invested.

Next, there is a possibility of incurring a loss when you invest your money, not something readily occurring with your job. Very few of us go to work, perform our duties, and lose money as a result.

Aren't those two issues enough justification for a different tax rate on capital gains versus ordinary income right there? Add this: capital gains are taxed at a lower rate as an incentive to invest. Without investment, we have no new jobs, and no increased productivity, which raises everyone's standard of living. We have no way to prepare for our retirement (other than to depend on Social Security!), and no way to make things better for our succeeding generations.

Investment is a good thing. If you do your job well, save some money, and invest it, it is good for you, the economy, and our country. Please, oh please, invest some money. We all depend on it.

Certainly we remember Mr. Buffett's article stating that his secretary paid a higher tax rate than he did. I'd bet a prix-fixe dinner at Chez Panisse in Berkeley that his secretary has a few bucks invested in equities (maybe some in Berkshire-Hathaway), and I'd bet another dinner at the Clint Eastwood's Hog's Breath Inn down in Carmel-by-the-Sea that his secretary is paying no more taxes on her investment income than Mr. Buffett is -- and paying considerably less on her earned income than Buffet is. Buffet's argument was blatantly incorrect and deliberately misleading, which is surprising coming from a man with such seemingly good intentions as to leave large portions of his fortune to charitable causes when he croaks. And, just a hunch here, I'll go one more dinner anywhere that Buffett's capital employs more people than his secretary.

(By the way -- here's a tip for the IRS. Mr. Buffett's statements imply that he is really making more money from his job -- the managing of his money -- than he is claiming, preferring to receive his earnings as capital gains and not attributing a large enough amount to his labor and expertise. Do I get a reward for being a tax snitch?)

Here's the sad part: Obama doesn't know what to do. Neither do his advisors. They want to keep their jobs, but they have no idea what's going on. Obama's like a pitcher who has been lit up for 18 runs in one inning and thinks if he keeps throwing his fastball, eventually he'll get someone out. Unfortunately, the coach can't take him out until 2012, so he's going to keep on throwing that fastball.

And keep on bobbling that head.

[Dr. Shane]

-Taxpayer earning $50K - pays $4,156 in federal income taxes, or 8.3% effective tax rate (not higher than 15% as erroneously bellowed by the illustrious campaigner)

-Taxpayer earning $50M - pays $17,466,318 in federal income taxes or 34.9% effective tax rate (considerably higher than, well, you know)

The guy earning $50K also pays FICA and medicaid tax. When added to the 8.3% that puts him over the 15%.

If the guy earning $50 million earns all of that from capital gains, he will pay 15% or less once he starts using loop holes.

Beware of the spinmisters out there.

[bonnie]

-Taxpayer earning $50K - pays $4,156 in federal income taxes, or 8.3% effective tax rate (not higher than 15% as erroneously bellowed by the illustrious campaigner)

-Taxpayer earning $50M - pays $17,466,318 in federal income taxes or 34.9% effective tax rate (considerably higher than, well, you know)

[Dr. Shane]

Stick to what was said please. This concerns federal income tax.

That is why we need to be sharp and not be so gullible. The spinmisters want to spin things their way so that we get tricked into thinking like them.

The issue isn't "just about federal income tax". Obama is comparing capital gains tax paid by the wealthy to income tax paid by the middle class. Of course, to do a fair comparison, we have to included the payroll tax paid by the middle class. Let's not forget, the middle class and poor carry the burden of the payroll tax.

You are not a top. Don't let them spin you.

[bonnie]

That is why we need to be sharp and not be so gullible. The spinmisters want to spin things their way so that we get tricked into thinking like them.

[Dr. Shane]

Capital gains and federal income tax are two separate issues.

[bonnie]

Quote:

The poor carry only the burden of knowing they do not pay or pay very little.What they do pay is returned PLUS by the Earned Income Tax Credit

Quote:

Not their Social Security and Medicare taxes. The poor and middle class carry the burden for Social Security and Medicare taxes.

Yes they initially pay in but the tax credit is fairly substantial.A family with three children and around 42-43,000 a year receive over 5500.00 Goes quite a ways in refunding previous amounts paid in.

I don't think those on welfare pay any

Quote:

Ahhhh, watch out for those spinmisters! That is what they have been spouting off the last couple of weeks. Don't buy into it.

This continued statement of yours is demeaning and insulting and I think quite deliberately so.Disagreeing with Shane means opinions of those that disagree with him are without validity and should be disregarded because of the influence of his definition of spin.Sorry,you are not the first and last expert on what is correct opinion

Quote:

Let's say I invest $30,000 into some stocks. I sell them for $35,000. Now it is true that I already paid income tax on the $30,000 I used to invest. But I have not paid any taxes on the $5,000 profit that I earned. That is what I pay capital gains tax on. I don't pay capital gains on the entire $35,000 - only on the $5,000 profit.

What goes into capital gains and investments generally already has paid 35% corporate tax

Badly phrased. What produces capital gains and investments generally already has paid 35% corporate tax.Then the 15% on profit.That is why the "generous" Warren Buffett draws only 100,000 a year in salary and then whines about everyone else

Let's go back to the topic of this thread.

Ordinary income is money earned from your job. This can be wages from cleaning windows to being the CEO of a major corporation. There are other inclusions, but it is essentially as I have described. Capital gain, on the other hand, is profit from invested capital. What's the difference, and why is there different tax treatment for the two?

First off, invested capital is, in itself, the remains of earned income after taxes have been removed. Get it? Taxes have already been paid on the invested income before the capital was invested.

Next, there is a possibility of incurring a loss when you invest your money, not something readily occurring with your job. Very few of us go to work, perform our duties, and lose money as a result.

Aren't those two issues enough justification for a different tax rate on capital gains versus ordinary income right there? Add this: capital gains are taxed at a lower rate as an incentive to invest. Without investment, we have no new jobs, and no increased productivity, which raises everyone's standard of living. We have no way to prepare for our retirement (other than to depend on Social Security!), and no way to make things better for our succeeding generations.

[Dr. Shane]

What produces capital gains and investments generally already has paid 35% corporate tax. Then the 15% on profit.

[bonnie]

The corporate tax is paid by the corporation, not the investor. The investor is not getting double taxed. That is spin. The corporation passes that 35% tax onto the consumer in the cost of the product or service rendered. The investor's 15% is paid by the investor.

[Dr. Shane]

The corporation is made up of individuals,"human beings" that take their income from the profits of the corporation.

[bonnie]

No, actually the salaries paid to employees does not come from the company's profits. The profits are the amount of money left over after paying the company's expenses, which includes the employees' wages.

[Dr. Shane]

If you don't regret where Obama has taken us I guess you are pleased with where we are at.

If we had elected McCain, who would save us now? McCain, Pelosi and Reid would have taken us to a bad place with no hope of getting out. At least now we have an option to change course.

[bonnie]

Originally Posted By: bonnie

If you don't regret where Obama has taken us I guess you are pleased with where we are at.

If we had elected McCain, who would save us now? McCain, Pelosi and Reid would have taken us to a bad place with no hope of getting out. At least now we have an option to change course.

Obama,Pelosi and Reid did take us to a terrible place.I seriously doubt if anyone is going to save us now.

Our option for change is months away and a tremendous amount of damage will still come our way.

Odd reasoning,when you have a choice between bad and disaster,people will choose disaster and consider it a intelligent choice.Nor am I buying your spin that you voted for Obama so we could get a republican president this time around

McCain with the change in congress may have been willing to pull back on insanity.

We know Obama won't regardless and he will work every angle to keep up the destruction as he promised

[Dr. Shane]

Obama,Pelosi and Reid did take us to a terrible place.

[bonnie]

I-can't-compromise-enough-with-Democrats McCain would have us in the same place economically. And Obama has done some good things. He has improved our standing in the world. He kill Osama bin Ladan. He took it to the credit card companies. He re-vamped the student loan program.

So he has done some good things.

[Dr. Shane]

No,he didn't kill Osama.He did what any other sitting president would have done in the same circumstances.

I can't disagree more. Obama was told there was a 50% chance that Osama was in that compound. A 50% chance. Obama sent Navy Seals into a nation with nuclear power without authorization from them to attack a compound next to a military establishment. That is brave. That is bold. That is not something any other sitting president would have done. Obama should be wearing a cowboy hat after doing something like that.

That was far bolder than Bush invading Iraq. Bush was told the case for Saddam have WMDs was a "slam duck". President Putin call Bush and told him of Russian intelligence indicating Saddam planned to use terrorists and WMDs to attack the US on US soil. President Bush did "what any other sitting president would have done in the same circumstances."

[bonnie]

I can't disagree more. Obama was told there was a 50% chance that Osama was in that compound. A 50% chance. Obama sent Navy Seals into a nation with nuclear power without authorization from them to attack a compound next to a military establishment. That is brave. That is bold. That is not something any other sitting president would have done. Obama should be wearing a cowboy hat after doing something like that.

That was far bolder than Bush invading Iraq. Bush was told the case for Saddam have WMDs was a "slam duck". President Putin call Bush and told him of Russian intelligence indicating Saddam planned to use terrorists and WMDs to attack the US on US soil. President Bush did "what any other sitting president would have done in the same circumstances."

I am glad that the invasion of Iraq was based on a firm belief.

I am glad Osama has been removed however it was done.

To many stories and the WhiteHouse unable to give a clear concise report of what happened as far as possible is more of what surrounds Obama.Panetta may very well be the one.

Many interviews given by what should be expected to be credible do no paint Obama as this decisive "cowboy".

Any president that did not act on the information would have been toast when it came out and it would.

[Dr. Shane]

Obama also gave order for Navy Seals to shoot the Somalian pirates while they were holding the hostages. I would say he is cowboy-in-chief.

[bonnie]

Obama also gave order for Navy Seals to shoot the Somalian pirates while they were holding the hostages. I would say he is cowboy-in-chief.

He is a joke

[Dr. Shane]

Them pirates are dead. That's no joke.