President Obama's Proposal to Boost Taxes for the Wealthy - Research Paper Example

The first reason President Obama needs to raise taxes on the rich is the fact that our country needs more money to balance the budget. We have made some very poor decisions as a nation and now these obligations are coming back to haunt us. The most important revenue issue we need to address is paying for the wars in Afghanistan and Iraq. We have never fought wars abroad without raising taxes to pay for the war. World War I was partially paid for by a huge tax on the richest Americans. This tax was presented as a patriotic duty that all rich Americans should do.

President Bush insisted that we did not need a tax increase to pay for Iraq or Afghanistan. Instead of raising taxes, he lowered taxes on all Americans, but most especially for rich Americans. We are facing increasing costs for Social Security and Medicare as well. These are popular programs that no one wants to end. In addition to increased expenses from wars and social programs comes the increasingly expensive mission of providing homeland security for America. The amount of money spent on law enforcement and intelligence gathering since the 9/11 attacks in New York, Washington DC and Pennsylvania has skyrocketed.

We want to be safe and we want to keep our social programs. The only way that we can have these things is to raise more revenue. There isn’t enough we can cut if we are not going to touch defense, homeland security and social security. President Obama has proposed a tax on the wealthiest Americans that would generate 1.5 trillion dollars in new revenue over the next decade. When an increase in revenue is necessary, the first people to give should be the rich because they have the most to give.

Another reason the rich should be taxed stems from the fact that the richest Americans have been concentrating more and more of the wealth in their own personal fortunes over the past thirty years. Economists argue that there are many reasons for this concentration of wealth among the richest 1% of Americans. Some of it can be traced to the reductions in the capital gains taxes that were implemented during the George W. Bush presidency. Capital gains are the income received when an asset such as real estate or company stock is sold.

These gains are taxed at a lower rate than regular income. This is a great advantage to the rich because most of their income comes from the selling of items that generate capital gains, not “income” in the technical sense. America has forgone trillions of dollars in lost revenue over the past two decades by reducing the capital gains tax. That revenue has ended up in the hands of the wealthiest Americans. Some economists say that a low capital gains tax is good for working and middle class Americans also because many have company stock for their 401K retirement plans.

The problem with this logic is the fact that most working class people never need the capital gains tax breaks because they are not actively trading their stocks. They have them in reserve for retirement. The only people benefitting from this tax break are the rich. This tax beak has helped concentrate wealth in the hands of the richest Americans. The economist Marty Sullivan commented, "The way you get rich in this world is not by working hard, it's by owning large amounts of assets and having those things appreciate in value.

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