Barack Obama’s Class Ceiling

Source: Internal Revenue Service

“Our nation’s strength and influence abroad must be firmly anchored in our prosperity at home,” Barack Obama said on Tuesday, describing his economic vision for the United States.  “The bedrock of that prosperity must be a growing middle class.”  But with each multiple of $1,000 earned annually by a married couple being penalized with an additional six cents in federal income taxes, Obama’s road to middle class equality in America is either an uphill struggle or a downhill fall that he wants to make steeper by eliminating George W. Bush‘s tax cuts, thus supporting the fact that the fairest and simplest type of income tax is a flat-tax with a standard exemption.1  

“Taxes are much less taxes on being wealthy than on becoming wealthy,” said University of Chicago economist Milton Friedman, explaining how government measures to alter the distribution of income have failed.  “While they limit the use of the income from existing wealth, they impede even more strikingly – so far as they are effective – the accumulation of wealth.”  Deadweight losses in government revenue result from the inefficiency of a progressive income tax structure.  In other words, a married couple in the United States has no incentive from the federal government to become a family with a second earner in the household, ultimately leading to a loss of potential revenue that would otherwise stimulate the economy.2  

Obama stated his socialist vision for America in a famous debate with a small business owner who rightly questioned his beliefs concerning taxation on the 2008 campaign trail.  “There is all the difference in the world between treating people equally and attempting to make them equal,” warned the Austrian economist Friedrich von Hayek.  “While the first is the condition of a free society, the second means, as De Tocqueville described it, ‘a new form of servitude’.” 3  


1.  Barack Obama, “Remarks by the President in Address to the Nation on the End of Combat Operations in Iraq,” The White House,  “Joe the Plumber: A Transcript,” St. Petersburg Times,  Milton Friedman, Capitalism and Freedom, Fortieth Anniversary Edition (Chicago: University of Chicago Press, 2002), 174-175.  

2.  Ibid., 173.  N. Gregory Mankiw, Principles of Economics, Fifth Edition (Mason: Cernage Learning, 2009), 249-258.  

3.  “Joe the Plumber: A Transcript,” St. Petersburg Times.  F.A. Hayek, Individualism and Economic Order (Chicago: University of Chicago Press, 1948), 16.


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