Fox News is distorting President Obama's economic agenda by pushing the straw-man argument that taxing the entirety of millionaires' incomes would fund the government for less than three months. In fact, Obama has proposed no such thing, and this Republican talking point obscures the billions in revenue that would be generated from letting the Bush tax cuts expire for wealthy households.
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Fox: "Taxing Millionaires At 100 Percent" Would Fund Government For About Three Months
Martha MacCallum: Taxing Wealthy At 100 Percent Would Fund Government "For About 2 And A Half Months, So That Hardly Feels Like A Meaningful Solution." Fox News host Martha MacCallum claimed that the "main focus of the Obama argument for how to fix things is this idea that the rich need to pay their fair share," adding that "serious economists" have said that "if you took not only the tax increases that President Obama wants but if you took every single penny and dollar that they made over the course of a year you'd only basically bankroll the government for about two and a half months." She concluded: "So that hardly feels like a meaningful solution." [Fox News, America's Newsroom, 9/24/12]
Steve Moore: "There Just Aren't Enough Rich People, There Are Not Enough Millionaires And Billionaires To Pay The Bills." Wall Street Journal editor and frequent Fox guest Steve Moore agreed with MacCallum's straw-man argument and stated:
MOORE: Right, and that assumes that people would still work and still invest and you'd still have rich people if you took 100% of their money. But you're right, there's just, and the problem of course, Martha, is there just aren't enough rich people, there are not enough millionaires and billionaires to pay the bills. [Fox News, America's Newsroom, 9/24/12]
Megyn Kelly: "Our Calculations Show That Taxing Millionaires At 100 Percent Would Now Run The Federal Government For Just Two And A Half To Three Months." Discussing the economy and Obama's jobs plan, host Megyn Kelly stated: "Our calculations show that taxing millionaires at 100 percent would now run the federal government for just two and a half to three months." [Fox News Network, America Live, 9/24/12]
Elizabeth MacDonald: "Taxing Millionaires At 100% Would Now Run The Federal Government For Two And A Half To Three Months." On a post on the Fox Business website, Elizabeth MacDonald quoted calculations by "Fox News analysts" that found that "taxing millionaires at 100% would now run the federal government for two and a half to three months":
According to calculations by FOX News analysts James Farrell and Mitch Kweit, taxing millionaires at 100% would now run the federal government for two and a half to three months. Specifically, the analysts took a crack at this question: "If you took all the adjusted gross income of all millionaires, how many months of federal spending would this pay for?" Here's what Farrell and Kweit found, based on IRS tax return and Treasury Department data:
* 2009: For calendar year 2009, taking all the adjusted gross income of filers making $1 million or higher would have paid for 20.67% of all federal spending during calendar year 2009 - approximately 75 ½ days, or 2 ½ months.
* 2010: For calendar year 2010, taking all the adjusted gross income of filers making $1 million or higher would have paid for 24.11% of all federal spending during calendar year 2010 - approximately 88 days, or approximately nearly three months.
Year Total federal outlays Total AGI of all millionaires
2009 $3.52 trillion $726.91 billion
2010 $3.48 trillion $839.58 billion (preliminary)
Straw-Man Argument That Involves "Wildly Hypothetical Scenario" Is A Republican Talking Point
Rep. Paul Ryan: "If You Took All The Income From Every Millionaire In America Today, It Would Run The Government For About Four Months." In an NBC News Meet The Press interview in 2011, Congressman Paul Ryan stated: "If you took all the income from every millionaire in America today, it would run the government for about four months." He continued:
RYAN: I have a better idea. Instead of job-killing tax increases why don't we just stop subsidizing wealthy people? Let's go after the crony capitalism, the corporate welfare in the tax code, in spending. And why don't we income adjust our spending programs so we don't subsidize wealthy people as much? I think that's a better idea to get more savings in the budget, and get our debt down without doing economic damage. [NBC News, Meet The Press, 10/9/11]
PolitiFact: Taxing Millionaires At 100 Percent Is "A Wildly Hypothetical Scenario." In an article examining Ryan's claim about taking "all the income from every millionaire," PolitiFact pointed out that "Ryan uses a wildly hypothetical scenario" and noted that no politician would ever propose such a plan as "a 100 percent tax obviously would have negative effects and is a political non-starter." [PolitiFact, 10/9/11]
In Fact, Obama Has Proposed A Top Rate Of 39.6 Percent
Tax Policy Center: Obama's Proposed Budget Sets Top Tax Rate At 39.6 Percent. The Tax Policy Center created a guide to the FY2013 Budget Proposal from the Obama Administration, and notes that the provisions affecting highest income taxpayers "allow top two rates to rise to 36% and 39.6% after 2012," not 100%. [Tax Policy Center, accessed on 9/24/12]
Expiration Of Bush Tax Cuts For Wealthy Would Raise Billions
NY Times: Obama's Proposal To Allow Bush Tax Cuts To Expire For Wealthier Americans Would Raise $850 Billion Dollars. From The New York Times:
President Obama, drawing a contrast with what he called Republican trickle-down economics, called ... for temporarily extending the Bush-era tax cuts for people making less than $250,000 while letting the taxes of the wealthiest go up.
A one-year extension for people making under $250,000 would cost the government $150 billion in revenue, the administration estimates, an amount that would be added to the deficit. In a point of comparison, economists estimate that letting the cuts expire for people above that threshold would generate $850 billion over 10 years. [The New York Times, 7/9/12]
FY2013 Budget: Expiring Income Tax Cuts For Upper-Income Earners Projected To Result In $848.8 Billion In Revenue. The Obama Administration's proposed Budget for FY2013 projects revenue resulting from tax cuts for upper income workers at $848.8 billion. The total effect of expiring income tax cuts and restoring estate, gift, and GST tax parameters is projected at $967.6 billion. [Fiscal Year 2013 Budget of the U.S. Government, February 2012]
Economists Say That Bush Tax Cuts Continue To Contribute To Deficits
CBPP: "Virtually The Entire Federal Budget Deficit Over The Next Ten Years" Is Due To Bush Policies, Economic Downturn. Center on Budget and Policy Priorities (CBPP) Chief Economist Chad Stone said in testimony before the Joint Economic Committee in June 2011:
[T]he economic downturn, tax cuts enacted under President Bush, and the wars in Afghanistan and Iraq explain virtually the entire federal budget deficit over the next ten years. The economic downturn added about $300 billion chiefly from the operation of the automatic stabilizers (declining revenue and increased outlays for unemployment insurance and other pro-cyclical spending) and associated interest costs. Both the financial-market measures enacted under President Bush and largely implemented under President Obama such as the Troubled Asset Relief Program (TARP), and the Recovery Act tax cuts and increases in spending enacted under President Obama, were important drivers of the surge in deficits in 2009-11, but those measures will largely have phased out by the end of this year, leaving only associated interest costs in subsequent years. [Center on Budget and Policy Priorities, 6/21/11]
Robert Reich: "Why We Must Raise Taxes On The Rich." In a Huffington Post blog post headlined "Why We Must Raise Taxes On The Rich," former Labor Secretary Robert Reich argued that "[t]he only way America can reduce the long-term budget deficit... is by raising taxes on the super rich":
Here's the truth: The only way America can reduce the long-term budget deficit, maintain vital services, protect Social Security and Medicare, invest more in education and infrastructure, and not raise taxes on the working middle class is by raising taxes on the super rich. Even if we got rid of corporate welfare subsidies for big oil, big agriculture, and big Pharma -- even if we cut back on our bloated defense budget -- it wouldn't be nearly enough. [The Huffington Post, 4/4/11]
Tax Policy Center: "Tax Cuts For These High-Earners Will Do Relatively Little To Boost The Economy." In an August 31, 2010 post, Tax Policy Center economist Howard Gleckman pointed out that tax cuts for the wealthy generally do not go back into the economy. Gleckman noted: "We know that higher income households are more likely to bank the cash than spend it. As a result, tax cuts for these high-earners will do relatively little to boost the economy in the short run." [Tax Policy Center, 8/31/10]
Pew Research Center: "Raising Taxes on Rich Seen as Good for Economy, Fairness." A Pew Research Center report found that "[b]y two-to-one (44% to 22%), the public says that raising taxes on incomes above $250,000 would help the economy rather than hurt it":
By two-to-one (44% to 22%), the public says that raising taxes on incomes above $250,000 would help the economy rather than hurt it, while 24% say this would not make a difference. Moreover, an identical percentage (44%) says a tax increase on higher incomes would make the tax system more fair, while just 21% say it would make the system less fair. [Pew Research Center, 7/16/12]
Paul Krugman: "The Economic Record Certainly Doesn't Support The Notion That Superlow Taxes On the Superrich Are The Key To Prosperity." In his January 19 New York Times column, Nobel Prize winning economist Paul Krugman explained that based on recent history, lower tax rates for the wealthy do not create more jobs.
[T]he low-tax status of the very rich is also a recent development. During Mr. Clinton's first term, the top 400 taxpayers paid close to 30 percent of their income in federal taxes, and even after his tax deal they paid substantially more than they have since the 2003 cut.
So is it essential that the rich receive such a big tax break? There is a theoretical case for according special treatment to capital gains, but there are also theoretical and practical arguments against such special treatment. In particular, the huge gap between taxes on earned income and taxes on unearned income creates a perverse incentive to arrange one's affairs so as to make income appear in the "right" category.
And the economic record certainly doesn't support the notion that superlow taxes on the superrich are the key to prosperity. During that first Clinton term, when the very rich paid much higher taxes than they do now, the economy added 11.5 million jobs, dwarfing anything achieved even during the good years of the Bush administration. [The New York Times, 1/19/12]
CBO: Extending The Bush Tax Cuts Would Increase Deficits By $2.6 Trillion Over 10 Years. In January 2010, the nonpartisan Congressional Budget Office estimated that extending the tax cuts enacted in 2001 and 2003 would increase deficits by $2.6 trillion between 2011-2020. [Congressional Budget Office, January 2010]
Fox Has Repeatedly Dismissed New Revenue From Expiration Of Bush Tax Cuts For The Wealthy
Megyn Kelly: "The Amount That They Would Get From Those Tax Hikes Is A Teaspoon In The Ocean." On America Live, Kelly falsely claimed "It would help some, but the amount that they would get from those tax hikes is a teaspoon in the ocean." [Fox News Network, America Live, 7/18/12]
Jon Scott: "If You Boost Taxes On The Wealthiest Americans, You Get Enough Money In A Year To Run The Federal Government Operations For About Eight And A Half Days." Fox News anchor Jon Scott dismissed the president's proposal because the money it raises would run the government for a mere "eight and a half days":
JON SCOTT: What [Obama] didn't explain is how raising taxes on the wealthiest Americans is going to help create jobs, or do anything like that. Our brain room did - ah, took - a number crunching exercise and found that if the president gets what he wants, in other words if you boost taxes on the wealthiest Americans, you get enough money in a year to run the federal government operations for about eight and a half days. Ah, it's kind of a drop in the bucket.
SIMON CONSTABLE: I mean, that's nothing. That's a few weekends, basically. [Fox News, Happening Now, 7/9/12]
Fox's Dobbs Scoffs At Projected Revenue Because It "Would Pay For The Federal Government To Operate For Eight And A Half Days." Appearing on America Live with Megyn Kelly, Fox Business host Lou Dobbs laughed off the effect this new revenue would have:
LOU DOBBS: This is why President Obama is such a great leader. This tax would raise an estimated, estimated, $85 billion dollars in one year. That would pay for the federal government to operate for eight and a half days. Eight and a half days. Meanwhile, he's run up deficits and the national debt by about four and a half trillion dollars in three and a half years. This man is not making sense as the leader of this great nation. [Fox News, America Live, 7/9/12]
Fox Host Bill Hemmer: Revenue From Buffett Rule "Would Fund The Government For 7 Days." America's Newsroom co-host Bill Hemmer noted that the Buffett Rule "would raise $47 billion over the next 10 years." He then added: "$47 billion would fund the government for 7 days. So just more than one working week." [Fox News, America's Newsroom, 4/11/12, via Media Matters]
Fox's Eric Bolling: The Buffett Rule Will "Not Help The Debt." On The Five, co-host Eric Bolling dismissed the potential effects of the Buffett Rule on reducing national debt:
BOLLING: Warren Buffett does not say that a Warren Buffett tax will solve a darn thing. The only thing a Warren Buffett tax will do is create class warfare. Not help the debt, certainly not help the American economy. [Fox News, The Five, 4/11/12, via Media Matters]