Posted on 10/21/2008 5:48:48 AM PDT by SJackson
Barack Obama says he plans to cut taxes for 95 percent of American workers. That sounds terrific, but there are three problems. One, it is meant to draw attention from the real core of the Obama tax plan: proposed increases in every major federal tax. Two, the structure of the cuts will create perverse incentives. And three, many of the people receiving “tax cuts” don’t pay taxes to begin with, meaning they’ll be in effect getting welfare.
The first point requires but a simple list. Obama proposes to raise the top two individual income tax rates by 25 percent or more, through both explicit rate increases and the phaseout of personal exemptions and all itemized deductions for upper-income earners. He’ll increase the capital-gains tax rate by 33 percent, the tax rate on dividends by 33 percent, and the top payroll-tax rate by 16 to 32 percent. He’ll create a new payroll tax for national health insurance, estimated at 7 percent. He’ll reinstate the death/inheritance tax, which is being phased out under current law, with a new top marginal rate of 45 percent. He’ll increase the corporate tax burden by 25 percent “by closing corporate loopholes and tax havens.” He’ll even increase tariffs through his protectionist trade policies.
Obama argues that only higher-income workers and rich corporations will suffer these tax increases, and they can afford it. But tax and economic policy is not about who “can afford it.” Increasing these marginal tax rates greatly harms the economy — when more of the money earned goes to the government, there’s less incentive for “the rich” to work, save, invest, and create and expand businesses. This affects people trying to start businesses with investment money from wealthy folks. Not to mention people looking for jobs, which usually come from businesspeople with money.
This isn’t just a theory. Ireland adopted a 12.5 percent corporate tax rate 20 years ago, when it suffered the second-lowest per capita GDP in the European Union (EU). Its economy boomed as a result, and today Ireland enjoys the second highest per-capita GDP in the EU. Ireland, with its 12.5-percent rate, raises 50 percent more corporate-tax revenue as a percent of GDP than the U.S. does with its 35 percent rate. Yet Barack Obama laughs at McCain’s proposal to reduce that corporate rate to 25 percent, the minimum needed to restore international competitiveness for U.S. companies and employers, mocking it as still more tax cuts for rich corporate fat cats.
Obama’s tax plan is exactly the opposite of the supply-side economics that Reagan adopted, which produced the astounding boom of the 1980s. That boom, in fact, lasted 25 years, from 1982 to 2007, as Art Laffer and Steve Moore discuss in their new book, The End of Prosperity. Laffer and Moore explain that more wealth was produced during those 25 years than in the previous 200 years of American history.
Obama’s tax plan is also exactly the opposite of President Kennedy’s, which produced another astounding boom in the 1960s. Pursuing the exact opposite policies from Kennedy and Reagan will produce exactly the opposite results.
(Note also that Obama’s tax increases will not produce nearly enough revenue to finance all his lavish spending proposals, as shown by a brilliant new paper from Alan Reynolds of the Cato Institute. And by the way, Bill Clinton campaigned in 1992 promising a tax cut for the middle class — after he was elected he dropped that idea, adopting tax increases for people making as little as $20,000 per year.)
Finally, Obama’s “tax cut,” if he follows through with it, will often be a simple giveaway. As it stand right now, roughly one-third of income earners pay no federal income taxes. Many actually receive payments from the income-tax system — these payments total 3.8 percent of all federal taxes paid. Simple arithmetic holds that if one-third of earners don’t pay income tax, it’s impossible to cut taxes for 95 percent of earners.
Obama’s “tax cut” is, in reality, a $500-per-worker refundable income-tax credit for workers making up to $75,000 per year, and for families making up to $150,000. The term “refundable” means that if the worker does not have enough tax liability to take advantage of the credit, the government sends the worker a check to cover the full amount of the credit anyway. It is like George McGovern’s 1972 promise of a $1,000 check for everyone, which the American people rejected as a crass vote-buying scheme.
Besides the $500-per-worker credit, Obama proposes a slew of income-tax credits targeted toward low- and moderate-income people, also refundable. Obama proposes such tax credits for child care, education, housing, retirement, health care, welfare, etc.
Though the people receiving these credits will spend the money, the programs will probably hurt the economy on net, because the credits will be phased out at higher income levels. This, in effect, constitutes yet another marginal tax on high-income earners, and thus another blow to their incentives to be productive.
These programs alone would cost $1.3 trillion over ten years. I call it The New Tax Welfare.
“One, it is meant to draw attention from the real core of the Obama tax plan: proposed increases in every major federal tax. Two, the structure of the cuts will create perverse incentives. And three, many of the people receiving “tax cuts” don’t pay taxes to begin with, meaning they’ll be in effect getting welfare.”
Hm, this almost sounds like the economic stimulus package being proposed again.
Don’t forget Obama’s 845 billion dollar “Global Poverty Tax”. And that’s not even giving money to American deadbeats, but deadbeats across the globe.......
The road to hell is lined with good intentions.
Sorry, but you mislabed that.
It should be “Time to get laid”.
A government big enough to give you every thing, is big enough to take it all away..
Ronald Reagan.
That transcends politics...
Look at Florida. Full of elderly retired people living on investments, most of which will be affected seriously by BO’s tax plan.
Many of these elderly retired are Jews, who have been very successful during their years in business and who face the triple threat of being taxed heavily during their retirement years, seeing Israel sold out and losing the ability to pass on all of their wealth to their children.
The last of the three is no small thing, as Jews have the strongest family ties of any group I know of.
But still they are all for BO because he is a dim.
How can elderly people in general, who by that age have seen their share of con men, and Jews in particular who in general are more savvy than others, be taken in by this total fraud? The retirement community in Florida should be enough to put that state in the McCain camp, yet it will not. You can find a similar group in almost every state; farmers in the agricultural areas, hunters, heavy manufacturing, etc., all facing major changes for the worse under BO, yet they will vote for him because he is a dim or because they hate Bush. If the nation is collectively that stupid, it deserves what it gets. Those of us who know better will just have to sit in the back of the bus until the nation comes to its senses.
Not sure about getting laid, but those of us who actually pay taxes are going to get SCREWED. . . .
Screwed is when you are not getting it out of love.
Laid is when you asked for it and love it.
Apparently the nation as a whole falls into the latter group.
In the group that wants to get laid, there are many who will learn the meaning of next morning remorse.
“I may be playing the devils advocate, but why should I turn down a decrease in my taxes? People making over $250K wouldn't hesitate.”
By far, most of those who will vote for BO make much less than $250,000.
I suspect that they make less than $100,000.
So it is only a matter of time until the “rich” bracket will be adjusted to.....what? $60,000? $40,000?
BO has voted already to raise taxes on all over $42,000 so that is an indication of his thinking.
But the point is that anyone who would tell so many bald faced lies can't be trusted on his statements about taxes.
One of his worst, and maybe the worst, is the lie that he would campaign on government financing.
What makes this such a serious lie is the way this election is playing out. BO is buying this election with the expenditure of unreal amounts of money.
If he wins, it will be with a bought election. Everything from $830,000 to ACORN to register fraudulent voters to TV and radio ads at a rate unprecedented and unimaginable only a year ago.
Obama’s tax plan will hit home when gasoline goes quickly to $5 per gallon as his windfall profits tax, new carbon taxes and a total ban on new drilling in the US all take hold. It will be fun watching the media spin meisters trying to explain why when Lord Obama punished the big oil companies for making too much money the price of gasoline went up and many pension plans took a further hit as oil stocks plunge.
Florida certainly has an outsized population of retirees, but the overwhelming majority are non-Jews (like over 95% of the state’s population) and the overwhelming majority won’t be impacted by Obama’s tax increases.
My point was that all of them added up amounts to a significant number of voters.
What do you mean they will not be affected by BO’s tax plan?
A 33% increase on dividends will affect everyone who has a retirement plan heavily invested in stocks, and most 401’s do.
Mine is a private plan and it is split between stocks and various other less volatile investments, but nevertheless, dividends are important.
Income from your 401K and retirement plan will be taxed as regular income, regardless of whether it was earned from dividends or capital gains, when you take distribuions. Under McCain's plan the rate on distributions from retirement plans would drop, I believe he's suggested to 10%, but the GOP doesn't seem to want to talk about that.
The reason to oppose Obama's redistribution plan is that it's pure Marxism, not socialism, something retirees should be able to relate to having witnessed the ravages of Marxism, but the GOP doesn't seem to want to discuss that either.
I have heard Obama people say that the 95 percent of earners includes people paying payroll taxes, and therefore it is mathematically possible.
I'm not sure if they are telling the whole story. Can someone shed more light on ths?
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