If you want to analyze something about the content of President Barak Obama’s Ohio speech, savor this: President Obama seems to be intent on demonizing the upper 3% (read top income/wealthy of the US). He also insists that the middle class, those making $250,000 or less, will get tax cuts. Where? When? Those making less than $250,000 a year are working class people, 60% of whom own stocks. Stocks produce dividends and capital gains. The taxes on those are slated to go up to 39% and 20% respectively. Marginal income tax rates will increase at least 10% as well. That is not a tax cut. Obama is trying to get the middle class to ignore this obvious truth by excoriating and demonizing the richest 3%.
It seems that Obama can't stand rich people, because his heart and soul are devoted to the 'poor downtrodden people' who got him elected. What he is emotionally and psychologically unable to embrace is that top 3% consists of two types of people - those who benefit the economy and those who take advantage of its opportunities.
The first 50% or so of people targeted for his wrath are the entrepreneurs and business owners. Obama tries to talk a good story about his short-term tax reductions when he knows full well that the marginal tax brackets will go to 50-60% on this entrepreneurial class; the class that accounts for 85-95% of all new, good-paying jobs.
He stated that a person making over $250,000 a year will have to fork over a considerably greater amount of his or her income once they breach this income barrier. Even though taxes will still increase for income levels lower than $250,000, the onus of this burden falls heaviest on this business group.
And they will NOT sign up for this suicide pact of wealth redistribution, even with the offer of a supposed tax break through an Obama plan for tax benefits through accelerated depreciation. The problem with this proposal is that the benefit applies only to 2011, after which everything returns to where it was. If businesses are unable to realize the full potential of the qualifying equipment purchases by the time 2012 rolls around, and they won’t, the full brunt of old and new taxes will likely put them farther behind.
Business owners will not work that much harder just to end up sending 50-60% of their income to the feds and another 10% to the bankrupt states. If their temporary reprieve from these massive tax increases lapses in 2012, just when their productive investments begin to produce significant increases in taxable earnings, their efforts will be penalized within one year by the excruciatingly heavy taxes. This cycle of taxation will not end well for entrepreneurs and they know it.
The second 50% of that infamous top 3% are the millionaires and billionaires that Obama mentions with scorn and derision in his tone of voice. As he said, we will even give them a tax break up to $250,000 but after that we will take much more. What the president seems to ignore is that these wealthy people are very capable of getting their income off the radar. They can hire attorneys and CPAs by the droves to protect their hard-earned wealth. Don't you suppose that on the long, hard road to building 7, 8, or 9-figure wealth - and generally paying 50% of their income to taxes - they have figured out how to avoid the worst of the tax-and-spenders in government? To them, Obama is just one in a long line of Presidents and politicians who want to separate them from their money. But all the while, as tax increases loom in the near future, these same people are going to sequester their money, reduce their taxable income ,and absolutely refuse to put their wealth into the business-building ventures that made them wealthy in the first place. (And, likewise, which would benefit the overall economy.) If a person is worth $50,000,000 and makes 5% or $2,500,000, they live well. If they move their funds to tax-free municipal bond funds and make 3% return (6% post-taxable) they have not lost "one thin dime' of spendable income.
Their money is safe. Their taxable income will probably drop substantially, depriving the Federal government of taxable income, while they wait out this collectivist rabble in the White House. It is axiomatic that when tax rates are reduced and capital gains taxes are dropped, the government revenues increase 30-50% This has been proven true at least 5 times in the last 100 years.
But this is not why President Obama wants more taxes from the wealthiest 3% He knows full well, just like the rest of the tax-oriented politicians, that progressive redistributive tax rates are designed to separate the wealthy from their money and hand it out to the 'mooch class,' now numbering 1 of 6 Americans. This is the focus of his hatred of the wealthy and productive people in this country - they have money and the ‘mooch class’ does not, and it is the ‘mooch class’ that votes for him and his policies. He made it clear that his presidency would 'fundamentally transform America.' What did that mean? We are seeing it in full with the most restrictive and redistributive policies since FDR and Woodrow Wilson, the poster children of the Progressive movement.
Welcome to the New Age.
It seems that Obama can't stand rich people, because his heart and soul are devoted to the 'poor downtrodden people' who got him elected. What he is emotionally and psychologically unable to embrace is that top 3% consists of two types of people - those who benefit the economy and those who take advantage of its opportunities.
The first 50% or so of people targeted for his wrath are the entrepreneurs and business owners. Obama tries to talk a good story about his short-term tax reductions when he knows full well that the marginal tax brackets will go to 50-60% on this entrepreneurial class; the class that accounts for 85-95% of all new, good-paying jobs.
He stated that a person making over $250,000 a year will have to fork over a considerably greater amount of his or her income once they breach this income barrier. Even though taxes will still increase for income levels lower than $250,000, the onus of this burden falls heaviest on this business group.
And they will NOT sign up for this suicide pact of wealth redistribution, even with the offer of a supposed tax break through an Obama plan for tax benefits through accelerated depreciation. The problem with this proposal is that the benefit applies only to 2011, after which everything returns to where it was. If businesses are unable to realize the full potential of the qualifying equipment purchases by the time 2012 rolls around, and they won’t, the full brunt of old and new taxes will likely put them farther behind.
Business owners will not work that much harder just to end up sending 50-60% of their income to the feds and another 10% to the bankrupt states. If their temporary reprieve from these massive tax increases lapses in 2012, just when their productive investments begin to produce significant increases in taxable earnings, their efforts will be penalized within one year by the excruciatingly heavy taxes. This cycle of taxation will not end well for entrepreneurs and they know it.
The second 50% of that infamous top 3% are the millionaires and billionaires that Obama mentions with scorn and derision in his tone of voice. As he said, we will even give them a tax break up to $250,000 but after that we will take much more. What the president seems to ignore is that these wealthy people are very capable of getting their income off the radar. They can hire attorneys and CPAs by the droves to protect their hard-earned wealth. Don't you suppose that on the long, hard road to building 7, 8, or 9-figure wealth - and generally paying 50% of their income to taxes - they have figured out how to avoid the worst of the tax-and-spenders in government? To them, Obama is just one in a long line of Presidents and politicians who want to separate them from their money. But all the while, as tax increases loom in the near future, these same people are going to sequester their money, reduce their taxable income ,and absolutely refuse to put their wealth into the business-building ventures that made them wealthy in the first place. (And, likewise, which would benefit the overall economy.) If a person is worth $50,000,000 and makes 5% or $2,500,000, they live well. If they move their funds to tax-free municipal bond funds and make 3% return (6% post-taxable) they have not lost "one thin dime' of spendable income.
Their money is safe. Their taxable income will probably drop substantially, depriving the Federal government of taxable income, while they wait out this collectivist rabble in the White House. It is axiomatic that when tax rates are reduced and capital gains taxes are dropped, the government revenues increase 30-50% This has been proven true at least 5 times in the last 100 years.
But this is not why President Obama wants more taxes from the wealthiest 3% He knows full well, just like the rest of the tax-oriented politicians, that progressive redistributive tax rates are designed to separate the wealthy from their money and hand it out to the 'mooch class,' now numbering 1 of 6 Americans. This is the focus of his hatred of the wealthy and productive people in this country - they have money and the ‘mooch class’ does not, and it is the ‘mooch class’ that votes for him and his policies. He made it clear that his presidency would 'fundamentally transform America.' What did that mean? We are seeing it in full with the most restrictive and redistributive policies since FDR and Woodrow Wilson, the poster children of the Progressive movement.
Welcome to the New Age.
Craig G. Francis is the owner of Francis Financial and The SBA Loan Store. He has been a top producer of SBA Loans since 1981, and has worked with Dun & Bradstreet and Bank of Commerce. Craig Francis has the expertise to steer clients through the often confusing rules and regulations associated with SBA Loans, having helped over 2,000 businesses acquire over a billion dollars in loans. He can be contacted through CraigGFrancis.com, SBALoanStore.com, on LinkedIn, or at 888-666-9722
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