Senator Obama has been very vigorous in advertising his “tax cuts for 95% of Americans.” I’ll tell you, that Barack is a slick character. There are several reasons why this statement is first, false and secondly, a lie, albeit he gets credit for smart campaigning. It allows the Senator to play both sides of the fence appearing to champion common sense tax policy of cutting them while engaging in class warfare to bring down “the rich.” Allow me to continue and explain the truth about Obama’s “tax cuts.”
Most importantly, Obama’s proposal does not actually let you keep more of your income through lower rates. His platform calls for no less than six refundable tax credits. Key word is “refundable.” Ladies and gentlemen, that means welfare.
Obama proposes a $500 ‘making work pay’ tax credit for individuals and $1,000 for working couples; a $4,000 “American Opportunity” credit for college tuition payments; a universal 10% mortgage payment credit in addition to the already existing mortgage credits; a 50% ‘savings credit’ up to $1,000; a credit of 50% up to $6,000 spent on child care. Also, the Earned Income Tax Credit would be expanded up to $555 ($175 currently) and up to $1,110 if the worker pays child support.
There are a few other tax credits laid out in his plan but the emphasis should be placed on the refundable credits because the intended recipients of these credits are the lowest income earners. The Congressional Budget Office data shows that between 40 and 44 percent low income American workers pay absolutely zero income taxes. With Obama’s proposed refunds, on top of the refunds already existing, these income earners will end up receiving checks every year through the IRS thanks to everyone who will still pay taxes.
How does Senator Obama plan to fund these payments? None other than raising taxes on select businesses and citizens deemed able to pay.
He’d like to enact a “windfall profits tax on excessive oil company profits” to fund a $1000 “emergency energy rebate” to pay heating bills. I wonder if being assessed further taxes will cause refiners and oil companies to raise prices? Or will they just slow production and lower supply to avoid a profit level deemed “excessive” by the all-knowing Barack? He has also proposed raising the corporate income tax rates. Again, this won’t affect the company; it affects the employees and the customers, i.e. everyday citizens, with lower wages or layoffs and higher prices.
The top two individual income tax rates would be raised, from 33 and 35 to 36 and 39.6 percents, respectively. He’d also like to raise the capital gains tax rate from 15 to 20 percent on taxpayers who make more than $250,000. Also, the dividends rate would be raised to 20%, again, for those making more than $250,000.
Populism in America works. Politicians have always pandered and will continue to until they are told to shut it. And I don’t know the specific statistics concerning where most Americans fall in terms of annual income. What I do know, and what history has proven, is that socialism always fails. Unequivocally and without question.
Obama made a new friend a couple weeks ago when Joe “The Plumber” Wurzelbacher cornered the Senator about his tax plan. Quite deplorably the media have investigated this man as if he were running. But whether Joe is who he claims to be is irrelevant, the man asked a good question and received an honest answer from Obama.
The five minute conversation revealed Senator Obama’s true feelings when it comes to income distribution and the government’s role. “I just want you to be clear – it’s not that I want to punish your success – I just want to make sure that everybody who is behind you – that they’ve got a chance at success too.” Do we still live in America?! Obama continued, “I think when you spread the wealth around, it’s good for everybody.”
As much as the Senator’s Freudian slip is enraging, it is equally refreshing. Why? Democrats in the United States rarely reveal out loud their true desires to institute further socialism. While I philosophically disagree with Obama’s desires and history proves me correct, I appreciate the candor. This is one area where I WANT politicians to emulate Europeans. They are very frank about their policies, included plans to redistribute wealth. The public knows where they stand and can vote accordingly. In this country an entire party lies and hides their true desires because, thankfully, the majority of this country does not want welfare; they have to be coerced and tricked into it.
The scariest piece of this plan is the effect on the recipients of Obama’s “refunds,” low income workers. The credits are all phased out as income rises. If you are successful and upwardly mobile, the marginal rates become staggering. As the American Enterprise Institute points out, families making $40,000 will lose 40 cents in credits for every next dollar earned from working overtime or taking a new job. So if Senator Obama wants to enable those on the low end “a chance at success” then his tax plan is counterproductive. It will deter families and individuals to work hard to move up the ladder.
It’s exactly there that the real truth comes to light. Create generations further dependent on government and they will always be in complete servitude. They will never be free. I’d like to leave with one final question from Daniel Mitchell, Senior Fellow at the Cato Institute. March 9, 1999 he wrote in The Washington Times, “According to the Tax Foundation, taxes now consume more than 38% of the average family’s budget. That is more than is spent on food, clothing, housing, and transportation combined. Compare this to the plight of medieval serfs. They only had to give the lord of the manor one-third of their output – and they were considered slaves. So what does that make us?”