Spread The Wealth Isn't Enough

My major complaint with McCain is his inability to respond effectively to Obama's nonsense.

95% tax cut isn't a tax cut, Senator.  Why can't you point out that 42.5 million Americans don't pay federal income tax?  Is that so hard?

Fannie Mae, Freddie Mac.  Not Fannie and Freddie Mae.

Let's talk about that $250,000.

In Obama's view, if you make $250,000, then it's okay for the government to take your money and give it to those people who make less.  If you run a business, and you work 12 hours a day, or risked bankruptcy, or failed 9 times and now on the 10th time you were successful, Obama says that you don't deserve to keep your money.

But where did he get $250,000?  And if that's the level this year, what will it be next year?  In 2010, what happens when the government decides $150,000 is the limit? Or $100,000?  Or $75,000?

In effect, Obama is saying that the government, run by him and his cronies, have the right to take away your money if you make too much.  He couches it in nicer terms, claiming it's Christian to give to your brothers, but it's a naked assumption of power by bureaucrats.  When the government can tell you what level of money is acceptable, they can change that level. 

And it always moves lower.  The Alternative Minimum Tax was designed to catch some 50 millionaires who weren't paying taxes.  Today it can catch as many as 70 million taxpayer (which is why they have to pass a patch each year). And yet, Obama still says he can close "tax loopholes" to make sure to catch those who aren't paying enough.

That's not how it works.  It never does.  Ham-handed attempts to bring fairness always end up catching the little guy, putting in place laws and regulations that never seem to catch the fat cats.  This allows the socialists to bring more regulations to catch those rich misers.   

The fact is that giving government the power to determine the "moral" level of how much you make is an affront to liberty.  The more government can take from you, the less freedom you have.  And the more government takes, the more it needs.

McCain has failed utterly in explaining this to the American people, and the result very well could be disastrous economic policies that make the last year look the good times. 

Comments

[John J.]

You are looking at the tax stuff backwards. Obama isn't "tak[ing] your money and giv[ing] it to those people who make less" He is taking less money from those making less and taking more money from those making more. Since the rich earn more when the middle class has more money, it will be a net gain on all sides.

He got $250,000 because only 5% of Americans make that much. I think these cut-offs should be indexed or include a sunset clause, but it isn't an arbitrary cut-off.

[Jim Durbin]

Some 40% of people don't currently pay any federal income tax. That means that a tax cut isn't a tax cut, it's taking money from those who pay taxes and giving it to those who do not.

Worse, it goes after the productive class. Those making $250,000 to $1,000,000 aren't the super wealthy, they are entrepreneurs expanding their businesses.

Employees and executives tend to take money in other ways. Stock options and penthouse suites and other perks are covered by the company, but small business owners don't have those protections.

if you really wanted to go after the superrich - everything would be a wealth tax and not an income tax.

Warren Buffett says he should be taxed more than 15% since his secretary is at a higher rate. But if his dividend rate was at 60%, he'd simply pay himself a salary, or find some other way to oay the lowest amont.

Wage earners and small business owners don't have that luxury, so tax plans designed to snare the rich, always end up taxing the producers the highest.

Again, I reference the AMT, designed to catch a few millionaires, and now snagging up to 70 million people a year when Congress doesn't pass a "temporary patch."

[John J.]

From what I have read of Obama's plan, the only tax break that is refundable (as opposed to a deduction on income) is the EITC, something McCain also proposes in his tax plan. This means that most of Obama's tax cuts will go to the middle class who are paying taxes. As for your 40% number, you fail to also mention that 66% of corporations (68% of foreign corps) don't pay any tax even though combined they earn $2.5 trillion in revenue.

Regarding small business and entrepreneurs, businesses are taxed separately and small businesses (those with less than 500 employees generally) will see large incentives under Obama's plans to further expand their business. The $250,000 is a personal income tax line and unrelated to corporate tax rates. Yet even if it were an across the board increase, less than 2% (using very loose rules that include individuals that aren't a business in the real sense of the word, i.e. book authors, people making money renting out second houses, etc.) of small businesses make more than $250,000.

As for capital gains, Obama doesn't want to raise it to 60%; he doesn't even want to raise it equal to standard income. He wants to raise it to the level it was under Clinton, 18-25% (I forget the exact number), compared to a 35% income tax rate. This is also where most of his increased tax is focused on and only 33% of people who reported capital gains earned less than $1 million.

The AMT wasn't planned out for incomes 20 years down the line. I agree that it should have been indexed to inflation. The $250,000 mark is a current term promise. Short of inflation going nuts, no one earning in the middle quintile will reach that number in the next 4 years. Tax brackets have been re-worked under pretty much every president ever since federal income taxes became legal. That isn't something special, that is a standard thing. 20 years down the line we will hear about politicians promising no income tax increase for those making $500,000.

[Jim Durbin]

All of Obama's "Tax Cuts" are refundable with the exception of the clean car credit. It's a clever way to disguise a massive wealth transfer without calling it spending.

http://online.wsj.com/article/SB122385651698727257.html

You have to stop with this 98% figure. Large numbers of companies aren't revenue producers or are tiny side businesses.

Of the companies that do matter - those that actually hire people - many of them do cross that threshold.

Owner's making less than $250,000 aren't hiring that many people. So the purpose is to tax the most productive members of society - the real job creators.

Personally, I'm in this boat. My decision to hire employees next year is based on healthcare and taxes. And if I'm not at $250,000, I won't be adding anyone. Under the Obama plan, if I'm forced to pay $10-$20,000 more (lifting caps in SS/Medicare, increases, and the sunset of the Bush tax cuts coming in 2010), it's doubtful I can afford to hire anyone.

Which means my business, which could grow to a million and hire 10 people, gets strangled in the grave, because the incentive to hire people is lessened considerably.

Real numbers - I go through them every month. Personal income and corporate income are very closely tied in small business. Come sit down with me one day and I'll show you.

[John J.]

Yes, I should stop using the 98% figure. If you remove those non-producers you cite, i.e. book deals, renting out second homes, etc., you get less than 1% of small businesses (those with 500 or fewer employees) make more than $250,000. So what I should be saying is more than 99% of small businesses wouldn't be impacted.

Also, employee pay is a business expense. It comes out of a company's profit before its taxable income is calculated. Thus, if you hire more people or paid your current employees more, you could fall back under that $250,000 mark. In fact, if you are worried about health care and taxes when it comes to hiring employees, you have more to worry about under McCain. As I said in another thread, McCain's health care plan includes charging payroll taxes on health benefits. For the average family's health care plan, this would be an extra $3,000 in taxes ($12,000 average plan taxed at 25% - the rate for earners between $32k and $78k). Just per employee that is more than Obama would raise taxes on someone making just over $250,000.

All of this discussion acts as if business income were taxed like personal income, which it isn't in most cases. It also assumes Obama isn't proposing small business incentives, which he does. And finally it assumes that income tax is paid at a flat rate at whatever bracket you are in, when each bracket of income is taxed at that bracket's rate (i.e. if you make $250,001, only $1 is taxed at the $250k rate).

The people impacted by Obama's proposal are those who PERSONALLY make more than $250,000; not on businesses whose gross receipts are more than $250k; not on people who own businesses with gross receipts more than $250k, not even on people who own businesses that net $250k UNLESS they pay themselves all of that profit.

[charlie]

the spread the wealth is a bunch of crap. it is socialism and socialism has proved to be anti God and socialism is a failure because it sucks the life out of people and gives them no hope for a better life, a life that is usually just poverty. those who work for your money deserve to be able to keep it for yourself and family, to spend, save or give as we see fit. the goverment should not be allowed to take our money and spend it on things we don't appove. like for example obama and other liberals vote to use our tax payer money for for planned parenthood the leading abortion provider. that is evil on the part of these liberals.do not allow our nation to be sunk. vote for John McCain