Posted on 01/27/2010 9:34:10 PM PST by EternalVigilance
By: Larry Walker, Jr.
First of all 41% of Americans don't even file income tax returns. Secondly, out of the 59% who do file tax returns, 43.4 million out of the 136 million tax returns filed face a zero or negative tax liability. So if 32% (43.4/136) of the those who file don't owe any taxes, and if 41% don't even file income taxes, then that equals 73% who don't pay any income taxes. That leaves the rest of us. So did 95% of the 27% who actually pay income taxes get a tax cut? I doubt it, but even if that was true it's not 95% of all Americans.
Is a refundable tax credit the same as a tax cut?
But the real fallacy lies in the fact that refundable tax credits are not tax cuts, but rather, they are subsidies. Subsidies are paid for by taking money from some Americans and giving it to others. This is also known as 'spreading the wealth around'.
I'm not very cheery knowing that while I have been faithfully paying my mortgage, people are buying foreclosed houses down the street for $110K less than what I owe. And not only that, but the Government is giving them an $8,500 subsidy out of my tax dollars. It's as if the $110K of potential equity wasn't enough of a subsidy. Also, when the government refunds a person $8,500 to buy a house, it only applies to those who bought houses, not to 95% of all Americans.
The $400 ($800 for joint filers) Making Work Pay Credit is also a refundable tax subsidy. It is only available to those who made less than $75,000 in 2009. Is it possible that 95% of Americans who pay taxes made less than $75K and will get the full credit? Not really.
The earned income credit is a well known tax subsidy. If you made $10,000 and have a child, you will pay no taxes and will get back a $6,000 tax refund. This is not a tax cut, but rather a 60% bonus awarded for not trying very hard.
Non-refundable tax credits represent true tax cuts, as they can only be used to reduce the amount of tax actually owed, with the balance being lost. The child care credit is an example of a non-refundable tax credit, and has not changed in years. The education credit is another example, yet it is already $2,500 per year, so nothing new was stated by Obama when he said he will give out a $10K credit over 4 years. Uh, we already have that, sir.
Another tidbit, right now, all three of my kids are in college. I'm divorced and they live with their mother out of state. I am paying part of the way for one while the other two have full scholarships. Because I don't claim any of them as dependents, I am not allowed any credit for the tuition that I'm paying. I wonder how many others are in the same boat. It's not that I want anything from the Government, but just want to let you know that there are cracks in the real world.
Capital Gains Tax Cut for Small Business?
Finally, Obama wants to give a Capital Gains Tax Cut for Small Business Investment. What does that mean? A capital gains tax cut only applies if someone has an appreciated asset to sell, which they have held for more than one year. So, first you have to have an appreciated asset. Then you have to either have a small business that buys and sells appreciated long-term assets, or would need to sell your business in order to benefit. The only problem with what Obama said is that the lower Capital Gains Tax rate that we already have, which is currently 0% for those in a 15% or lower tax bracket, already applies. Nothing new here.
As a small business owner I haven't quite figured out how anyone can really use this one. And what kind of tax rate are we talking about anyway? He didn't say anything specific. The only way I could use it is if I sold my business. But I don't want to sell the business. And if I did sell my business I would already benefit from the Section 1244 exclusion or the low capital gains rate.
While you are applauding Obama's words, you should stop and think about how a capital gains tax cut can benefit a small business. If anyone can explain it to me, I'll be glad to listen, but to me, it's just rhetoric.
In conclusion, all I heard from Obama tonight, regarding taxes, was the same class warfare, wealth redistribution rhetoric that I heard in 2008 when I cast my ballot for the other guy. ___________________________________________________
References: http://www.taxfoundation.org/research/show/1410.html
There.
Somebody had to say it.
Obama loves to fudge the numbers, doesn’t he?
Was he talking about that $13 a week that was not a tax cut but a tax deferment, which we still owe. Many are going to be shocked that they are paying this year or at best getting a few hundred less back than they did last year.
The Republicans in the House knew the truth which is why they did not applaud at the tax cuts comment.
Yeah, we got a tax refund. I’m still paying for it in every paycheck!
BTTT
Horse manure.
You gave NOBODY a "tax cut".
You gave 95% of all Americans a reduction in the withholding rate. But we all still owe the same tax at the end of the year!
Lying SOB!
On the other hand, this guy may be so stupid he doesn't know the difference between a withholding rate and a tax rate...
He can pour perfume on it, but it's still b-s.
bookmark.
Lets give Americans a choice.
They can have Obama’s tax cut of 2009, or Reagan’s 25% across the board tax cut from 1981.
Personally, I’ll take Reagan’s.
If you're a single parent earning 10K a year I would say you are trying very hard to make ends meet but seriously need to find a better job.
Socialism. Entitlements. Welfare.
0baMao lies.
Simply put, Obama is saying that by taking A’s tax dollars and giving them to B in the form of a tax refund, he has given B a tax cut. That he gets away with it is astounding.
UPDATED VERSION.
Barack Obama - “I gave 95% of all Working Families a tax cut...”
Really?
First of all 43.4% of Americans don’t pay any income taxes. That leaves the rest of us. So did 95% of the 56.6% who actually pay income taxes get a tax cut? I doubt it, but even if that were true, it’s not 95% of all Americans (or ‘working families’, whatever that means).
Actually, he temporarily let A keep some of his tax dollars...delaying their confiscation until next April 15.
It was a withholding cut. Not a tax cut.
When a lot of folks go to fill out their 1040's, they'll notice the withholding amount for 2009 is a lot less than it was in 2008, or they'll eventually figure that out after checking how much they owe from the tax tables and realizing they didn't have enough withheld last year. Think people are mad now?
Yeah, I think you’re talking about the Making Work Pay Credit, although that did wind up being a refundable credit on this year’s tax return as well. I was talking about the huge increases in refundable credits like the EITC, the Additional Child Tax Credit, the First Time Homebuyer Credit, the expanded Hope Credit, etc. I’m positive that’s what he meant when he was talking about his tax cuts for people raising kids and those trying to go to college. Calling a refundable tax credit a “tax cut” is scandalous in any case.
That may be. I assumed that the 95% citation meant it had to be a near universal "tax cut" -- thus the reduction in withholding.
Indeed, the minute that started showing up in my pay, I immediately adjusted my deductions to pay it right back. Last year, all the wonderful tax 'help' given ended up costing me a bundle at tax time.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.