I have said this to anyone who will listen–Obama is engaing in a lie with his “tax cuts for 95% of Americans”; he is actually redistribuing wealth in a degree that we’ve never seem before in America!
Finally, I see an understandable summary piece on Obama’s tax plan from the Wall Street Journal.
As the Journal states, and I wonder as well:
One mystery — among many — of the McCain campaign is why it has allowed Mr. Obama’s 95% illusion to go unanswered.
In a nutshell what Obama is doing with his tax plan is redefining the meaning of a tax cut. Obama will put a huge tax increase on those who earn the most and will redistribute those tax dollars to those who make less. For those who make less, this is not just about a tax cut….those people will receive a check they can cash from the government even if they pay no taxes at all.
THAT. IS. SOCIALISM. on a vast scale!
Does Obama really cut taxes for 95% of Americans? NO. From the WSJ:
One of Barack Obama’s most potent campaign claims is that he’ll cut taxes for no less than 95% of “working families.” He’s even promising to cut taxes enough that the government’s tax share of GDP will be no more than 18.2% — which is lower than it is today.
It’s a clever pitch, because it lets him pose as a middle-class tax cutter while disguising that he’s also proposing one of the largest tax increases ever on the other 5%. But how does he conjure this miracle, especially since more than a third of all Americans already pay no income taxes at all? There are several sleights of hand, but the most creative is to redefine the meaning of “tax cut.”
How does Obama redistibute the wealth of those who create jobs and strive to live the American Dream?
For the Obama Democrats, a tax cut is no longer letting you keep more of what you earn. In their lexicon, a tax cut includes tens of billions of dollars in government handouts that are disguised by the phrase “tax credit.” Mr. Obama is proposing to create or expand no fewer than seven such credits for individuals:
– A $500 tax credit ($1,000 a couple) to “make work pay” that phases out at income of $75,000 for individuals and $150,000 per couple.
– A $4,000 tax credit for college tuition.
– A 10% mortgage interest tax credit (on top of the existing mortgage interest deduction and other housing subsidies).
– A “savings” tax credit of 50% up to $1,000.
– An expansion of the earned-income tax credit that would allow single workers to receive as much as $555 a year, up from $175 now, and give these workers up to $1,110 if they are paying child support.
– A child care credit of 50% up to $6,000 of expenses a year.
– A “clean car” tax credit of up to $7,000 on the purchase of certain vehicles.
Here’s the political catch. All but the clean car credit would be “refundable,” which is Washington-speak for the fact that you can receive these checks even if you have no income-tax liability. In other words, they are an income transfer — a federal check — from taxpayers to nontaxpayers. Once upon a time we called this “welfare,” or in George McGovern’s 1972 campaign a “Demogrant.” Mr. Obama’s genius is to call it a tax cut……
……..The political left defends “refundability” on grounds that these payments help to offset the payroll tax. And that was at least plausible when the only major refundable credit was the earned-income tax credit. Taken together, however, these tax credit payments would exceed payroll levies for most low-income workers.
How is this different than McCain’s tax plan?
It is also true that John McCain proposes a refundable tax credit — his $5,000 to help individuals buy health insurance. We’ve written before that we prefer a tax deduction for individual health care, rather than a credit. But the big difference with Mr. Obama is that Mr. McCain’s proposal replaces the tax subsidy for employer-sponsored health insurance that individuals don’t now receive if they buy on their own. It merely changes the nature of the tax subsidy; it doesn’t create a new one.
So who is just who is going to get “free” money from the government without having paid any income taxes at all?
The Tax Foundation estimates that under the Obama plan 63 million Americans, or 44% of all tax filers, would have no income tax liability and most of those would get a check from the IRS each year. The Heritage Foundation’s Center for Data Analysis estimates that by 2011, under the Obama plan, an additional 10 million filers would pay zero taxes while cashing checks from the IRS.
Just how much does Obama’s tax program expand the Welfare State?
The total annual expenditures on refundable “tax credits” would rise over the next 10 years by $647 billion to $1.054 trillion, according to the Tax Policy Center. This means that the tax-credit welfare state would soon cost four times actual cash welfare. By redefining such income payments as “tax credits,” the Obama campaign also redefines them away as a tax share of GDP. Presto, the federal tax burden looks much smaller than it really is.
But that is not all….the other parts of his plan that are hidden somewhere behind his ears includes the fact that the tax “credits” (money from the government) will have be phased out as income grows. So, in effect, many of the income earners below $100K will pay more tax. As explained by the Wall Street Journal, the marginal tax rate will increase such that as workers are capable of earning more, they are not incented, because of the tax plan, to make more…
Because Mr. Obama’s tax credits are phased out as incomes rise, they impose a huge “marginal” tax rate increase on low-income workers. The marginal tax rate refers to the rate on the next dollar of income earned. As the nearby chart illustrates, the marginal rate for millions of low- and middle-income workers would spike as they earn more income.
Some families with an income of $40,000 could lose up to 40 cents in vanishing credits for every additional dollar earned from working overtime or taking a new job. As public policy, this is contradictory. The tax credits are sold in the name of “making work pay,” but in practice they can be a disincentive to working harder, especially if you’re a lower-income couple getting raises of $1,000 or $2,000 a year
Filed under: 2008 Presidential election, Barack HUSSEIN Obama, John McCain, Politics, Progressives Ain't, Socialism, Taxes | Tagged: 2008 Election, American Dream squelched.John McCain, Barack Obama, Marginal Tax Rate, Obama is a Socialist, Obama's tax plan, Politics, Redistribution of Wealth, Socialism, tax credits, Tax Increase |