Obama's 95% Tax Illusion
#1
Obama's 95% Tax Illusion
http://online.wsj.com/article/SB122385651698727257.html
Better the devil you know...[/quote]
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.
[Review & Outlook] AP
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."
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:
[Review & Outlook]
- 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 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.
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.
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.
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.
There's another catch: 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. One mystery -- among many -- of the McCain campaign is why it has allowed Mr. Obama's 95% illusion to go unanswered.
[Review & Outlook] AP
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."
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:
[Review & Outlook]
- 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 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.
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.
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.
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.
There's another catch: 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. One mystery -- among many -- of the McCain campaign is why it has allowed Mr. Obama's 95% illusion to go unanswered.
Better the devil you know...[/quote]
#4
Originally Posted by xdorkx
So, who here likes socialism? Voting Obama, because that's what you'll get with him...
I "love" the fact that people are so Pro-Obama that they don't realize what he's really trying to do to the country. I hate (I rarely use hate) both candidates who are in the spotlight and hate the fact that all the good candidates were run out at the beginning because lack of money for campaigning. The fact that its a big popularity contest like in HS really bothers me :?
I'm going to write my name in on the ballot in my area
#9
#10
Originally Posted by jamessicat25
THIS IS HOW good Obama is:
http://www.ebaumsworld.com/video/watch/999596/
http://www.ebaumsworld.com/video/watch/999596/
#12
Originally Posted by Sciond
ok vote for McCain and see what you get....one of the Keating 5 perps....oh maybe you forgot about that.......
There have been extensive inquiries and investigations into the Keating 5 "incident", and McCain has been continually cleared of any and all wrongdoing. Just because you're accused, doesn't mean you're guilty. In fact, both political parties file frivolous lawsuits against the other candidate EVERY election cycle.
And not to counter with an attack, but isn't it odd that Obama was the #2 money recipient from FM/FM, over the course of his extremely limited senate tenure?
Obama WILL take us closer to socialism. I can only hope that the damage that he will do is limited in scope, and that we can get someone else in there quickly enough to fix it.
#13
Senior Member
Fail, INC
Club One
SL Member
Join Date: Nov 2004
Location: What's in your Box...
Posts: 14,930
Originally Posted by senseiturtle
Originally Posted by Sciond
ok vote for McCain and see what you get....one of the Keating 5 perps....oh maybe you forgot about that.......
There have been extensive inquiries and investigations into the Keating 5 "incident", and McCain has been continually cleared of any and all wrongdoing. Just because you're accused, doesn't mean you're guilty. In fact, both political parties file frivolous lawsuits against the other candidate EVERY election cycle.
And not to counter with an attack, but isn't it odd that Obama was the #2 money recipient from FM/FM, over the course of his extremely limited senate tenure?
Obama WILL take us closer to socialism. I can only hope that the damage that he will do is limited in scope, and that we can get someone else in there quickly enough to fix it.
not every senate investigation is accurate or honest
#14
Originally Posted by Sciond
and you think he did not do it?????
not every senate investigation is accurate or honest
not every senate investigation is accurate or honest
I can lose my medical license if enough people ACCUSE me of malpractice, regardless of how many times I get cleared by the court system, the medical review panels, the medical board of examiners, and the state ethics committee... How is that fair?
Innocent until proven guilty... although nowadays, they throw your picture up on the news, and NEVER address the fact that you were found innocent. It matters ONLY that you were accused, not that you were guilty.
#15
Socialism is not as bad as many believe it to be.
In a socialist society the means of production are owned by the workers rather than by a rich minority of capitalists or functionaries. Such a system of ownership is both collective and individual in nature.
It is collective because society can control production unlike the economic anarchy of capitalism and because production is for the common good rather than for individual profit.
At the same time it is individual because workers are no longer a 'collective' mob of alienated non-owners employed by a minority of owners. Work becomes a free and self-affirming activity for each worker and they receive the full fruits of their labor. The capitalists and their servants no longer control production nor grow rich from other's toil. Everybody is an owner. Socialism is genuine free enterprise.
In a socialist society the means of production are owned by the workers rather than by a rich minority of capitalists or functionaries. Such a system of ownership is both collective and individual in nature.
It is collective because society can control production unlike the economic anarchy of capitalism and because production is for the common good rather than for individual profit.
At the same time it is individual because workers are no longer a 'collective' mob of alienated non-owners employed by a minority of owners. Work becomes a free and self-affirming activity for each worker and they receive the full fruits of their labor. The capitalists and their servants no longer control production nor grow rich from other's toil. Everybody is an owner. Socialism is genuine free enterprise.
#16
Senior Member
Fail, INC
Club One
SL Member
Join Date: Nov 2004
Location: What's in your Box...
Posts: 14,930
Originally Posted by senseiturtle
Originally Posted by Sciond
and you think he did not do it?????
not every senate investigation is accurate or honest
not every senate investigation is accurate or honest
I can lose my medical license if enough people ACCUSE me of malpractice, regardless of how many times I get cleared by the court system, the medical review panels, the medical board of examiners, and the state ethics committee... How is that fair?
Innocent until proven guilty... although nowadays, they throw your picture up on the news, and NEVER address the fact that you were found innocent. It matters ONLY that you were accused, not that you were guilty.
http://www.suntimes.com/news/politic...t07web.article
if you would like more information just let me know
#17
Socialism is not that bad? Come on Heathen...
First of all, the tax increase on the 'wealthy'.
The poor are employed by the Rich. The rich will have their taxes raised and be forced to lay off the poor. That is one problem in itself, the next is...free healthcare and college for those who can't afford it? every joe schmoe will go to college, and this will put our nation FURTHER into debt. Canada has free health care, know where most Canadians go for SERIOUS operations? They cross the border south and PAY for their medical treatment in the States.
Friends of mine who live in Canada say their system sucks, in fact, Canadians in some Provinces are pushing for more privatization. They have antiquated equipment, going back to the post-WW II days, which is used for everyday procedures and whatnot. Less populated areas have to have fund raisers in order to purchase MRI and CT scan equipment, as there is no free market to guide such decision making, or, for that matter, profits to justify such purchases. The government otherwise steps in and puts hospitals and clinics on long waiting lists for such equipment, when funds become available. Which is never.
Already, people in the STATES are heading over the southern border to get dental work done in Mexico since it can be done for a fraction of the price as what is available in the US and with similar quality (just do your homework before picking your DDS). Just like Canadians and Europeans flock to the US for their medical care, we’ll have to head to another country to get ours as well if the left has their way.
Hell, The beauty of the communist spectrum doctrine is that all people get to suffer equally. Of course, the political leadership will have their own plan because sometimes, some people are a little “more equal.”
Think about this:
In a free market, I have the option to pick the best plan for me, from a range of suppliers, at the price I wish to pay. As soon as you get government involved, there are mandates of what plans have to include, it increases prices and consolidates supply. That is bad for the consumers of health care.
Not only that, but the government would require taxes to fund such programs. Lets think about that word. It has two meanings which are very closely related. On one hand, it means a government forcibly taking money from an entity. At the same time, it means to place an undue burden on an activity which ultimately limits it. In fact, taxation reduces your economic freedom, placing an undue burden on your ability to prosper while a parasitic government leeches from you. Time and time again has shown that a reduction in tax rates will stimulate the economy and a production of more revenue. Even JFK knew that.
Oh yeah, I almost forgot to mention. Know what the next step AFTER Socialism is? Communism.
-My 2 Cents
First of all, the tax increase on the 'wealthy'.
The poor are employed by the Rich. The rich will have their taxes raised and be forced to lay off the poor. That is one problem in itself, the next is...free healthcare and college for those who can't afford it? every joe schmoe will go to college, and this will put our nation FURTHER into debt. Canada has free health care, know where most Canadians go for SERIOUS operations? They cross the border south and PAY for their medical treatment in the States.
Friends of mine who live in Canada say their system sucks, in fact, Canadians in some Provinces are pushing for more privatization. They have antiquated equipment, going back to the post-WW II days, which is used for everyday procedures and whatnot. Less populated areas have to have fund raisers in order to purchase MRI and CT scan equipment, as there is no free market to guide such decision making, or, for that matter, profits to justify such purchases. The government otherwise steps in and puts hospitals and clinics on long waiting lists for such equipment, when funds become available. Which is never.
Already, people in the STATES are heading over the southern border to get dental work done in Mexico since it can be done for a fraction of the price as what is available in the US and with similar quality (just do your homework before picking your DDS). Just like Canadians and Europeans flock to the US for their medical care, we’ll have to head to another country to get ours as well if the left has their way.
Hell, The beauty of the communist spectrum doctrine is that all people get to suffer equally. Of course, the political leadership will have their own plan because sometimes, some people are a little “more equal.”
Think about this:
In a free market, I have the option to pick the best plan for me, from a range of suppliers, at the price I wish to pay. As soon as you get government involved, there are mandates of what plans have to include, it increases prices and consolidates supply. That is bad for the consumers of health care.
Not only that, but the government would require taxes to fund such programs. Lets think about that word. It has two meanings which are very closely related. On one hand, it means a government forcibly taking money from an entity. At the same time, it means to place an undue burden on an activity which ultimately limits it. In fact, taxation reduces your economic freedom, placing an undue burden on your ability to prosper while a parasitic government leeches from you. Time and time again has shown that a reduction in tax rates will stimulate the economy and a production of more revenue. Even JFK knew that.
Oh yeah, I almost forgot to mention. Know what the next step AFTER Socialism is? Communism.
-My 2 Cents
#19
Originally Posted by Kvizzel
LET'S ALL LEAVE THE US AND CANADA HERE WE COME!?
Seriously Obama and McCain fails...
Seriously Obama and McCain fails...
#20
Here's my deal. I think Obama is going to crap the bed like any sane person who has gone to his website and read his plans. Not only will he fail, but he will fail spectacularly. In 3 years people will be saying, 'Hey, remember the good old days when Bush Jr. was president?' I could put a McCain/Palin sign in my front yard, and vote Republican, but that would be putting the good of the country in front of my desire for lulz. There's no guarantee with McCain, but Obama is 4 years of guaranteed lulz.