Taxes

Barack Obama, Tax Reformer

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The president speaks to Africans:

No business wants to invest in a place where the government skims 20 percent off the top…

I can't improve on David Beito's sarcastic reaction: "Has Obama endorsed a 19 percent maximum income tax rate?"

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  1. The full quote was even better:

    “”Repression takes many forms, and too many nations are plagued by problems that condemn their people to poverty. No country is going to create wealth if its leaders exploit the economy to enrich themselves, or police can be bought off by drug traffickers. No business wants to invest in a place where the government skims 20 percent off the top, or the head of the Port Authority is corrupt. No person wants to live in a society where the rule of law gives way to the rule of brutality and bribery. That is not democracy, that is tyranny, and now is the time for it to end.”

  2. No country wants to, but America will have to as payment for their racial sins. I am starting to think Obama does actually understand how economies work and really wants to destroy the American one.

  3. What’s the U.S. tax rate, again?

    disingenuous, Jesse

  4. There’s only one explanation for the double standard: Obama hates white people.

  5. 20 percent off the top

    is not the same as

    20 percent off the bottom

  6. no-name:

    Federal income tax rates range between 10 and 35 percent, not including medicare. That’s before state taxes and sales taxes. Average income in the US is around $24k median and $35k mean, meaning that the average American pays 15 or 25 percent. Again before Medicare, state and sales taxes.

  7. Meanwhile, the airwaves are full of people (like one Senator John McCain) saying, “We shouldn’t investigate these new (or any of the old) allegations of extralegal government behavior; we need to look forward, not back. Let’s just vow not to do bad things, anymore.”

    to which I reply (again):
    If we make it plain that there are no consequences whatsoever for government officials who break the law, what possibly could make anybody think they will not continue do do as they please?

  8. What’s the U.S. tax rate, again?

    disingenuous, Jesse

    I’ll bite. Why is this disingenuous?

    The 2009 tax rate for anyone making over $33,950 is 25%, which would be a full 5% higher than the 20% that Barack Obama thinks is ‘immoral skimming’.

    No, I think what we really have here is Obama’s real message. He’s not talking about the legal skimming the government does, he’s talking about the illegal kind via corruption. That’s where government skims off the top but the money doesn’t go into the general fund for shovel-ready projects. You know, bribes and the like.

  9. Someone post something about effective tax rate on US businesses now.

  10. Median household income in the US is over $50K now; individual median income for full-time year-round workers is over $35K for women and $45K for men. But yeah, that puts most married couples in or below the 15% marginal tax bracket, and most single people at or under 25%.

    That’s just median federal personal income taxes, though. Add in state and local taxes (and deficit spending, i.e. deferred taxes) and the median situation gets more complicated, but the mean government expenditure is up to 40% of GDP and growing.

  11. Funny, I’d be pretty thrilled if I lived in a country where the government only skimmed 20% off the top of me!

  12. Barack Obama, Tax Reformer = Oxymoron

  13. The worst part about our tax code is all the explicit social engineering in it. Just set a *low* flat rate rate, and allow the civilian population to make their own value judgements.

    I’m holding my breath.

  14. Its not corrupt when The Chosen One does it.

  15. Shut the fuck up, Barack Obama.

  16. “…about effective tax rate on US businesses now”

    _______

    …well, there are many Federal/state/local taxes/fees on U.S. businesses– both direct and indirect… easily exceeding 50% in true totals.

    Average corporate tax is ~35% on profits. After-tax profits are then taxed again as personal income, when distributed to the owners/stockholders of the corporation (~20%+).

    Then there’s excise tax, property tax, sales tax, use taxes, inventory tax, utility tax, license fees, vehicle/transportation fees, building permits fees, payroll taxes…. and on and on and on…..

    Americans really work for the government… though few realize it.

  17. I’m genuinely upset about this comment. What a fucking asshat.

  18. I’m might be wrong but the return on investment/equity is on averge 6 percent. In other words most businesses must spend 94 cents to make a dollar.

  19. What’s the U.S. tax rate, again?

    disingenuous, Jesse

    You’ll have to be a little less cryptic than that.

  20. I’m confused. Is he talking about 20% for Africans making *over* or *under* $250K/yr?

  21. The U.S. marginal tax rates on federal personal income are as high as 35%. That doesn’t mean individuals in high tax brackets pay 35% of their total income in federal income taxes, even if they don’t take any deductions whatsoever.

    Also, Obama doesn’t control local and state taxes.

    Yes, the U.S. tax code is fucked up. Yes, we should get rid of all the deductions and social engineering. Potentially, we could still have a graduated rate.

    According to what I’ve read recently, the actual average federal personal income tax rate overall is in the neighborhood of 16-18%, once deductions are accounted for, even among the top 1% of earners.

  22. the actual average federal personal income tax rate overall is in the neighborhood of 16-18%

    He didn’t say “when the Federal government skims 20%”, he just said “government”.

  23. Obama can’t be bothered by petty details like meaning what he says when he’s busy gearing up to begin nationalizing America’s community colleges.

  24. DAR,

    That was more amusing than even I was hoping for.

  25. Americans really work for the government… though few realize it.

    They’re starting to realize it now in the IOU issuing state of California!

  26. The administration is sure lucky that they didn’t have Joe Biden deliver that line.

  27. the innominate one | July 12, 2009, 11:06am | #
    What’s the U.S. tax rate, again?

    disingenuous, Jesse

    Yo, shut the fuck up Obama defenders. You can’t fake credibility this late in the came.

  28. So, I’m wondering if the apparatchik who loaded up that speech on the teleprompter has been reassigned.

    -jcr

  29. Yes, we should get rid of all the deductions and social engineering.

    I’m with you on that.

    Potentially, we could still have a graduated rate.

    Except that punitive increases in taxes as you make more money is social engineering.

    -jcr

  30. alan – no, you shut the fuck up. I could rebut you more thoroughly, but you don’t deserve the effort.

    Obama deserves plenty of criticism. Real criticism. I’m not convinced of this particular criticism’s validity.

    This late in the game – you mean six months into a four-year term?

    JCR – I disagree that a graduated rate is necessarily punitive or social engineering. I do think the rate should be the same regardless of income type (wages, salary, capital gains, interest income, etc.) I also think that people at the very lowest end of the income scale shouldn’t be taxed below a livable income, and that as income rises, so should one’s tax rates.

  31. According to what I’ve read recently, the actual average federal personal income tax rate overall is in the neighborhood of 16-18%, once deductions are accounted for, even among the top 1% of earners.

    Yeah, that extra 2% makes all the difference between a thriving economy and a place where no one wants to invest.

    And he wasn’t talking about personal income taxes anyway; the analogy is corporate tax rates which are much higher in the US.

  32. While I think his speechwriters should have done a better job on this one, he’s clearly using skimming to mean an unauthorized taking. Now for an anarchist like myself, all taxes are unauthorized. But the rest of you are just whining to whine now because you know damn well what he meant and you’re distorting it to suit your needs. Why become like them?

  33. I could rebut you more thoroughly, but you don’t deserve the effort.

    Ah, the Playground Wimp Gambit. Haven’t heard that one in a while.

  34. Sorry, when a guy considers himself bound only by the literal, deconstructive meaning of his words, as Obama has demonstrated time and time again, he shouldn’t get the benefit of a favorable interpretation of his words. Live by the parse, die by the parse, I say.

  35. the innominate one | July 12, 2009, 4:33pm | #

    alan – no, you shut the fuck up. I could rebut you more thoroughly, but you don’t deserve the effort.

    You saw the disconnect in Obama’s words No business wants to invest in a place where the government skims 20 percent off the top…, yet you played stupid, and you pretended that the disconnect wasn’t there so you could move a goal post or two for a very slightly more favorable interpretation in which you could make the spurious case that JW was being disingenuous. You don’t deserve my respect or that of any one else, nor do you deserve this small allotment of time I’m taking to tell you what a piece of shit you are for thinking you could get away with a lie that big and absurd on its face. If you had any integrity you would be asking for an apology to all of us for your attempt at deception. Don’t really expect it though, so eat shit and live forever you maggot infested dung heap of a human being.

  36. “no business wants to invest in a place where the government skims 20 percent off the top”

    If you were running a mining operation and just had to hand over 20% xtra of your profits to some government officials in order to avoid environmental regulations, elf and safety etc, it might be worth it depending on the cost of cleaning up your mess and market prices.

  37. Tulpa – if 2% more or less makes little to no difference, why the arguments over allowing the marginal rate to go back to Reagan-era rates?

    Isn’t that only 2% difference?

  38. If today’s libertarians truly can’t distinguish between federal taxation (where returns on our tax dollars are generally below 100%, but substantially above 0%) and, uh, thugs who take a fifth of your shit and give you nothing in return, then libertarianism is as much of a dead end as modern conservatism. In which case the left is going to win by default.

  39. anonymous coward,

    True for many taxes, like for roads and such. But what if the return on the tax is in the form of a chain around our neck? Are you going to tell me I am getting something of value?

    That is the problem with much of what taxes pay for, they are things I do not want and find inhibiting. Like the bailouts, I do not want them and they make getting back to a sound economy even harder. I would say that in many cases the returns are substantially below zero.

  40. (where returns on our tax dollars are generally below 100%, but substantially above 0%)

    And our return on the Iraq war were what, oh liberal one? I thought it was a belief that the war had negative returns.

  41. “Tulpa | July 12, 2009, 4:35pm | #

    I could rebut you more thoroughly, but you don’t deserve the effort.

    Ah, the Playground Wimp Gambit. Haven’t heard that one in a while.”

    Yes, I’m deeply afeared that alan is going reach through the tubes and get me.

  42. If today’s libertarians truly can’t distinguish between federal taxation (where returns on our tax dollars are generally below 100%, but substantially above 0%) and, uh, thugs who take a fifth of your shit and give you nothing in return, then libertarianism is as much of a dead end as modern conservatism. In which case the left is going to win by default.

    From a recent Reason article on the state budget matters:

    In 2002 total combined state revenue was $1.097 trillion…. In 2007 this figure had risen to almost $2 trillion. That’s an 81 percent increase, at a time when prices plus population increased 19 percent.

    An increase of that magnitude can only occur through arbitrary and capricious means. So whatever that figure of worth where returns on our tax dollars are generally below 100%, but substantially above 0% stands now at previous value minus greater than 50 percent of previous value for that time periond, and thus, well on our way to banana republic status.

    I’m not arguing that you can’t parse within that frame of reference Obama intended which Libertarians for reasons I just explained place little credence, but to not acknowledge the disconnect in Obama’s thought processes and to also counter with a charge as inominate1 did is dubious.

  43. Yes, I’m deeply afeared that alan is going reach through the tubes and get me.

    I told you to go live forever, fool, so what are you worried about? Oh, being exposed.

  44. And people thought that “tithing” was bad.

    Bring back the feudal era.

  45. Oh, and AC, another thing, I don’t think you appreciate that the average independent when he sees that quote will also the disconnect (Obama doesn’t acknowledge that there are far more barriers than a 20 percent skim that the state imposes on business entry into the market). It doesn’t take a special set of conditions, exposure to a little Hayek, a little Friedman, or little John Stossel to get it. So, no, libertarians are not imperiled, but are helped by the oppositions obtuseness as Obama displayed in this case.

  46. True for many taxes, like for roads and such. But what if the return on the tax is in the form of a chain around our neck? Are you going to tell me I am getting something of value?

    Seriously. We’re expected to pay the government so they can regulate us out of business.

    Please, take my money and use it to pay a thug to beat me unless I make products to the specifications of a bunch of delusional hippies! I really want to be forced to use wind power and eat organic. Please, force me to behave. Oh holy State. I have sinned. I must now donate to redeem my soul. May the priests whip me for my disobedience, with whips paid for by myself.

  47. t-i-o sez a graduated rate is necessarily punitive or social engineering

    Fail.

    It is premised on utility theory – assuming an intellectual basis. Many of the proponents of progressive taxation that I’ve discussed this with ultimately fall back on jealousy as the need to “even the playing field”.

  48. If he was referring to the corporate tax rate the average combined federal and state tax rate is nearly double 20%, while the federal rate is 35%. But he is slightly vindicated if he was referring to overall rate of federal taxation on everyone as compared to GDP. Federal revenue in 08 being 2.5 trillion and 96 percent of that taxes, and the GDP being something like 14.2 trillion than the percentage is 16.9. Once you add state taxes you’ll be well over the 20% line which underscores something important about Obama’s message to Africa and the US. Fiscal responsibility and accountability for war criminals is good for Africa and bad for the U.S.

  49. Ian,

    He clearly wasnt referring to total rate – since he said “no business” that implies that any business being taxed (although, I think he was referring to graft, but tomato,tomato) more than 20% would avoid investing there.

    His statement leads to a MAX rate of 20%, not an overall rate of 20%.

  50. Obama is One Of Us??. He is a superstar! He was the first black president on MTV!

  51. errr

    he didnt mention tax once

    that 20% figure is clearly meant to be corruption not tax

    “No country is going to create wealth if its leaders exploit the economy to enrich themselves, or police can be bought off by drug traffickers”

    “where the rule of law gives way to the rule of brutality and bribery”

    The statement is off-course bullshit as corruption is clearly no obstacle for industry as you usually get something back in return for it, lapse environmental standards, things that shit on workers conditions etc

  52. I also think that people at the very lowest end of the income scale shouldn’t be taxed below a livable income, and that as income rises, so should one’s tax rates.

    A flat tax with a large personal deduction accomplishes that just fine. A person making $200k pays a higher percentage of their income in tax than a person making $100k.

  53. While I think his speechwriters should have done a better job on this one, he’s clearly using skimming to mean an unauthorized taking.

    We all know that. It doesn’t make his choice of words any less entertaining, or the fact that taxes too are a disincentive any less of a legitimate point.

  54. that 20% figure is clearly meant to be corruption not tax

    Well, duh.
    But if your taxing people for the sake of “wealth redistribution” what’s the difference? What is a needy group other than one that has the political connections and power to take what it wants from those that don’t? What’s the difference between taking money from people that don’t have the votes to stop you, and those that don’t have the guns to stop you?

  55. He was clearly talking about corruption graft rather than taxation. Some people see a distinction between the two, though I’ll grant that some do not.

  56. “But if your taxing people for the sake of “wealth redistribution” what’s the difference?”

    Well, one may be done through the the rule of law and the consent of the majority for public purposes chosen again via the rule of law and the consent of the governed, which many folks think make it legitimate.

    “What’s the difference between taking money from people that don’t have the votes to stop you, and those that don’t have the guns to stop you?”

    See Locke, John et al., on consent of the goverened making government power legit and the consent of the governed being determined by majority rule.

  57. Jesse’s disincentive point is the stronger way to go than the “hey both are the same morally” argument, though the counter to his would be that when the 20% goes to taxes it may provide a benefit to the public which outweighs the negative effects of the (admitted) disincentive while with straight up graft it usually does not provide any potentially offsetting dsincentives.

  58. that 20% figure is clearly meant to be corruption not tax

    If you can pay some apparatchik 20% and disappear from the tax rolls, that’s a bargain in most countries.

    -jcr

  59. that 20% figure is clearly meant to be corruption not tax

    From the standpoint of the person paying the tax – what is the difference? The economics of disincentive are identical.

  60. Federal income tax rates range between 10 and 35 percent

    That’s naive. Say you make $100. Your tax rate is 25%. This leaves you $75 of the $100. Now you buy plumber’s services. You pay the plumber $75, but the plumber also has a 25% tax rate, and so another $18.75 of your money goes straight to the feds (and it is also worth keeping in mind you only actually got $56.25 worth of pluming services for your $75.00) Your total federal tax rate here is actually 43.75%; and as mentioned, that doesn’t count the double dipping the state does, or the various separate taxes, such as fuel taxes and so on.

    Income tax is an intentional double dipping method; when state and feds use it, it becomes quadruple dipping.

    This is why an up-front tax that *replaces* income tax would be better; if the average citizen had any idea what they were *really* giving up in taxes, they might be a little less forgiving of the political maneuvering that sucks them so dry. Of course, that’s exactly why we don’t have an upfront tax.

  61. The numbers I’ve seen for the US tax burden are usually over 20%. Not including all tax or coerced payments in such a calculation, like omitting sales or local tax, is making a false comparison.

    Arguably payments made in bribery and kickbacks are hard to quantify at a national level. But thankfully they are usually so egregious when present they are not hard to see or they obviously out pace documented payments.

  62. Well, one may be done through the the rule of law and the consent of the majority for public purposes chosen again via the rule of law and the consent of the governed

    Consent of the majority = democracy with strict supermajorities needed to pass anything (i.e, something that not a single country on earth actually has)

    consent of the governed = free market anarchocapitalism

    These two phrases are not the same thing, MNG, and neither means what you think it does. Having 51% of the 50% or so of the adult population who are members of the 50% or so of the total population who are eligible to vote, using the ballot to take stuff from everyone else, isn’t even close to “consent of the majority”, much less “consent of the governed”. It’s the tyranny of 1/8 of the population over the remaining 7/8ths.

  63. Little late to the party, but no one seems to have made precisely this point yet, though Ben is in the neighborhood.

    Someone post something about effective tax rate on US businesses now.

    The effective tax rate on businesses is 0%. All costs, including both tax and graft, are rolled into the cost of doing business and calculated when determining prices for the the end consumer, who ends up paying it all.

    But when a business has a choice between setting up in one area that charges A taxes and another that charges 2A, the first area allows them to offer products at lower prices.

  64. He was clearly talking about corruption graft rather than taxation.

    Just like he clearly said he would not opt out of the FEC campaign finance system during the campaign, and that he would end raids on med MJ dispensaries in state where they’re legal, and that he wouldn’t raise taxes on people earning $250,000 or less, and that he would try or release all the prisoners at Gitmo, et cetera. He’s weaseled out of all those pledges by insisting on a literal interpretation of his words rather than the obvious meaning.

    So guess what? I’ll take a literal interpretation of his words this time. The guy can’t have it both ways.

  65. Tulpa,

    I was rolling my eyes at some of the most literal interpretations of this quote until I read your last post. Fair enough and good point.

  66. “…which many folks think make it legitimate.” -MNG

    Which is a different notion than a sound and constructive economic policy, which is what is being talked about here.

  67. “Well, duh.
    But if your taxing people for the sake of “wealth redistribution” what’s the difference?”

    I see so if British Petroleum suck oil out of the Niger Delta and pay no tax on it

    then that’s good for the Nigerians

    but if British Petroleum suck oil out of the Niger Delta and pay tax which the government use to build a prison or finance their judiciary

    then the Nigerians are being ripped off?

    Its obvious that charging loads of corporation tax on a company manufacturing mars bars for local consumption gets transferred back to the people as higher prices for Mars bars

    but I can’t see that logic applying to oil or raw minerals that are shipped overseas for processing

    The skimming 20% thing is a funny observation
    but just in the sense of

    “what’s the capital of iceland?

    about $4.50”

    Taking something out of context to highlight a different situation

    Rip on Obama’s speech because it was condescending as fuck. It failed to mention many of the West’s real contribution’s to African poverty, such as McNamara’s World Bank and its Keynesian policies, Agricultural subsidies in the West and US/EU protectionism in general that prevents the industrialization of Africa. (we’ve definitely had this conversation before on another thread :))

    Rip on Obama’s speech for saying the “days of colonialism are over” and then forgetting mention about Obama’s plans for United States Africa Command

    en.wikipedia.org/wiki/United_States_Africa_Command

    a prospect that should disturb any libertarian

  68. Well, one may be done through the the rule of law and the consent of the majority for public purposes chosen again via the rule of law and the consent of the governed, which many folks think make it legitimate.

    [inigo mode]
    You keep using that phrase. I do not think it means what you think it means.
    [/inigo mode]

    Rule of Law does not mean “following the rules to pass a law”.

    As the Obama appointees have made very clear, the rule of law does not apply in taxation.

  69. MaterialMonkee,

    To be fair, AFRICOM is more the same sort of effort as all the other Unified Combatant Commands. Yes, it does raise the ugly spectre of colonialism, but it’s supposed to mirror the stuff the US does with EUCOM, NATO partnerships and the like. Of course, Italy and Germany brought the U.S. building bases in their countries on themselves(whether we should still be there, is of course, debatable). BTW, I saw your British 1st Armoured Division down in Germany on exercises (when I was with the U.S. 1st Armored). Pretty cool.

  70. Art,

    did the Brit 1st Armoured have tanques?

  71. I also think that people at the very lowest end of the income scale shouldn’t be taxed below a livable income, and that as income rises, so should one’s tax rates.

    You could accomplish that with a standard deduction that makes sense (like 8K per dependent) and then a flat tax after that. The graduated tax rate serves mainly to rip off lower-income people. Sometimes I think they deserve it seeing that they continually vote for it.

  72. I see so if British Petroleum suck oil out of the Niger Delta and pay no tax on it

    then that’s good for the Nigerians

    Well, its good for the Nigerians they employ, buy goods and services from, and pay royalties to, anyway.

    Now, I don’t know who actually owns the mineral rights to Nigerian oil. If its private landowners, then they should be getting paid royalties for production from their land, and I don’t see why the state has some extra special right to an additional tax.

    If its the state, then it should get whatever royalties it negotiated.

  73. Tulpa,

    I was rolling my eyes at some of the most literal interpretations of this quote until I read your last post. Fair enough and good point.

    Literalism had nothing to do with my critique. This is Obama doing a Bush. Like when Bush warned Iran not to meddle in the affairs of other nations. Hence, disconnect.

  74. However, you may have meant that to be aimed at those who were doing comparative tax rate analysis. Might not have deserved eye rolls, but it was literalist.

  75. Barack Obama, Lying Sack of Shit

  76. I’m not sure they ever mentioned the specifics, but I’m willing to bet the Sheriff of Nottingham’s tax rates were tame compared to current rates.

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