Lost in the horrendous events of last week was an opportunity to talk about what we normally talk about on April 15: taxes. President Barack Obama, one of the wealthiest presidents of the past century, with a net worth of about $14 million and income last year of more than $600,000, paid an effective federal tax rate of 18.4 percent.
Yes, this is the same Obama who’s delivered this message for the past two years:
Right now, because of loopholes and shelters in the tax code, a quarter of all millionaires pay lower tax rates than millions of middle-class households. Right now, Warren Buffett pays a lower tax rate than his secretary.
Now, you can call this class warfare all you want. But asking a billionaire to pay at least as much as his secretary in taxes? Most Americans would call that common sense.
When Americans talk about folks like me paying my fair share of taxes, it’s not because they envy the rich. It’s because they understand that when I get tax breaks I don’t need and the country can’t afford, it either adds to the deficit, or somebody else has to make up the difference—like a senior on a fixed income; or a student trying to get through school; or a family trying to make ends meet. That’s not right. Americans know it’s not right.”
For a debate often mired in tedious details conducted in obscure hearings, the president put a victim’s face—Warren Buffet’s struggling secretary; never mind that some estimated she makes $200,000 a year herself—on the matter. Call it the Obama rule: If you are wealthy, says the president, taking a tax break you don’t need isn't right.
So, a functional federal tax rate of 18.4 percent for Obama—perhaps a lower rate than that of his secretary. When the President of the United States takes the time to itemize $519.00 of personal “office expenses,” that’s a man looking to save every penny on taxes.
Let me be clear: I’m all for everyone paying less in taxes. But I never tried to paint those who are against higher taxes as evil.
Those inclined to defend the president might point to his sizable charitable donations. Good for Obama. I’m all for every American following his example versus, say, Joe Biden’s less-charitable approach. But the president could have chosen not to itemize his giving, or to give that money to the U.S. Treasury, as many people do. There is even a government website to facilitate the payment: pay.gov. Unlike the tax-return forms, it’s a simple one-pager and they take credit cards.
Instead, Obama made the decision to give $150,034 to a slew of worthy charities. God bless him but in doing so, he is clearly making the decision that these charities can spend his money more effectively than the federal government. I couldn’t agree more.
The president’s wealth puts him in Middle Richistan, a nice neighborhood of families worth $10 million to $100 million.
People don’t tend to think of Obama as wealthy, but in fact he’s one of the wealthier presidents of the modern era. In Robert Frank’s great book Richistan, the president’s wealth puts him in Middle Richistan, a nice neighborhood of families worth $10 million to $100 million. In my view, there’s no shame in that, and if that neighborhood were larger it would be a good thing for the country.
The problem is, under President Obama, the number of those at the bottom is expanding as more Americans slip out of the middle class. In New York City alone, even as the stock market surges, the number of people collecting food stamps is on pace to double in just a few years, from 1 million in 2007 to 2 million by this summer. That would mean less than two workers in the city for every person collecting the benefit. Nationally, the ratio is now below 3 to 1.
So what we have here is a very wealthy president who may be paying less than his secretary in taxes while the poor get poorer and the rich get richer. I’ll leave it to others to defend that reality, but let’s at least not pretend it isn’t reality.