Obama is right to take on the very rich
They're paying far less of their incomes in taxes than average Americans.
Boston and Washington
We've seen, in recent weeks, an outpouring of public outrage over the mega millions that keep flowing – despite the escalating economic meltdown – into the pockets of America's top bankers and corporate executives.
"I'm angry," Sen. Claire McCaskill (D) of Missouri told her Senate colleagues late last month, as she introduced a bill to cap pay for bailed-out CEOs at $400,000 a year. "Wall Street [is] kicking sand in the face of the American taxpayer."
"I will not tolerate it," President Obama added a few days later, as he announced a $500,000 executive pay cap at firms getting substantial bailout dollars.
The amount of money that goes into executive pockets is staggering. So is the amount that comes out of those pockets in taxes: precious little. America's super-rich are paying far less of their incomes in taxes than average Americans who punch time clocks. This is grossly unfair. The good news: Under Mr. Obama's new plan to cut the deficit in half, the very richest Americans will start paying something closer to their fair tax share.
It's been a while since they've done that. As recent IRS data show, these elites are paying less in taxes – much less – than their deep-pocket counterparts used to pay. In 2006, the 400 highest-income Americans together reported $105 billion in income, an average of $263 million each.
Having trouble visualizing that? To pocket $263 million a year, you would have to take home over $60,000 an hour – and work 12 hours a day, seven days a week, for an entire 12 months. Sounds tiring, doesn't it? But most of the top 400 make their fortunes buying and selling assets, everything from stocks and bonds to the exotic paper that helped inflate the housing bubble.
Uncle Sam taxes income from those assets – whether that income be capital gains or dividends – at a much lower rate than income from work.