The Danger Lurking Behind Obama’s Tax Policy
After a historic election, to take a moment to consider what an Obama presidency will mean for the United States – we have to look forward, and how to deal with our current financial crisis. And according to Jim Davidson, some of the numbers simply do not add up.
One of the primary campaign, Obama has been ruthlessly tables on its promise to raise taxes on “rich”, a group initially defined as those over $ 250,000 per year. This was later reduced to $ 200,000 per year, and more recently has been defined as the Americans more than $ 150,000 a year.
Leaving aside the precipitous downward slide in the definition of “rich”, there are many reasons to suspect that Obama tax changes bode much higher, if not confiscatory, taxes on the most productive Americans. Obama has strongly advocated for an increase in taxes as a way to use the government to change the distribution of pre-tax income, which he believes has focused too much on productivity gains in recent years in the hands of the very rich.
He seems to think that the “very rich” are a breed closed more or less permanent members, which varies little from year to year. This figure, in its concept of “equity”, implying that it is perfectly just to load a small fraction of the population with most of the operating costs of the federal government. This is detailed in a New York Times article on the spread of wealth “by David Leonhardt. He wrote of Obama:
“He then pay for the cuts, at least in part, by increasing taxes on the wealthy to a point where eventually be slightly higher than under Clinton. For these upper-income families, politics Tax Center comparisons with McCain are even Starker. McCain, by continuing the basic thrust of Bush’s tax policies and adding some new wrinkles, reduce taxes for the top 0.1 percent of income – those making an average of $ 9.1 million – by another $ 190,000 a year, on top of the Bush reductions. Obama would increase taxes on the top 0.1 per cent on average of $ 800,000 a year. ” It is difficult not to see that figure and a little stunned. It is an enormous increase in taxes on wealthy families. But it is also worth putting the number in context. Most of Obama raising taxes on the wealthy – about $ 500,000 from $ 800,000 to – simply remove the Bush tax cuts. The remaining $ 300,000 hardly invest their pretax income gains in recent years. Since the mid-1990s, inflation has its pretax income almost doubled. ”
“To put it another way, the rich have done so well in recent decades, with their increased income and falling tax rates, Obama’s plan does not come close to eliminating their profits. The same could be said of households that a few hundred thousand dollars a year (which have raised less than the very wealthy, but also face smaller tax increases). As ambitious as Obama’s proposals may be, still leave the gap between the rich and the entire world much broader than burdensome on the young entrepreneur who was making his first million, as the aging plutocrat who really enjoyed the prosperity of the past quarter-century since Reagan cut marginal tax rates. ”
An October 13 editorial in The Wall Street Journal said the mysterious arithmetic sweep Obama claims to cut income taxes for millions of people who currently have no responsibility for the income tax and do not pay taxes:
“For the Obama Democrats, a tax cut is not what it allows you to save more than you earn. In his lexicon, a tax cut includes tens of billions of dollars in brochures that are disguised by the phrase “tax credit”. Mr. Obama proposes to create or expand no fewer than seven credits for individuals:
“- U.S. $ 500 tax credit ($ 1000 a couple) to” make work pay “that phases income of $ 75,000 for individuals and $ 150,000 per couple.
“- U.S. $ 4,000 tax credit for college tuition.
“- A 10% mortgage interest tax credit (on top of current mortgage interest deduction and other housing subsidies).
- A savings of 50% tax credit of up to $ 1000.
“- An expansion of the earned-income tax credit only to allow workers to receive as much as $ 555 a year, from $ 175 now, and give these workers up to $ 1110 if paying child support.
- A child care credit of 50% of expenses up to $ 6000 a year.
“- A ‘clean car’ tax credit of up to $ 7,000 on the purchase of certain vehicles.
“This is the policy of catch. All but the clean car credit would be refundable, which is in Washington to talk about the fact that you can receive these checks even if they have no income tax liability. In other words are an income transfer – a federal check – from taxpayers to nontaxpayers. Once upon a time we called this “welfare” or George McGovern in 1972 a campaign of ‘Demogrant. “Mr. Obama’s genius is to call a reducing taxes.
“The prosecutor believes that the foundation under the Obama plan 63 million Americans, or 44% of all files on taxes, would have no income tax, and most of those who get a check from the IRS each year . The Heritage Foundation’s Center for Data Analysis estimates that in 2011, under the Obama plan, an additional 10 million filers pay zero tax while collecting checks from the IRS.
“The total annual expenditures on refundable” tax credits “will increase over the next 10 years by $ 647 million to U.S. $ 1054 billion, according to the Tax Policy Center. This means that the tax credit welfare state will soon cost four times actual cash welfare. by redefining income, such as tax credits, “the Obama campaign also redefines them away as a tax share of GDP. Presto, the federal prosecutor is much smaller than it really is. ”
After all the definitions are analyzed neglected, one point remains clear. The top 5% of the U.S. income, which currently pay 60.14% (2006 figures) of all income tax, are for a huge increase in federal taxes under Obama.
One of the specific proposals of Obama is to increase the capital gains and dividend taxes by 25%, which dramatically increased the confiscation of capital and increasing the percentage of “profits” will reflect the inflation of the currency depreciation. In the U.S., the investor must pay tax on the difference between the sale price of an asset and the purchase price, unadjusted for inflation. Consequently, when the rate of inflation and taxes are high, a large part of the “surplus” is illusory. Any assets valued at less than the inflation rate will result in the loss of its owner and the purchasing power they have to pay income taxes illusory. Obama in the highest tax rates (which has been suggested that the capital gains and dividend taxes should be increased to 25%), resulting in the confiscation of capital of modest inflation levels.
And the Great credit implies that inflation will be much higher than recent experience.
Leaving aside whether it is fair or moral to force a small fraction of the population, mainly to pay the full cost of government, much of which involves the reorganization of the checks to buy votes from the various groups affected, There is a bigger issue. Can it be rational for the entire tax system to stand on the shoulders of a small group, like a pyramid at its wobbly, so any trial that undermined the prosperity of those who commit the state to pay bankruptcy?
It is a question worth asking if you have substantial assets. In light of the credit crunch in the world, which has been deflated assets of every kind, the prospect of growing prosperity in the extent to which one of every 20 Americans to become “super rich” benefactors Big Government is vanishingly small. There will be enough rich people to fill the role assigned to them in the plan of Obama. The expected outcome, in addition to the confiscatory taxes, is a dramatic shortfall in revenue. This, in turn, means increasing the deficit and financing needs of the deficit that quickly swamp the Treasury’s ability to borrow.