America, You Asked For It!

Political News and Commentary from the Right

A promise that won’t be kept?

But this is a good thing! Jim Kuhnhenn, of the Associated Press reports in this article that Obama may already be backing off an oft-repeated campaign promise–to increase taxes on Americans earning more than $250,000. Perhaps Joe the Plumber got through after all. For those who may have missed it, here’s the video that put Joe in the spotlight.

After that the Obama campaign continued to charge forward with its call for a tax increase on everyone except those earning less than $250,000. The campaign even embarked on a smear campaign against Joe the Plumber, the American citizen. His background was investigated, his integrity was publicly questioned by Obama himself when he said “How many plumbers do you know that make a quarter million dollars a year ?”

This weekend, Obama introduced his team of economic advisers and, according to the AP, specifically stated that he would move forward with the tax cuts for those making less than $250,000 a year. Noticeably though, he avoided any mention of the oft-repeated campaign promise of raising taxes on others. When pressed on the issue following Obama’s remarks, aides reportedly said there will be no tax increases in the immediate future. This is the first good change I’ve had to report and its a change conservatives have been calling for in Obama’s platform.

I don’t make $250,000 a year (Heck, I don’t even make 20% of that.) and I know many of you don’t either, but historical evidence shows tax increases don’t stimulate the economy and don’t increase government revenues in the long term. Take a look at this chart which compares the top tax rate with U.S. tax receipts.

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Click to view larger image.

Source (Tax Receipts): Tax Policy Center
Source (Tax Rate):

It’s clear from the graph that tax cuts tend to temporarily reduce tax receipts, but the long-term growth in those receipts that follows the short dip more than compensate. Compare the relatively stagnant growth rate when tax rates were at their highest with the booming growth as these tax rates were stepped down to their current levels. That’s all well and good, but how does the top tax rate effect the growth of the overall economy? For that, let’s look at the next chart which compares the U.S. Gross Domestic Product with the top tax rate.

economic crisis, credit crisis, obama, change,
Click to view larger image.

* Source (Tax Rate):
**Source (GDP):

It’s apparent from these graphs that higher taxes stifle economic growth. When taxes are kept low, it leaves capital in the hands of consumers who know best how to spend their money. We don’t need more taxes, we need government to cap spending. If our federal government capped spending for 5 years, there would likely be a huge budget surplus available to pay down the mounting U.S. National Debt. We haven’t gotten there yet, but perhaps one day we’ll have a President who will demand Congress act as responsibly as the American people are required to act–paying their bills as they go.

If Obama has reversed himself, this is a victory as conservatives have been harping on the dangerous effects on the economy if he did push through his vaunted tax policy. Let’s keep up the pressure and maybe the next four years won’t be as bad as we originally imagined.

November 25, 2008 Posted by | Economy | , , , | Leave a comment

Middle Class Tax Relief

Continuing to dissect Obama’s Blueprint for Change, today we’ll take a closer look at his plan for middle class tax relief.

Provide a Tax Cut for Working Families: Obama and Biden will restore fairness to the tax code and provide 150 million workers — 95 percent of workers — the tax relief they need.

The plan calls for a refundable tax credit of $500 for 150 million American workers. That’s going to cost $75 billion that has to come from somewhere. From everything I can find, this will be in addition to the Earned Income Credit. This article on Wikipedia claims that 21 million Americans received $36 billion under the EIC for tax year 2007. So Obama plans to triple the cost of this wealth redistribution scheme in an effort to make 130 million more Americans dependent on the government.

Create the American Opportunity Tax Credit: Barack Obama and Joe Biden will make college affordable for all Americans by creating a new American Opportunity Tax Credit. This fully refundable credit will provide $4,000 a year for college education.

Another refundable tax credit! If you didn’t click the link to see the definition above, these credits have the capacity to reduce a person’s tax liability to less than zero. The net effect of this will be to pay students $4000 each year for college. Again, this appears to be in addition to $4,050 Pell Grant already available to most of these students.

The only requirements for receiving this credit appear to be enrollment in college and 100 hours of community service. I see no performance standards, attendance standards, or the like listed. The lack of such standards already plagues the Pell Grant program. Some students enroll in low-cost college programs for the specific purpose of receiving this grant and subsequently fail the class or even never show up for class. In other words, there is a subset of our society that abuses this program to effectively receive a government handout. Unless strict requirements are put in place to prevent this type of abuse, this will become just another redistribution of wealth in too many cases.

Barack Obama and Joe Biden will reform the Child and Dependent Care Tax Credit by making it refundable and allowing low-income families to receive up to a 50 percent credit for their child care expenses.

Currently, this credit is non-refundable and covers up to 35% of the first $3,000 for families with one child or 35% of the first $6,000 for families with 2 or more children. Obama’s blueprint claims this set up disproportionately benefits upper-income families. That’s only because it’s a tax deduction, not a damned welfare program! I can’t resist it any longer, I have to quote Marx here…”From each according to his ability, to each according to his need.” Someone please tell me again this slogan doesn’t apply. This is making me absolutely sick!

Simplify Tax Filings for Middle Class Americans: Obama and Biden will dramatically simplify tax filings so that millions of Americans will be able to do their taxes in less than five minutes.

The blueprint claims this will save up to 200 million hours of taxpayer taxfiler preparation and aggravation and $2 billion in paid preparer fees. Newsflash–the 1040 EZ is pretty damned simple already! I’d bet most taxpayers taxfilers will continue to use paid preparers if only to get the refund advance they offer.

Barack Obama and Joe Biden will eliminate all income taxation of seniors making less than $50,000 per year.

What, no refundable tax-credit? Perhaps they didn’t think this one all the way through yet. This is one I might actually be able to support if the description in the blueprint is accurate. Although, this is going to create a huge burden on the younger generations as waves of baby-boomers retire.

I guess the thing that troubles me the most about Obama’s plan is that his refundable tax credits are disguised as tax cuts–they’re giveaways. I’m absolutely sick and tired of politicians and the media calling government giveaway programs tax cuts. A tax cut reduces the amount of tax one pays, it doesn’t give someone more money than they pay in taxes! That’s welfare my friends, or a redistribution of wealth.

If Obama plans to hand all this money out, it has to come from somewhere. This is redistribution of wealth, no two ways about it. Though they try to disguise it, the requisite philosophy is that the state–or the populace–owns whatever it deems as one’s excess income. If this plan is enacted as outlined, we’ll be one step closer to becoming the United Socialist States of America.

November 10, 2008 Posted by | Obama | , , , | Leave a comment