Obama: Tax the rich to help grow the economy
Obama: Tax the rich to help grow the economy
By , USA TODAY
President Obama said today that the nation faces a stark economic choice: Continue giving tax breaks to the nation's wealthiest citizens or risk gutting essential programs that help grow the middle class."Let me me ask you, what's the better way to make our economy stronger?," Obama told an enthusiastic crowd in Boca Raton, Fla. "Do we give ... tax breaks to every millionaire and billionaire in the country? Or should we make investments in education and research and health care and our veterans?"Obama also told students at Florida Atlantic University that "what drags our entire economy down" is when"the gap between those at the very, very top and everybody else
keeps growing wider and wider and wider and wider."Much of his campaign-style speech concerned so-called "Buffett Rule," a proposal which would require millionaires and billionaires to pay at the least the same tax rate as middle-class income earners.The president also decried Republican budget plans that would give more tax breaks to the wealthy, and he dared the GOP to specify the kinds of budget cuts it would make in order to reach its goal of a lower federal debt."The money's got to come from somewhere," Obama said.Republicans, meanwhile, denounced the Buffett Rule as an election-year gimmick that will do little to reduce the debt, and constitutes an unnecessary tax hike that will slow economic growth.Republican Party spokeswoman Kirsten Kukowski said Obama would rather raise taxes than cut government spending. The Buffett Rule, she said, would raise "an insignificant amount of tax dollars relative to the size of Obama's binge spending."Rep. Paul Ryan, R-Wis., chairman of the House Budget Committee, told MSNBC that Obama's proposal "represents a huge tax increase on job creators."The Democratic-run Senate has scheduled a vote on the Buffett Rule for Monday, though Republicans are sure to block it.The proposal is named for billionaire investor Warren Buffett, who says it's unfair for him to pay a lower tax rate than his secretary.The reason: Investment income is taxed at lower rates than salaries and wages. Proponents of the Buffett Rule have not said whether they would increase investment taxes, or establish some sort of flat tax for millionaires and billionaires.Obama cited the anecdote about Buffett and his secretary in his speech, saying "now that's wrong -- that's not fair." The president said the share of national income flowing to the wealthiest 1% has
climbed to levels last seen in the 1920s, yet the rich are also paying the lowest tax rates of the past half-century."We've got to choose which direction we want this country to go," Obama said. "Do we
want to keep giving those tax breaks to folks like me who don't need them? Or do we want to keep investing in those things
that keep our economy growing and keep us secured? That's the choice."Obama spent part of his speech on more conservative themes, saying at one point that "government is not the answer to everything," and discussing programs that have been cut on his watch. Obama also said none of his proposals would include tax hikes for those making less than $250,000 a year.But there are some things government should do, he added, including education, research, health care and other "investments" that can help Americans better themselves."In this country, prosperity has never trickled down from the wealthy
few," Obama said. "Prosperity has always come from the bottom up, from
a strong and
growing middle
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That's rich: International Monetary Fund Director Christine Lagarde, accompanied by her deputy, David Lipton, speaks at a news conference in Washington on Thursday. | AP
Tax the rich? IMF report raises eyebrows
Fund urges nations to go after the wealthy, big business to mitigate financial imbalances
Tax the rich and better target the multinationals: The IMF has set off shock waves last week in Washington by suggesting countries fight budget deficits by raising taxes.
Tucked inside a report on public debt, the new tack was mostly eclipsed by worries about the U.S. budget crisis, but did not escape the notice of experts and nongovernmental organizations.
“We had to read it twice to be sure we had really understood it,” said Nicolas Mombrial, the head of Oxfam in Washington. “It’s rare that IMF proposals are so surprising.”
Guardian of financial orthodoxy, the International Monetary Fund, which held its annual meetings with the World Bank last week in the U.S. capital, typically calls for nations in difficulty to slash public spending to reduce their deficits.
But in its Fiscal Monitor report, subtitled “Taxing Times,” the IMF advanced the idea of taxing the highest-income people and their assets to reinforce the legitimacy of spending cuts and fight against growing income inequality.
“Scope seems to exist in many advanced economies to raise more revenue from the top of the income distribution,” the IMF wrote, noting “steep cuts” in top rates since the early 1980s.
According to IMF estimates, taxing the rich even at the same rates during the 1980s would reap fiscal revenues equal to 0.25 percent of economic output in developed countries.
“The gain could in some cases, such as that of the United States, be more significant,” around 1.5 percent of gross domestic product, said the IMF report, which also singled out deficient taxation of multinational companies.
In the U.S. alone, legal loopholes deprive the Treasury of roughly $60 billion in receipts, the global lender said.
The 188-nation IMF said that it did not want to enter into a debate on whether the rich should pay more taxes. But it said: “The chance to review international tax architecture seems to come
the fundamental issues should not be ducked.”
IMF chief Christine Lagarde, kept up the sales pitch for a more just fiscal policy. “It’s clearly something finance ministers are interested in, it’s something that is necessary for the right balance of public finances,” said Lagarde, a former French finance minister, in a panel discussion Wednesday. “There are lot of wasted opportunities,” she added.
After the French Socialist government’s proposal of a 75 percent tax on the wealthy was overturned by the country’s highest court last year, France’s finance minister cautiously welcomed the IMF’s new direction.
“If the core idea is that fiscal policy is a policy that aims to reduce inequalities, I wouldn’t know how to protest against that,” Finance Minister Pierre Moscovici said at a news conference in Washington.
The minister said it was a “positive development” but he downplayed that it marked a “significant change” for the IMF.
But the IMF’s Copernican revolution is still in the twilight stage. In its report, the IMF continued to push for a wider scope for value-added tax, a consumption tax that some say is inherently unfair, and on reductions in public spending.
“These proposals are heading in the right direction, but a lot remains to be done,” said Oxfam’s Mombrial, calling notably for the IMF to do more against illegal capital flows, which, according to the NGO, cost billions of dollars in fiscal revenues in the developing countries.
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