100 Percent Tax on Those Earning $500K or More Leaves U.S. With $839B Deficit

April 18, 2011 - 1:05 PM

President Barack Obama

President Barack Obama smiles during an interview with The Associated Press, Friday, April 15, 2011, in Chicago. (AP photo/Pablo Martinez Monsivais)

(CNSNews.com) - When he presented his plan for dealing with the national debt last week, President Barack Obama suggested a number of ways he would like to increase taxes on people he referred to as “millionaires and billionaires.”

However, recently released statistics from the Internal Revenue Service indicate that taxing away 100 percent of the income of every American who earned $500,000 or more in 2009 would still have left the United States with a massive annual deficit.

In fact, in tax year 2009 (the last year for which IRS has published statistics), the combined gross income of all Americans earning $500,000 per year or more was about $1.03 trillion ($1,029,256,075,000.00) of which these Americans paid $256.7 billion ($256,699,499,000.00) in federal income taxes.

That left this group of Americans about $773 billion ($772,556,576,000.00) in income that the federal government had not taken away in income taxes.

Also during tax year 2009, according to the Bureau of the Public Debt, the national debt increased by $1.61 trillion ($1,611,544,812,899.90).

If the federal government had increased the income-tax rate on Americans earning more than $500,000 to 100 percent in 2009--and seized the remaining $773 billion in income it had not initially taken away from these Americans--that would have closed the federal deficit for the year to $839 billion ($838,988,236,899.90).

After taxing away 100 percent of the income of those earning $500,000 or more in 2009, the Obama administration would still have needed to increase taxes on Americans earning less than $500,000 by a total of $839 billion--just to balance federal accounts for the year.

[Correction: As initially posted, this piece said that imposing a 100-percent income tax on those earning $500,000 or more in 2009 would still have left a deficit in that tax year of $582 billion. That calculation neglected to account for the $256.7 billion in taxes this group of Americans did pay in that year. When this money is accounted for, a 100-percent tax on Americans earning more than $500,000 in 2009 would have only closed the annual deficit to $839 billion.]