October 15, 2008

OBAMA'S TAX PLAN

Obama's proposed tax credits:

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.

(via CG)

Posted by: Sarah at 02:50 AM | Comments (6) | Add Comment
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1 It's amazing to me the basic lack of understanding even the candidate has regarding economics and basic things like capital gains taxes. He was blathering on the other day in Toledo about small businesses, capital gains taxes and such but the promise of doing away with capital gains taxes in the small business scenario he described wasn't such a great give since they don't exist in that scenario anyhow. Remarkable. But, just the kind of pretty face/happy talk the American people seem to be super in love with at the moment.

Posted by: Guard Wife at October 15, 2008 03:37 AM (eb8pN)

2 But he's just wants to "spread the wealth"! What's wrong with that? (said very sarcastically)

Posted by: Jenni at October 15, 2008 04:25 AM (1vAo5)

3 We're so far from the concept of a "safety net" here that it's sickening. Could you clarify this sentence? At first, I thought you were saying that Obama's plan is too inadequate to be a "safety net," but knowing you, that seems, um, unlikely.

Posted by: Amritas at October 15, 2008 08:09 AM (+nV09)

4 Oh. And another thing while I'm at it. He gave a mumbo jumbo answer to a plumber in my state that has made it onto the national news more than once regarding what his tax plans would do to help this guy. Unfortunately for those industrial or tradespeople losing their jobs who may have the ability to start their own businesses, doing so will likely have a huge chunk of taxes attached to it such that it won't even be worth it to launch your own business. And, please, can someone say out loud that by punishing large companies for earning profits, our retirement accounts suffer? Can someone do that? I don't know...maybe MCCAIN in the debate tonight!?

Posted by: Guard Wife at October 15, 2008 08:45 AM (eb8pN)

5 Amritas -- What I meant was that the idea of the government helping people financially has always been called a "safety net": a little bit of help to get them back on their feet so they can start being successful again. But now we're at the point where the government is literally just cutting checks to people for no good reason, taking money from one guy's earnings and handing it over to another, just for existing. I know that the connection is tenuous, but I have had several discussions in the past week about the meaning of the "safety net" and so it's at the front of my mind.

Posted by: Sarah at October 15, 2008 09:14 AM (TWet1)

6 Sarah, Thanks for the clarification. I couldn't find the term "safety net" in the WSJ article and was wondering why you brought it up. Not that I don't think it's relevant - it is.

Posted by: Amritas at October 15, 2008 10:11 AM (+nV09)

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