It's the Taxes, Stupid!

In the recent debates, both Obama and Biden have told us that under their tax plan is about ‘fairness’ and that no one will pay ‘no more than they did under Ronald Reagan’. These are boldface lies which we can not let stand. Karl Rove pointed this out after the VP debate on Fox, but even the well informed Rove only got it part right. Reagan’s top tax rate was 28%, and social security and Medicare were capped. Under Obama’s plan, the top rate would go up to 39.6%, much higher than Obama and Biden are telling us. But that is not the whole story. That does not include the 15.3% tax on social security and Medicare which Obama has proposed a doughnut hole approach, exempting some incomes, but lifting the cap off for incomes over $200K/$250K. Obama has backed from making this a specific proposal, but Obama did mention this several times during his campaign back in May and June of this year. This tax will really be horrible for small business owners who have to pay both halves of the payroll tax, creating a rate of 55%. Tax rates not seen since the Carter era.

Americans are all for a fair and simpler tax policy, but Obama’s plan is neither. Obama plans adds in numerous phase outs for deductions and exemptions creating pockets of income which will even see much higher rate than the 55%. While under Obama’s plan, tax rates at the top end are skyrocketing, millions of families who pay no taxes will now be getting government checks. That is not a tax cut that is welfare.

Reagan implemented the best tax plan in modern history, with two simple low rates, very few loopholes, and none of these phase outs and AMT that plague our current tax system. That is they system we need to get back to. McCain needs to specifically attack Obama’s plan and point out these outrageous rates that small businesses will see. Small businesses are the backbone of America’s job creation machine and Obama’s plan targets them the most. If McCain can effectively make this point, he will win. If not, say hello to President Obama.

U.S. Tax System Explained in Beer - by Joe SixPack (Stan Bradley)

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing. The fifth would pay $1. The sixth would pay $3 The seventh would pay $7. The eighth would pay $12. The ninth would pay $18. The tenth man (the richest) would pay $59.

So, that's what they decided to do. The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. 'Since you are all such good customers,' he said, 'I'm going to reduce the cost of your daily beer by $20. 'Drinks for the ten now cost just $80.The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But what about the other six men - the paying customers?

How could they divide the $20 windfall so that everyone would get his 'fair share?' They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so the fifth man, like the first four, now paid nothing (100% savings). The sixth now paid $2 instead of $3 (33% savings). The seventh now pay $5 instead of $7 (28% savings). The eighth now paid $9 instead of $12 (25% savings). The ninth now paid $14 instead of $18 ( 22% savings). The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings. 'I only got a dollar out of the $20,' declared the sixth man.

He pointed to the tenth man,' but he got $10! "Yeah, that's right,' exclaimed the fifth man. 'I only saved a dollar, too.. It's unfair that he got ten times more than I! "That's true!!' shouted the seventh man. 'Why should he get $10 back when I got only two? The wealthy get all the breaks!

"Wait a minute,' yelled the first four men in unison. 'We didn't get anything at all. The system exploits the poor! 'The nine men surrounded the tenth and beat him up. The next night the tenth man (the richest) didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!

And that, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

http://www.ktok.com/pages/mullinsinthemorning.html

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