One might expect Obama to join this debate, but he hasn’t.
The reason is evident from a 2008 interview that Obama did with Charlie Gibson
of ABC News. The topic was raising the capital gains tax rate on the rich.
Gibson: George Bush has taken it down to 15 percent. And in each
instance, when the rate dropped, revenues from the tax increased—the government
took in more money. And in the 1980s, when the tax was increased to 28 percent,
the revenues went down. So why raise it at all, especially given the fact that
100 million people in this country own stock and would be affected?
Obama: Well, Charlie, what I’ve said is that I would look at
raising the capital gains tax for purposes of fairness.
Gibson: But history shows that when you drop the capital gains tax,
the revenues go up.
Obama: Well, that might happen, or it might not.1
It’s worth pausing to ponder what Obama is saying.
Basically, he is saying that it doesn’t matter whether higher tax rates on the
rich actually generate additional revenues for the government or not. This is
not about government revenue. Rather, it is about Obama’s own basic notion of
fairness which demands that the rich pay more. Perhaps—to take a cue from his
father’s writings—if the highest income earners paid tax rates of “up to 100
percent,” Obama would finally be satisfied that they were contributing their
fair share.
That’s right – Barack Obama Senior, our President’s father
was a socialist who once wrote an article in the East Africa Journal – “Theoretically
there is nothing that could stop the government from taxing 100 percent of
income so long as the people get benefits commensurate with their income which
is taxed”.2
Barack Obama Sr. himself, in 1965, published an article in
the East Africa Journal which considered what a country should do when a large
portion of its wealth is controlled by a small number of people at the top.
Obama Sr. states his objective: “We need . . . to eliminate power structures
that have been built through excessive accumulation so that not only a few
individuals shall control a vast magnitude of resources as is the case now.”
But how to achieve this? Obama Sr. proposes the use of state power to take over
large parts of the private, or as he puts it “commercial,” sector. Obama Sr.
says there is no reason to worry about economic freedom or individual rights;
what matters is the good of society as a whole. “We have to look at priorities in
terms of what is good for society and on this basis we may find it necessary to
force people to do things they would not do otherwise.” Obama Sr.
recommends that the state compel private firms to become what he calls “clan
cooperatives.” These are basically government-regulated or
government-managed companies that produce goods less with a view to profit than
with a view to meeting the government’s own social and political objectives.
Obama Sr. also proposes that the rich be dealt with through very high rates of
taxation. Again, he’s not worried about how much the government is
confiscating. “Certainly there is no limit to taxation if the benefits derived from
public services by society measure up to the cost in taxation.”3
As cited in the
quotation above, Obama Sr. is even willing to consider tax rates up to 100
percent!
It’s remarkable that this paper by Obama Sr. has gotten so
little media coverage. One would expect it to be on the front page of every
newspaper and a lead item on the evening news, especially during public debates
in America over taxes and massive government intervention in the healthcare and
financial sectors.
Notice the two-part economic strategy proposed by Obama Sr.
- Forced state control over private enterprise, and confiscatory tax rates with
no upper limit. We will find it instructive to compare this to President
Obama’s economic policies. For example, President Obama frequently talks about
people being forced to pay their “fair share” in taxes, but he never specifies
what that share is. Here, we have a document that explicitly states his
father’s thoughts on the subject and may provide some guidance to the son’s own
thinking. Yet for many in the media, these father-son comparisons are
completely taboo. For them, it seems, the ghost of Barack Obama Sr. must be
quietly ignored, so it cannot be seen haunting the corridors of 1600
Pennsylvania Avenue.
Clearly the shocker of the paper is the suggestion of a 100
percent tax rate. We may think: How can a man in his right mind propose something
so ridiculous? We can imagine the income tax form, a mere postcard with just
two line items: a) List what you earn, and b) Send it in.
Yes, by conventional economic considerations Obama Sr. is a
crank. The law of incentives holds that it makes no sense to impose taxes that
eliminate the motivation to work. But we know from the many writings of Barack
Obama Senior and as well as the writing and activities of Barack Obama’s mother
– that they were both virulent Anti Colonialist. So, when we insert the
anti-colonial premise, we can see why confiscatory tax rates—even 100 percent
rates—do make a kind of sense.
First of all; one must understand the mindset and ideas that
run throughout anti-colonial theory. The central anti-colonial idea is theft.
In this view, countries get rich through invasion and plunder, and people and
corporations acquire wealth through their greedy exploitation of others.
Now imagine if you came to my house and stole all my
furniture. In terms of those goods, what’s the appropriate tax rate for you?
The answer is: 100 percent, because it’s not your furniture. Thus when you
assume that income is not the result of effort or work; when you assume that it
is not “earned”; when you consider income and wealth to be the product of
greed, exploitation, and theft; then you have no problem with taking as much of
that income and wealth as you can get away with. After all, the rich people and
the corporations are a bunch of thieves; the money doesn’t really belong to
them! The government shouldn’t seek to motivate thieves, but rather to punish
them and seize their ill-gotten wealth.
The centerpiece of Obama’s re-election campaign is an attack
on the rich, the millionaires and billionaires, the top 1% of income-earners in
this country. From Obama’s point of view, these are greedy, selfish people who
are not paying their appropriate share.
Obama champions the Buffett Rule, which calls for capital
gains and dividends to be taxed at a minimum rate of 30 percent. The rule is
named after investment guru Warren Buffett, who declared that at 15 percent he
pays a lower rate of taxation than his secretary. Buffett’s observation seems
to buttress Obama’s point that the rich get unfair tax breaks. In fact,
however, capital gains and dividends are taxed twice. They are taxed as
corporate profits-and America has one of the highest corporate tax rates in the
world; and then they are taxed again as payouts to individuals. The real
capital gains tax rate is closer to 45%. Moreover, when rich people have more
of their own money, they can spend it or invest it. The purpose of a relatively
low capital gains tax rate is to encourage them to invest it and help foster
innovation and job growth.
Finally, as an editorial in the New York Times noted, the
Buffett Rule would generate an estimated $50 billion over 10 years, a pittance
compared to our annual trillion-dollar deficit. Even if Obama got his way, the Times
conceded, his solution would “not to make an appreciable dent in our deficit.”
In fact, it would not pay for a single one of Obama’s extravagant spending
programs. 4
Notes &
References
1 Transcript: Obama and Clinton debate, ABC news, April 16,
2008
2 Barack Obama Sr., “Problems Facing Our Socialism,” East
Africa Journal, July 1965.
3 Ibid.
4 editorial, “the Buffet Alternative Tax,” Wall Street
Journal September 20, 2011,
Excerpt from - Obama's America: Unmaking the American Dream
by D'Souza, Dinesh (2012-08-13). Perseus Books Group.
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