The rich have been soaking the poor.
New York Times (December 31, 2015) Thanks, Obama: Highest Earners’ Tax Rates Rose Sharply in 2013:
Data released by the I.R.S. on Wednesday shows that tax rates on the income of America’s 400 wealthiest taxpayers rose sharply to 22.9 percent in 2013, erasing a majority of the last two decades’ decline in their effective tax rate. As described in an article in The New York Times on Wednesday, tax rates on America’s 400 wealthiest taxpayers fell sharply from the late 1990s through 2012, when their average effective income tax rate fell to 16.7 percent from 26.4 percent.
That link in that New York Times article links to another New York Times article (December 29, 2015) For the Wealthiest, a Private Tax System That Saves Them Billions:
With inequality at its highest levels in nearly a century and public debate rising over whether the government should respond to it through higher taxes on the wealthy, the very richest Americans have financed a sophisticated and astonishingly effective apparatus for shielding their fortunes. Some call it the “income defense industry,” consisting of a high-priced phalanx of lawyers, estate planners, lobbyists and anti-tax activists who exploit and defend a dizzying array of tax maneuvers, virtually none of them available to taxpayers of more modest means.
And from another New York Times article (December 31, 2015) Justice in Taxes, Most Likely Short-Lived:
For 20 years beginning in the early 1990s, the effective tax rates for those at the very top of the income ladder generally dropped. Then, in 2013, after a pair of unusual tax increases negotiated by the Obama White House went into effect, taxes went up on this group. According to data released on Wednesday by the Internal Revenue Service, the average rate for federal income taxes paid by the country’s top 400 income earners rose from 16.7 percent in 2012 to 22.9 percent in 2013, almost exactly where they stood in the early 2000s, though well below the level of the early 1990s. By any measure, that’s a victory for the cause of tax justice, analysts said. According to data released on Wednesday by the Internal Revenue Service, the average rate for federal income taxes paid by the country’s top 400 income earners rose from 16.7 percent in 2012 to 22.9 percent in 2013, almost exactly where they stood in the early 2000s, though well below the level of the early 1990s. By any measure, that’s a victory for the cause of tax justice, analysts said. But the recent rate increases, many experts also noted, still do little to overcome the broader issue of a separate, more comfortable tax system for the ultra-wealthy.
Paul Krugman (December 31, 2015) Soaking The Rich, Slightly:
It’s now a fact as opposed to a mere projection that Obama significantly raised taxes at the top — and the hit was especially big at the very top of the scale. And my point that the economy’s pretty good job growth despite this tax hike — raising taxes on job creators! — refutes right-wing doctrine continues to stand.
Paul Krugman (January 1, 2015) Privilege, Pathology and Power:
Wealth can be bad for your soul. That’s not just a hoary piece of folk wisdom; it’s a conclusion from serious social science, confirmed by statistical analysis and experiment. The affluent are, on average, less likely to exhibit empathy, less likely to respect norms and even laws, more likely to cheat, than those occupying lower rungs on the economic ladder ... The biggest reason to oppose the power of money in politics is the way it lets the wealthy rig the system and distort policy priorities. And the biggest reason billionaires hate Mr. Obama is what he did to their taxes, not their feelings.
Washington Examiner (December 31, 2015) Taxes on richest Americans soared in 2013:
The increase in taxes paid by top earners is attributable to the tax changes implemented in the "fiscal cliff" deal that ended the majority of the Bush-era tax cuts for high earners in the first days of 2013 and to the imposition of a new Obamacare tax on investment income. The fiscal cliff deal resolved an impasse between President Obama and Democrats and congressional Republicans by raising the top income tax rate rise from 35 percent to 39.6 percent, reversing part of the Bush tax cuts pertaining to high income earners. The legislation also undid the capital gains tax cuts under Bush, raising the tax rate on long-term capital gains from 15 percent to 20 percent. The Obamacare investment surtax, used to finance the expansion of health insurance in the health care legislation, raised the tax rate on capital gains and other investment income to 23.8 percent for top earners. The higher rates on investment income are especially important for the top 400 income earners, who earn the majority of their income not through wages and salaries but through interests in businesses, real estate, commodities and more.
My Commentary: As originally planned, the Bush tax cuts of 2001 and 2003 were set to expire on January 1, 2011. In late 2010 President Obama extended the Bush tax cuts for 2 years as a "compromise" with the Republicans to extend federal unemployment benefits for the long-term unemployed 1 more year (which expired at the end of 2013) — something the GOP wouldn't do without extending the Bush tax cuts. (The GOP actually wanted the tax cuts made permanent.)
When the Bush tax cuts finally expired on January 1, 2013 it had automatically rolled backed the tax rate on capital gains from 15% back to 20% (where is was the last time under Clinton). This portion of the capital gains tax rate didn't increase because of anything Obama did. But starting in 2013, a provision in Obamacare did add a surtax of 3.8% on capital gains to expand Medicaid — making the rate on capital gains 23.8% (If the tax rate had still been 15%, the new tax rate would have been 18.8% for capital gains).
But still, even 23.8% is wayyyyyyyyyyyyyy too low — when the top rate on regular wages is 39.6% — which is about what the tax on capital gains once was in 1979 before Jimmy Carter lowered the rate on capital gains to 28%. Then Reagan lowered it to 20%, then back to 28%. Clinton later lowered it to 20%. Bush lowered it to 15%. In 2013 it went back to 20% (and Obamacacare added 3.8%).
Obama, after first extending the Bush tax cuts for the rich for 2 years, he raised taxes on the rich by a mere 3.8% with the Congressional-passed healthcare law (aka Obamacare)— he didn't "soak the rich". But the tax rate on capital gains is still very low, and should be tax as regular wages based on the current progressive rates (and also taxed for Social Security).
Also, the $118,500 income cap for Social Security taxes should be eliminated. Members of Congress make $174,000 a year, and so, pays this tax on only 65% of their earnings. Whereas, 95% of wage earners make less than $118,500 a year — and so, must pay this tax on 100% of their earnings. Is that fair? (Hillary Clinton thinks $250,000 a year is "middle-class", but that wage is in the top 1% of all wage earners.)
[* And I don't know if Bill Cosby endorsed Hillary Clinton]