President Obama was in his element on Wednesday: Shirt sleeves rolled up, lively and animated, clearly enjoying the youthful, largely sympathetic audience at Facebook’s Silicon Valley headquarters, and the theater-in-the-round setting that enabled him to kibitz with the company’s youthful founder and CEO, Marc Zuckerberg.
Indeed, it was in a humorous vein that the president made his case on the normally staid subject of debt reduction. The White House plan for tackling America’s looming debt crisis calls for $4 trillion in deficits to be eliminated over the next decade, in part by cutting spending but also through a tax hike. This would come in the form of allowing the Bush-era tax cuts for the nation’s top income bracket to expire at the end of 2012.
“Let’s take another trillion of that [money] that we raise through a reform in the tax system,” Obama said at Facebook headquarters, “that allows people like me -- and, frankly, you, Mark -- for paying a little more in taxes.” “I’m cool with that,” deadpanned Zuckerberg, whose fortune is estimated at close to $15 billion, as the audience laughed appreciatively. “I know you’re okay with that,” the president shot back.
It was another riff on the theme the president has made familiar since his “major address” on debt reduction at the George Washington University last week. In that speech, on April 13, Obama noted that the last decade has seen the average income of the top 1 percent of earners increase by $250,000.
“That’s who needs to pay less taxes?” the president then asked rhetorically. “I don’t need another tax cut. Warren Buffett doesn’t need another tax cut.”
The nation’s top income bracket – which is a very different group of people from the top 1 percent of earners – includes individuals who earn $200,000 or more per year, and families that make $250,000 or more per year. If the Bush-era tax cuts for this bracket were to expire, the top marginal taxation rate would rise to 39.6 percent from the current rate of 35 percent.
That top income bracket includes many taxpayers whose annual income, let alone their net wealth, will never begin to approach that of Buffett or Zuckerberg, or that of the president himself, whose family almost $2 million in income this year, and more than $5 million the year before.
Among them is Virginia resident Sam Misleh, a fifty-year-old restaurateur who owns three cafes in the commonwealth, along with Walker’s Grille, an eatery that opened its doors six weeks ago. Between the four establishments, Misleh employs close to eighty people at any given time. In a good year, the annual income of Misleh, who files taxes jointly with his wife, will reach, or perhaps slightly exceed, an income of $250,000.
This is enough to place Misleh in the top income bracket, but he bristles at the notion that he belongs in the same category as “millionaires and billionaires” – the very group the president chides congressional Republicans for protecting when they say they oppose raising the top marginal rate.
“I mean, $250,000 – they're gonna spend that in a night!” he said in an interview this week. “You know, $250,000 means a lot to us because, I mean, that's what we're trying to live off of and trying to make work.”
Although his family has been in the restaurant business in one way or another since 1972, when Misleh’s father opened a small pizzeria, he described Walker’s Grille as his “big gamble,” and expressed anxiety about meeting his operating expenses.
“This is my going to Las Vegas,” he told Fox News. “It's so hard to get a loan from a bank nowadays, you have to almost fund everything yourself. That's the biggest problem. The biggest hurdle is trying to get money to open and operate an establishment. So far, we're hanging in there and doing it…Staffing is not a problem but making payroll, paying the bills, you know – that's on a monthly basis and you have to do that….We're still paying our bills, you know, they're getting paid somehow. But it's just not as rosy out there as everybody thinks it is.”
In an interview with a Denver TV reporter on Monday, President Obama asserted that only 2 percent of small business owners makes more than $250,000 annually. Asked where that statistic came from, the White House responded with a link to a study by Brookings Institution economist William Gale.
But a prominent trade group disputed Gale’s methodology.
“We think it’s higher [than 2 percent],” said Bill Rys of the National Federation of Independent Business. “What [Gale] did was look at IRS data. What we did at the NFIB is we went out and we asked small business owners. We talked directly to the source. We found that the overall number was higher….And some research we did at the NFIB found that businesses between twenty and 250 employees are the ones most likely to be hit with that tax increase.”
For the proud proprietor of Walker’s Grille, however, such disputes would be entirely academic, if they did not cut so close to the bone. “The tax rates are what they are and they should probably stay there,” Misleh told Fox News. “No raising. Just keep them the same.”