http://online.wsj.com/article/SB121910303529751345.html?mod=googlenews_wsj Wall Street Journal Online: =================== Obama's Tax Plan Is Really a Welfare Plan By PETER FERRARA August 19, 2008; Page A17 Barack Obama's tax plan is the opposite of supply-side economics. He proposes to raise marginal rates for just about every federal tax. He also proposes a raft of tax credits that taxpayers can receive if they engage in various government-specified activities. Moreover, the tax credits would mostly go to those who pay little or nothing in federal income taxes. His trick is to make the tax credits "refundable." Thus, if the tax credit is for $1,000, but the taxpayer would otherwise only pay $200 in taxes, the government would write a check to the taxpayer for $800. If the taxpayer pays nothing in federal income taxes, the government would pay him the whole $1,000. Such credits are not tax cuts. Indeed, they should be called The New Tax Welfare. In effect, Mr. Obama is proposing to create or expand a slew of government spending programs that are disguised as tax credits. The spending on these programs is then subtracted from the total tax burden, in order to make the claim that his tax plan is a net tax cut overall. On the tax side of the ledger, the details released by his campaign last week confirm what a President Obama has in mind for our most productive citizens. The top individual income tax rate, for example, would be increased by 13%, to 39.6%; the next-highest rate would be raised to 36%. The top rates on capital gains and dividends would rise by a third, to 20% The Social Security payroll tax would be raised between 16% to 32% for families making over $250,000 a year. This means that the real returns these people get from their lifetime payments into the retirement program will be driven below 0%, according to my own previous research, which was published by the Cato Institute and elsewhere. Mr. Obama also wants a permanent federal estate tax, with a top rate of 45%; his health-insurance plan includes a new payroll tax on employers; and he also contemplates several increases in the corporate income tax, including a new so-called windfall profits tax on oil companies. Then there is the spending side of the ledger. Mr. Obama proposes a fully refundable Making Work Pay Tax Credit, which would have the government pay out $500 to each worker and $1,000 to couples -- reminiscent of George McGovern's 1972 election proposal for the government to send a $1,000 check to everyone. His American Opportunity Tax Credit would provide a $4,000, fully refundable tax credit for college tuition expenses. His Mortgage Interest Tax Credit would provide a 10% credit -- refundable -- to offset mortgage interest payments for lower- and middle-income families. His Health Care Tax Credits, which the campaign says "will ensure that health insurance is available and affordable for all families," include "a new refundable 50 percent health tax credit on employee premiums paid by employers." Currently existing tax credits would also become spending programs in the Obama tax program. The Savers Credit would be made fully refundable, and would be expanded, according to the campaign, "to match 50% of the first $1,000 of savings for families that earn under $75,000." The Child and Dependent Care Tax Credit would be made refundable and expanded to allow "low-income families to receive up to a 50 percent credit on the first $6,000 of child care expenses." The Earned Income Tax Credit is already refundable. Mr. Obama would expand it to "increase the number of working parents eligible for EITC benefits, increase the benefits available to noncustodial parents who fulfill their child support obligations, increase benefits for families with three or more children, and reduce the EITC marriage penalty, which hurts low-income families." In short, welfare spending is to be increased by paying more money out to low-income income tax filers. The latest Congressional Budget Office data shows the bottom 40% of income earners already pays no income taxes. Indeed, they receive a net payment from the federal income tax system -- meaning from the taxpayers -- equal to 3.8% of all federal income taxes, because of the refundable tax credits under current law. The middle 20% of income earners, the true middle class, pays 4.4% of federal income taxes. Overall, the bottom 60% of income earners pay less than 1% of federal income taxes on net. When "tax credits" primarily go to this group in the form of checks from the government (rather than a reduction in their tax burden) it is simply an abuse of the language to call the spending a tax cut. Consequently, to say, as the campaign does say, that the candidate's tax plan is a tax cut on net -- and that it would limit taxes to 18.2% of GDP -- is grossly misleading. The Obama tax plan would sharply increase real taxes. It also would come nowhere near to paying for the massive increases in federal spending he has proposed, including the spending that is disguised in the form of refundable tax credits. ------------------------------------------------------------------------------ Mr. Ferrara is director of entitlement and budget policy for the Institute for Policy Innovation. He served in President Reagan's White House Office of Policy Development, and as associate deputy attorney general under the President George H.W. Bush.
I wonder if Obamas tax plan will cost more then the 10 billion dollars a month The US will spend in Iraq through out McCain's presidency, or the 10-20 billion a month when McCain starts a war with Iran or even the 100 billion a month if Mccain starts WWIII To McCain's credit,he did say he would balance the budget,minus war costs <object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/MEc2ot3QGB4&hl=en&fs=1"></param><param name="allowFullScreen" value="true"></param><embed src="http://www.youtube.com/v/MEc2ot3QGB4&hl=en&fs=1" type="application/x-shockwave-flash" allowfullscreen="true" width="425" height="344"></embed></object> <object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/cLfsG8XKWfw&hl=en&fs=1"></param><param name="allowFullScreen" value="true"></param><embed src="http://www.youtube.com/v/cLfsG8XKWfw&hl=en&fs=1" type="application/x-shockwave-flash" allowfullscreen="true" width="425" height="344"></embed></object>
Is 10 Billion a month worth spending if it keeps oil flowing to feed a multi-trillion dollar world market. A world market that the US is 25% of
My favorite McCain policy is the one where he will pay the debt down with the money we save by not being in Iraq (ie. debt). In that vein, I've decided to pay my credit card with my credit card.
Nope. $10 billion a month could reduce that 25% to 20% to 15%, and has the added bonus of not killing our guys and other people.
Well, at least that means there is a chance it will work, since supply-side, "trickle-down" economics is complete and utter bullshit.
Here's another WSJ article. YOU decide. The OBAMA TAX PLAN By Jason Furman and Austan Goolsbee August 14, 2008; Page A13 Even as Barack Obama proposes fiscally responsible tax reform to strengthen our economy and restore the balance that has been lost in recent years, we hear the familiar protests and distortions from the guardians of the broken status quo. Many of these very same critics made many of these same overheated predictions in previous elections. They said President Clinton's 1993 deficit-reduction plan would wreck the economy. Eight years and 23 million new jobs later, the economy proved them wrong. Now they are making the same claims about Sen. Obama's tax plan, which has even lower taxes than prevailed in the 1990s -- including lower taxes on middle-class families, lower taxes for capital gains, and lower taxes for dividends. Overall, Sen. Obama's middle-class tax cuts are larger than his partial rollbacks for families earning over $250,000, making the proposal as a whole a net tax cut and reducing revenues to less than 18.2% of GDP -- the level of taxes that prevailed under President Reagan. Both candidates for president have proposed tax plans. But they are starkly different in their approaches and their economic impact. Sen. Obama is focused on cutting taxes for middle-class families and small businesses, and investing in key areas like health, innovation and education. He would do this while cutting unnecessary spending, paying for his proposals and bringing down the budget deficit. In contrast, John McCain offers what would essentially be a third Bush term, with his economic speeches outlining $3.4 trillion of tax cuts over 10 years beyond what President Bush has already proposed and geared even more to high-income earners. The McCain plan would lead to deficits the likes of which we have never seen in this country. It would take money from the middle class and from future generations so that the wealthy can live better today. Sen. Obama believes a focus on the middle class is appropriate in the wake of the first economic expansion on record where the typical family's income fell by almost $1,000. The Obama plan would cut taxes for 95% of workers and their families with a tax cut of $500 for workers or $1,000 for working couples. In addition, Sen. Obama is proposing tax cuts for low- and middle-income seniors, homeowners, the uninsured, and families sending a child to college or looking to save and accumulate wealth. The Obama plan would dramatically simplify taxes by consolidating existing tax credits, eliminating the need for millions of senior citizens to file tax forms, and enabling as many as 40 million middle-class filers to do their own taxes in less than five minutes and not have to hire an accountant. Sen. Obama also recognizes that small businesses are the engine of job growth in the economy. That is why he is proposing additional tax cuts, including a tax credit for small businesses that provide health care, and the elimination of capital gains taxes for small businesses and start-ups. The vast majority of small businesses would face lower taxes under the Obama plan than under the McCain plan. In addition, Sen. Obama supports reforming corporate taxes in a manner that would help create jobs in America and simplify the tax code by eliminating distortions and special preferences. Sen. Obama believes that responsible candidates must put forward specific ideas of how they would pay for their proposals. That is why he would repeal a portion of the tax cuts passed in the last eight years for families making over $250,000. But to be clear: He would leave their tax rates at or below where they were in the 1990s. - The top two income-tax brackets would return to their 1990s levels of 36% and 39.6% (including the exemption and deduction phase-outs). All other brackets would remain as they are today. - The top capital-gains rate for families making more than $250,000 would return to 20% -- the lowest rate that existed in the 1990s and the rate President Bush proposed in his 2001 tax cut. A 20% rate is almost a third lower than the rate President Reagan set in 1986. - The tax rate on dividends would also be 20% for families making more than $250,000, rather than returning to the ordinary income rate. This rate would be 39% lower than the rate President Bush proposed in his 2001 tax cut and would be lower than all but five of the last 92 years we have been taxing dividends. - The estate tax would be effectively repealed for 99.7% of estates, and retained at a 45% rate for estates valued at over $7 million per couple. This would cut the number of estates covered by the tax by 84% relative to 2000. Overall, in an Obama administration, the top 1% of households -- people with an average income of $1.6 million per year -- would see their average federal income and payroll tax rate increase from 21% today to 24%, less than the 25% these households would have paid under the tax laws of the late 1990s. Sen. Obama believes that one of the principal problems facing the economy today is the lack of discretionary income for middle-class wage earners. That's why his plan would not raise any taxes on couples making less than $250,000 a year, nor on any single person with income under $200,000 -- not income taxes, capital gains taxes, dividend or payroll taxes. In contrast, Sen. McCain's tax plan largely leaves the middle class behind. His one and only middle-class tax cut -- a slow phase-in of a bigger dependent exemption -- would provide no benefit whatsoever to 101 million families who do not have children or other dependents, or who have a low income. But Sen. McCain's plan does include one new proposal that would result in higher taxes on the middle class. As even Sen. McCain's advisers have acknowledged, his health-care plan would impose a $3.6 trillion tax increase over 10 years on workers. Sen. McCain's plan will count the health care you get from your employer as if it were taxable cash income. Even after accounting for Sen. McCain's proposed health-care tax credits, this plan would eventually leave tens of millions of middle-class families paying higher taxes. In addition, as the Congressional Budget Office has shown, this kind of plan would push people into higher tax brackets and increase the taxes people pay as their compensation rises, raising marginal tax rates by even more than if we let the entire Bush tax-cut plan expire tomorrow. The McCain plan represents Bush economics on steroids. It has $3.4 trillion more in tax cuts than President Bush is proposing, largely directed at corporations and the most affluent. Sen. McCain would implement these cuts without proposing any meaningful steps to simplify taxes or eliminate distortions and loopholes. In addition, Sen. McCain has floated over $1 trillion in new spending increases but barely any specific spending cuts. As previously mentioned, the Obama plan is a net tax cut -- his middle-class tax cuts are larger than the rollbacks he has proposed for families making over $250,000. Sen. Obama would pay for this tax cut by cutting spending -- including responsibly ending the war in Iraq, reducing excessive payments to private plans in Medicare, limiting payments for high-income farmers, reducing subsidies for banks that make student loans, reforming earmarks, ending no-bid contracts, and eliminating other wasteful and unnecessary programs. While Sen. Obama would shrink the deficit from its current record levels, he recognizes that it is even more important to confront our long-term fiscal challenges, including the growth of health costs in the public and private sector. He also believes it is critical to work with members of Congress from both parties to strengthen Social Security while protecting middle-class families from tax increases or benefit cuts. He has done what few presidential candidates have been willing to do by making a politically risky proposal to strengthen solvency by asking those making over $250,000 to contribute a bit more to Social Security to keep it sound. Sen. Obama does not support uncapping the full payroll tax of 12.4% rate. Instead, he is considering plans that would ask those making over $250,000 to pay in the range of 2% to 4% more in total (combined employer and employee). This change to Social Security would start a decade or more from now and is similar to the rate increases floated by Sen. McCain's close adviser Lindsey Graham, and that Sen. McCain has previously said he "could" support. In contrast, Sen. McCain has put forward the most fiscally reckless presidential platform in modern memory. The likely results of his Bush-plus policies are clear. As Berkeley economist Brad Delong has estimated, the McCain plan, as compared to the Obama plan, would lower annual incomes by $300 billion or more in real terms by 2017, costing the typical worker $1,800 or more due to the effect of large deficits on national savings and thus capital formation. Sen. McCain's neglect of critical public investments would further impede economic growth for decades to come.
Roosevelt's fourth term and Jimmy Carter's second term all rolled up into one. Not to mention that he would revive Clinton's policy about loan discrimination in the [all important to Democrats] black neighborhoods and bring us another sub prime crisis most likely...