Obama's proposal isn't aimed at deficit reduction; it's aimed a garnering votes in 2012; None of it is on paper; until then it's merely the same old rhetoric of a failed President who is a master campaigner, but a hopeless milquetoast as a leader. If it was possible for the US to talk it's way out of debt, Obama would certainly be our guy. If it was possible to spend our way out of debt, Obama would be a rock star.
Unfortunately, his warm, enthusiastic embrace of failed Keynesian economic policies, like George Bush before him have left us days late, and trillions of dollars short, with no real end in sight as long as he holds office. His proposed tax increases have clearly been designed without regard to financial reality.
His taxation trigger point of $1million is patently naive, and shows he has neither done his homework, or has any real understanding of how business, especially small business works.
To be elegible to obtain a loan from the Small Business Administration, it's qualifying criteria requires a business to have fewer than 500 employees and less than $7million in annual sales. The average small business in the United States has fewer than 20 employees and less than $2million in sales annually(source: smallbusiness.chron.com ). The profit margins of these companies(many are between 1.5% and 5%) are tenuous at best because larger companies can take advantage of expensive technology wheras smaller companies rely on labor and equipment which is less expensive, but also less efficient.
Many of the companies on the lower end of this sliding scale also file as sole proprieters; in other words, their business income is combined with their personal income and filed and taxed acordingly. Many small business owners, who are themselves middle class would fall into the $1million pot hole provided by the Obama "deficit reduction plan". This would increase operating costs, stifle job growth and in some cases drive their businesses into the ground.
I have no problem with the rich paying more in taxes... to a point. I think setting the bottom line at $1million shows very clearly that Mr. Obama is more interested in talk than action and his numbers are purely arbitrary, based on audience effect. That gross amount should be adjusted upwards to closer to the $7million metric used by the Small Business Administration.
Considering that almost half of the families in the US pay absolutely no Federal Income Tax, I also think it would be fairer, along with the increased taxes on the rich, to implement a very small(in the area of 1/10th of a cent per dollar) national sales tax, with no exemptions other than those paying with food stamps. Add to this some realistic and serious spending cuts, reworked entitlements(reworked for less waste and better benefits to those who receive them), less ideology and more pragmatism, and we'd at least have a realistic starting point.