October 15, 2008
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.
We're so far from the concept of a "safety net" here that it's sickening. And there's more, as The String Beans say:
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.
So both poor and rich people have a "disincentive to working harder" under the Obama tax plan. Boy, that sounds like a winner for the future of America.
Posted by: Guard Wife at October 15, 2008 03:37 AM (eb8pN)
Posted by: Jenni at October 15, 2008 04:25 AM (1vAo5)
Posted by: Amritas at October 15, 2008 08:09 AM (+nV09)
Posted by: Guard Wife at October 15, 2008 08:45 AM (eb8pN)
Posted by: Sarah at October 15, 2008 09:14 AM (TWet1)
Posted by: Amritas at October 15, 2008 10:11 AM (+nV09)
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