How the Obamas (and the Guilty Left) Can Pay More Taxes
By Paul B. Matthews
The American Thinker
August 1, 2011
http://www.americanthinker.com/2011/08/how_the_obamas_and_the_guilty_left_can_pay_more_taxes.html
President Obama and others on the "guilty left" love to talk about all of the "Bush tax breaks" they receive but don't need -- a theme that was again prevalent in Obamas address to the nation Monday night on the debt ceiling.
How can we ask a student to pay more for college before we ask hedge fund managers to stop paying taxes at a lower rate than their secretaries? How can we slash funding for education and clean energy before we ask people like me to give up tax breaks we don't need and didn't ask for? [First of all, let's get the nomenclature properly straightened out. Lawful deductions are simply a mechanism to determine the ultimate level of tax ... they're not "tax breaks" ... they are mathematical factors that help determine your ultimate tax rate. The use of the term "tax breaks" slyly and falsely implies that the taxpayer selfishly took something that really belongs to the government - nothing could be farther from the truth! 100% of a taxpayer's income is earned by the taxpayer from his sweat equity or his assets ... and it all belongs to the taxpayer, period, end of story. The government then uses a mathematical computation to determine the amount of hard-earned income it will seize from the taxpayer ... and deductions are simply factors in that mathematical computation. If leftists don't like the very idea of deductions, then there is an easy solution ... simply internalize what used to be deductions and credits into a flat tax rate ... the Flat Tax ... and then if the government decides to either lower or raise taxes, it will just adjust the rate. Of course, the real problem here is one of perception ... for leftists, the government first owns 100% of every citizen's income and then it "magnanimously" decides how much each citizen should be allowed to keep. On this score, they are dead ass wrong. B.]
In April, he reiterated this point during a speech on deficit reduction.
I don't need another tax cut. Warren Buffett doesn't need another tax cut. Not if we have to pay for it by making seniors pay more for Medicare. Or by cutting kids from Head Start. Or by taking away college scholarships that I wouldn't be here without. That some of you wouldn't be here without. And I believe that most wealthy Americans would agree with me. They want to give back to the country that's done so much for them. Washington just hasn't asked them to. [Well, Barack ... if you're soooooo terribly attuned to the needs of others ... solely as defined and administered by the federal government, of course! ... and you have so much excess income to give away (obviously because you force the U.S. taxpayers to pay the exorbitant costs for your golf outings and family, worldwide vacations instead of paying for them, yourself) ... why don't you just make a charitable donation to the U.S. Treasury, eh? You know you can do that, don't you? B.]
Obama has also repeatedly called to sharply reduce the utilization of itemized deductions on married couples with incomes over $250,000 -- what the left now affectionately calls "spending within the tax code."
[T]he tax code is also loaded up with spending on things like itemized deductions[.] ... And while I agree with the goals of many of these deductions, like home ownership or charitable giving, we cannot ignore the fact that they provide millionaires an average tax break of $75,000 while doing nothing for the typical middle-class family that doesn't itemize. [Ah, here is a very clear example of the false notion that the government first owns everyone's income and then allows them to keep some of it - "spending on things like itemized deductions." You see, the government first has to own something before it can spend it, don'tcha know! So, Obama ... ever the true Marxist believer ... sees lawful deductions that are simply mathematical factors in the computation of ultimate tax liability as "government spending." How bloody ridiculous! Like I said before, if you don't like the mathematical computation that utilizes deductions, then go to a Flat Tax ... but don't be a stupid clown and suggest every taxpayer should feel guilty because the government is the first, real owner of the fruits of their personal blood, sweat & tears and it has somehow erred in allowing you to keep too much of your own earnings to the "detriment of others." WHAT A CROCK OF SHIT! B.]
If Obama and the others with incomes over $250,000 genuinely believe that they are "not paying their fair share" of income taxes, then here are a few tax strategies they can use to increase the amount owed each year to Uncle Sam.
1. Do not utilize itemized deductions.
According to the 2010 Obama personal tax filing, Barack and Michelle Obama claimed $373,289 in itemized deductions. Instead of claiming all these deductions, the Obamas could have simply selected to utilize the standard deduction ($11,400 for married couples), thereby boosting their taxable income by $361,889.
By utilizing this strategy, they could have paid an additional $126,661 in 2010 income taxes (utilizing a 35% marginal tax rate).
2. Do not place any money into deferred asset accounts including 401Ks, IRAs, Self-Employed 401Ks, SIMPLE or any other retirement type account.
In 2010, the Obamas contributed the maximum of $49,000 into a Self-Employed 401K. By utilizing this strategy, the Obamas successfully managed to avoid $17,150 in 2010 income taxes.
3. Do not recognize capital losses.
The Obamas managed to take the maximum capital tax loss deduction of $3,000 in 2010. If the Obamas had not recognized a long-term capital loss at some point in the past, they could have paid an additional $1,050 in 2010 federal taxes.
4. Do not utilize the Foreign Tax Credit.
Given that President Obama is hypercritical of U.S. multinational companies for holding assets overseas to avoid high U.S. corporate tax rates, it's almost hypocritical of the president to utilize the Foreign Tax Credit on the individual Form 1040. But that is exactly what he did -- to the tune of $22,215.
If the Obamas had utilized these four simple tax maximizing strategies, they could have paid an additional $167,076 in 2010 federal taxes.
This number would have more than offset the $69,050 they "saved" thanks to the Bush 4.6% marginal tax rate cut on incomes over $250,000.
So the next time President Obama goes on a tirade that he is not paying his fair share of income taxes, please feel free to reference this article.
Paul B. Matthews is an Austin, TX-based CPA. He holds an MBA from the University of Texas.
The essential American soul is hard, isolate, stoic, and a killer. It has never yet melted. ~ D.H. Lawrence
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