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How Obama is ‘Saving’ the Middle Class

What Obama means by 'saving' the Middle Class is turning them into welfare clients.

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President Barack Obama won re-election by selling the idea that he was the champion of the middle class.  Now he is forcing them into poverty and driving them from their homes.

That is the effect of new taxes going into effect on Jan. 1, regardless of how negotiations on the fiscal cliff turn out (unless, as seems unlikely, Congress decides to extend all of the Bush tax cuts to everyone).  The new marginal rates on dividends and interest (43.4%) and capital gains (20%, or 23.8% including the ObamaCare surcharge for high earners) will be devastating for the middle class.

Not only will it apply to those not-so-rich high earners who breach the $200,000 level, but it will harm those under the limit by undermining their desire to get ahead.  Why work longer or harder with 43.4% of marginal income going straight to Washington, another 15% to 20% going to state and local taxes, and 55% of whatever’s left going to death taxes when you pass on?  It’s easier to do what Obama wants and just stay poor.

New tax rates are just the beginning.  There’s the failure to address the Alternative Minimum Tax.  And with the president’s unwillingness to negotiate, there’s the restoration of higher tax rates on all earners.  There is also a host of indirect taxes, such as an onerous tax on medical device makers and lower reimbursements to doctors and hospitals, that will be passed on to consumers one way or another.

Altogether, Obama is “saving the middle class” with a $494-billion tax hike, three-fourths of it on the middle class.

Those who will be hurt the most are small businessmen, professionals, and modestly affluent retirees.  Many of these filers claim more than $200,000 on their tax returns, but they are hardly the evil 1% that Obama vilified during the campaign.  They operate family farms and small construction companies.  They are dentists and accountants.  They are the hardworking owners of retail stores and fast-food outlets.  In short, they are middle-class Americans.

Granted, they are successful.  But isn’t success what Americans aspire to?  By raising taxes on the middle class and especially on those among the middle class who are more successful than others, Obama is sending the message that Americans might as well not aspire to anything.  If they do, they too can expect to be taxed back into dependency.

That has been the plan all along.  That’s why the president exudes such spite toward those who aspire to be rich (while the Buffetts and Zuckerbergs who support him get a free ride).  As far as the left is concerned, all Americans should be dependent on government.  When’s the last time Obama celebrated the success of anyone other than someone like Christopher Brian Bridges (aka “Ludacris”)?  When’s the last time he spoke in a heartfelt manner about the great gift of capitalism and the everyday sacrifices of those in the middle class who make it work?

Never.  What he constantly proclaims is the glorious benefit of Big Government, with the implication that those who control Big Government possess an absolute right to rule over the middle class.  That is why he insists that Congress hand over control of the debt ceiling.  And to make government bigger, Obama demands bigger revenues.  Why should he negotiate?  On January 1, he gets up to half a trillion more in revenues to force more Americans into dependency.

Next week, all or part of that half-trillion in taxes is going into effect, including the Obama death tax.  Just think of those family farms whose owners pass away in the new year.  With Obama blocking reform, rates will return to 55% of assets over $1 million (in addition to whatever state death taxes are due).  At current prices, a typical 200-acre Midwestern farm is now valued at nearly $2 million.  That farm will have to be sold or mortgaged to pay estate taxes.  It will be difficult for surviving family members, who may be dependent on the farm for their livelihoods and may already have been operating the farm for years, to continue operating “half a farm.”  But that’s what Obama wants.

Small business owners are in the same boat. In order to pay that 55% death tax, many who inherit a franchise, a retail operation, or even a service station will be forced to sell the business.  And everyone who worked at that business loses his job.

The death tax is just as unfair to those who do not operate a business but have saved diligently all their lives.  Inheritors will be forced to sell stocks, bonds, land, and even precious family heirlooms to pay the tax.

And what happens to all of this money — the proceeds from the family farms, the franchisees, the retail shops, the estates of small investors?  It goes to fund the greatest pay-to-play scheme ever concocted.  It rewards the welfare class, the union bosses, the trial lawyers, the crony capitalists, and the armies of lobbyists and community organizers who support the Democratic Party.

And for this, the entire middle class is to be ground into the dust.  And the country as a whole will be condemned to generations of poverty and serfdom.

That is what is at stake in the current negotiations.  Of course Obama is intransigent.  He is determined to destroy the middle class and force them into dependency, where they will join the mushrooming welfare class — the 47 million on food stamps, the 23 million still looking for work, and the 100 million who have dropped out of the labor force altogether.  He is far more concerned about renewing unemployment benefits than he is about creating jobs.

Obama’s idea of “saving” the middle class is extending unemployment benefits, increasing welfare payments to single moms, and boosting the earned income credit for low earners.  That kind of assistance doesn’t save the middle class — it just turns them into welfare clients.  But, of course, that’s the point.  Move them out of the middle class and into dependency.  And while you’re at it, make them actually believe you’re saving them.

Originally published at the American Thinker, under the title “‘Saving’ the Middle Class.

About the Author: Dr. Jeffrey Folks is the author of Heartland of the Imagination (2011).


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8 Responses to “How Obama is ‘Saving’ the Middle Class”

  1. Charlie Hall says:

    Why does the JP continue to run uninformed columnists? No US State has state and local income taxes as high as 15%. Dividends and capital gains continue to get a massive tax break, with a top marginal rate approximately half that of those of us who work for a living. (Remember also that dividends and capital gains are also exempt from social security tax.) The estate tax rate is 40%, not 55%, applying to estates over $5 million, not $1 million — and that threshold is adjusted for inflation. Furthermore, the law continues another massive tax break: Not only does an estate of $5 million get exempted from the estate tax, it continues a total exemption from capital gains taxes up to the value of the estate at the time of death.

    Why does the Jewish Press continue to publish such motzi shem ra?

  2. Economics is hard. They know they don't like the president so they hook around for reasons to hate him. Since the facts confuse them, they don't value them; instead, they just make up what they think the facts should be and use their made-up b.s. like they do here, to denigrate the president.

  3. Mark SoFla says:

    Why? Because they're uninformed .. and that's very bad for a newspaper! It appears to me that this article was partially written before the recent tax agreement, and partially written after. In other words, it's a hodgepodge of incorrect facts mixed with a few correct ones. #badjournalism

  4. How sure are you on your info

  5. Charlie Hall says:

    100% certain.

    State tax rates:

    http://www.taxadmin.org/fta/rate/corp_inc.pdf

    New estate tax rules:

    http://www.forbes.com/sites/deborahljacobs/2013/01/02/after-the-fiscal-cliff-deal-estate-and-gift-tax-explained/

    And the big exemption for estates that are subject to the estate tax (even if too small to pay estate tax):

    http://en.wikipedia.org/wiki/Stepped-up_basis

    George Steinbrenner died during 2010 when there was no estate tax. His sons end up paying much more in capital gains taxes than they would have in estate taxes when they finally sell the Yankees.

  6. Charlie Hall says:

    The only part of this that is obscure is the Stepped Up Basis rule. But anyone who doesn't know about the Stepped Up Basis rule should not be writing about tax policy.

  7. Charlie Hall says:

    Crony Capitalism is a long-established tradition in American history, going back at least to the 1770s. We forget that the First Bank of the United States, the Erie Canal, the Baltimore and Ohio Railroad, the transcontinental railroads, and 2/3 of the New York City Subway were a product of Crony Capitalism. Its use declined with the rise of the Public Authority in the 20th century; there is a good argument that Crony Capitalism actually provides more accountability (and the third alternative is out and out socialism).

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What Obama means by ‘saving’ the Middle Class is turning them into welfare clients.

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