January 21, 2010:
Several readers urged us to combine and clarify charts and commentary from previous articles in one, more concise presentation. With our thanks for constructive criticism, here it is:
ObamaNomics is built on the assumption that politicians are better stewards of economic resources than the millions of individuals and business enterprises who created those resources. The Democrats’ plan is to dramatically increase taxation to fund programs through which government can exert greater control over our lives.
But these data show that the private sector’s ability and willingness to generate wealth for government to seize through taxation is rapidly diminishing. These data show that Obama’s own actions are are literally killing the goose that lays the golden eggs he needs to fund his agenda.
The drop in individual income tax revenue in fiscal 2009 was the steepest since 1939. As the chart shows revenue continues to plummet in fiscal 2010.
Virtually all individual income tax is paid by top half of income earners, those with the resources to invest in business enterprises that create jobs. Half the taxpayers earning over $200,000 are small business owners, who directly invest their own after-tax profits in business expansion.
Thus, a drop in individual income tax revenue signals declining small business profits and declining resources available to invest in businesses and create jobs. Not only is current tax revenue down, but without current investment, future tax revenue will decline even more.
Yet Obama and the Congress have continuously hectored the small businesses that could power the nation out of recession. He bashes them for seeking the profits that they could reinvest in expansion and job creation. He continuously threatens them with tax increases, new health care mandates and a crippling energy shortage created by government through a new “cap and trade” program.
Corporate income tax is a direct tax on corporate profits. Obama and the Democrats make no secret of their contempt for corporate profits. But it is those profits that fund job creation and provide the tax revenue for big government programs.
The drop in corporate income tax revenue in fiscal 2009 was the greatest since 1932, the depths of the Great Depression. As the chart shows, revenue continues to crash in fiscal 2010.
Obama’s threatened health care mandates, energy taxes and energy rationing through cap and trade will depress corporate profits even more, causing even more unemployment and even lower corporate income tax revenue.
Total federal revenue in fiscal 2009 dropped more than any time since 1932. As the chart shows, revenue continues to drop, dramatically, in fiscal 2010.
When someone in the media finally confronts the Democrats with this ominous data, they will, of course, dismiss it all as the result of “Bush policies.” But it has been three years since the Democrats won a controlling majority in Congress and sixteen months since the Bush team persuaded Congress to let government start the bailout program now known as TARP. Obama continued and expanded the TARP program. He seized control of AIG, GM and Chrysler. He discouraged risk-taking and investment by promising to burden businesses with new taxes, health care mandates, forced unionization and an artificial energy shortage created by government. Obama owns the “policies” driving this downward spiral.
The “policy” America desperately needs is smaller government, restricted to the few legitimate functions it is permitted to exercise under the Constitution. Greater liberty, and much less government intervention will leave companies, investors and entrepreneurs free to create wealth, produce profits and provide jobs. The path to prosperity is liberty, not authoritarian government.
Ironically, greater liberty will also generate more tax revenue.