During a speech on deficit reduction atGeorge Washington University last week, President Obama whipped out one of hisfavorite new one-liners. Republicans “want to give people like me a $200,000tax cut,” Obama said, presumably referring to the high-income earners inAmerica.
Fortunately, the White House releasedPresident Obama and his wife Michelle’s income tax return this week, so we cansee just what he meant by “people like me.” The receipt shows that thePresident and his wife made more than $1.73 million and paid $453,770 infederal taxes. That means 26.2 percent of his income went to taxes, lower thanthe top 35 percent rate under the Bush-era tax levels, and far lower than the39.6 percent level Obama pushed for last summer.
This leads economist Steve Landsburg to askan interesting question, “If the President believes that people like him oughtto be paying more, then why didn’t he pay more? There is absolutely no ruleagainst sending in more money than you owe.”
Now you might say that the Obamas believe it’simportant to raise many billions more in taxes, and that sending in an extrahundred thousand or so would make essentially no progress toward that goal. ButI don’t think you’d continue to say that if you thought about it. If the Obamasare one of, say, a million families in their financial position, and if theObamas, and only the Obamas, send in some extra money, that’s only (by Mr Obama’sreckoning) one one-millionth as good as repealing the Bush tax cuts — but atthe same time it’s costly to only one one-millionth as many taxpayers. Surelythese things should scale.
In fact, since you’d expectthe first hundred thousand to go to the most urgent use, the president’scontribution should be worth more than one one-millionth of a millioncontributions, while still imposing costs on only one one-millionth as manypeople. If repealing the Bush tax cuts is a good deal, the Obamas’ extra voluntarycontribution would be an even better one.
Somehow I think it unlikely that Obamawill be whipping out his check book anytime soon. Nevertheless, if his desirefor philanthropy and his well-founded concern over the deficit overcome him, I’dlike to remind him that federal law allows the Secretary of the Treasury toaccept gifts given for the express purpose of reducing public debt. I’dencourage our President to visit the following link, which provides an easy andsecure way to pay what he considers his fair share: https://www.pay.gov/paygov/forms/formInstance.html?nc=1271991815942&agencyFormId=23779454
Sadly, if the past is our guide, simplygiving the government more money does more to increase rather than decrease ourdeficit. According to a studyconducted in late 2010 by economist Richard Vedder, since World War II, eachnew dollar in tax revenue was associated with $1.17 in new spending.
So if the President really wanted tohelp he should focus on reducing government spending, not raising governmentrevenues. After all, as recently as 2007 government spending represented only19.6 percent of GDP, but in the three years since 2009 it has jumped to 24.4percent, where it is scheduled to stay for the foreseeable future. There isjust no escaping the fact that we have a spending problem, not a revenueproblem. That said, if our President isgoing to continue saying people like him should pay more, the least he could dois lead by example.