Obama’s 95% Illusion
“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury”
Great nations rise and fall. The people go from bondage to spiritual truth, to great courage, from courage to liberty, from liberty to abundance, from abundance to selfishness, from selfishness to complacency, from complacency to apathy, from apathy to dependence, from dependence back again to bondage.
“When the people fear the government, you have tyranny. When the government fears the people, you have freedom.” Thomas Paine
Obama’s 95% Illusion
One of Barack Obama’s most potent campaign claims is that he’ll cut taxes for no less than 95% of “working families.” He’s even promising to cut taxes enough that the government’s tax share of GDP will be no more than 18.2% — which is lower than it is today.
It’s a clever pitch, because it lets him pose as a middle-class tax cutter while disguising that he’s also proposing one of the largest tax increases ever on the other 5%. But how does he conjure this miracle, especially since more than a third of all Americans already pay no income taxes at all? There are several sleights of hand, but the most creative is to redefine the meaning of “tax cut.”
For the Obama Democrats, a tax cut is no longer letting you keep more of what you earn. In their lexicon, a tax cut includes tens of billions of dollars in government handouts that are disguised by the phrase “tax credit.” Mr. Obama is proposing to create or expand no fewer than seven such credits for individuals:
– A $500 tax credit ($1,000 a couple) to “make work pay” that phases out at income of $75,000 for individuals and $150,000 per couple.
– A $4,000 tax credit for college tuition.
– A 10% mortgage interest tax credit (on top of the existing mortgage interest deduction and other housing subsidies).
– A “savings” tax credit of 50% up to $1,000.
– An expansion of the earned-income tax credit that would allow single workers to receive as much as $555 a year, up from $175 now, and give these workers up to $1,110 if they are paying child support.
– A child care credit of 50% up to $6,000 of expenses a year.
– A “clean car” tax credit of up to $7,000 on the purchase of certain vehicles.
Here’s the political catch. All but the clean car credit would be “refundable,” which is Washington-speak for the fact that you can receive these checks even if you have no income-tax liability. In other words, they are an income transfer — a federal check — from taxpayers to nontaxpayers. Once upon a time we called this “welfare,” or in George McGovern’s 1972 campaign a “Demogrant.” Mr. Obama’s genius is to call it a tax cut.
The Tax Foundation estimates that under the Obama plan 63 million Americans, or 44% of all tax filers, would have no income tax liability and most of those would get a check from the IRS each year. The Heritage Foundation’s Center for Data Analysis estimates that by 2011, under the Obama plan, an additional 10 million filers would pay zero taxes while cashing checks from the IRS.
The total annual expenditures on refundable “tax credits” would rise over the next 10 years by $647 billion to $1.054 trillion, according to the Tax Policy Center. This means that the tax-credit welfare state would soon cost four times actual cash welfare. By redefining such income payments as “tax credits,” the Obama campaign also redefines them away as a tax share of GDP. Presto, the federal tax burden looks much smaller than it really is.
The political left defends “refundability” on grounds that these payments help to offset the payroll tax. And that was at least plausible when the only major refundable credit was the earned-income tax credit. Taken together, however, these tax credit payments would exceed payroll levies for most low-income workers.
It is also true that John McCain proposes a refundable tax credit — his $5,000 to help individuals buy health insurance. We’ve written before that we prefer a tax deduction for individual health care, rather than a credit. But the big difference with Mr. Obama is that Mr. McCain’s proposal replaces the tax subsidy for employer-sponsored health insurance that individuals don’t now receive if they buy on their own. It merely changes the nature of the tax subsidy; it doesn’t create a new one.
There’s another catch: Because Mr. Obama’s tax credits are phased out as incomes rise, they impose a huge “marginal” tax rate increase on low-income workers. The marginal tax rate refers to the rate on the next dollar of income earned. As the nearby chart illustrates, the marginal rate for millions of low- and middle-income workers would spike as they earn more income.
Some families with an income of $40,000 could lose up to 40 cents in vanishing credits for every additional dollar earned from working overtime or taking a new job. As public policy, this is contradictory. The tax credits are sold in the name of “making work pay,” but in practice they can be a disincentive to working harder, especially if you’re a lower-income couple getting raises of $1,000 or $2,000 a year. One mystery — among many — of the McCain campaign is why it has allowed Mr. Obama’s 95% illusion to go unanswered.
Obama’s Socialist Agenda — Is Anyone Listening?
Posted By Bobby Eberle On October 14, 2008 at 6:38 am
Outside of stump speeches, carefully scripted responses to reporters, and the endless recitation of talking points, there are a few moments when a politician speaks from the heart. It is in these moments when true motivations and core beliefs are often revealed.
Such a moment occurred this past weekend, when Barack Obama unveiled his socialist leanings and gave a clue to the American people about what Obama is all about. But, are the American people listening? Have they become so duped by the rhetoric of “hope” and “change” that they don’t see the train wreck that’s about to happen? Our freedoms are already being taken away as government continues to grow. If Obama gets elected, the subtleties will be thrown out the window as blatant socialism will rule the day. Just read Obama’s response to a plumber’s question in Ohio…
As reported by Fox News, during a campaign event in Ohio, Obama was peppered with questions from a local plumber who asked, “Your new tax plan is going to tax me more, isn’t it?” The plumber was complaining (as I often do) that he is “being taxed more and more for fulfilling the American dream.”
Obama’s response? He gave the plumber a classic dose of socialism:
“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 for success too,” Obama responded. “My attitude is that if the economy’s good for folks from the bottom up, it’s gonna be good for everybody … I think when you spread the wealth around, it’s good for everybody.”
Spread the wealth around? This is America, isn’t it? Redistributing the “wealth” is a classic tenant of Marxist philosophy. Communist China, the former Soviet Union, Cuba, and so on…. they all believe in government ownership of basically everything. Hard work, initiative, expertise… none of that is rewarded. Instead, the efforts of the talented and the hard-working are taken from them and given to those who don’t work as hard. The result is a decrease in productivity, not to mention the self-fulfillment that comes from being rewarded for a job well done. And this is exactly what Barack Obama wants to do!
John McCain needs to get the message out on EXACTLY how he and Barack Obama are different. Yes, there should be tax cuts, and they should be for all Americans. Everytime Obama speaks about tax cuts, he only talks about cutting taxes for a particular group or segment of society. It is social engineering at its worst. Obama and the “govermennt” will decide how to redistribute the wealth of this country. McCain needs to hammer this!!!
My question to Obama is this… How do you make the economy good “for folks at the bottom up” without injecting more government into the picture or letting capitalism work?
Does Obama really understand the essence of America? It is strong because of the American spirit of invention and the bravery to undertake new endeavors. Those at the economic bottom DO NOT create jobs. Those at the economic bottom get hired for jobs. When the economy is robust, more jobs are created, thus more people get hired. There’s not a business existing in America today that doesn’t want to “do more business.” In order to grow, more workers must be hired, and more capital purchased… both of which benefit the economy. Doesn’t Obama understand this???
Let’s just do a little simple math to see how taxes really work. Let’s say there is a person making $50,000/year and paying 15% in federal income tax. Thus, the person’s yearly tax burden is $7,500. If someone making $1,000,000/year paid at the same tax rate, they would pay $150,000 in taxes. So, the person making $50,000 pays $7,500, and the person making a million pays $150,000. Those who make more money, pay more in taxes. It’s only logical.
However, that is not how a socialist thinks. Rather than each person truly paying “their fair share,” the socialist says that the “rich” person should not only pay more because he or she makes more, but they should also pay a higher percentage. So, the person making $1,000,000/year instead pays 35% in taxes for a tax bill of $350,000. That’s an extra $200,000 that the government takes out of circulation to pay for their social engineering.
My contention is this, there is basically nothing that the individual with an extra $200k as his/her disposal could do that is “bad” for the economy. The person could save it, thus giving banks more leverage to do business. The person could invest it, thus helping new or established companies grow. The person could donate some to charity, thus helping organizations at the grassroots level do things more efficiently than the federal government could ever hope to. Or, God forbid, the person could simply go out and buy stuff. Two hundred thousand dollars of stuff is a lot of stuff! Imagine all that cash injected into society. Talk about a stimulus package. More goods being purchased, whether it is cars, clothes, furniture, food, or whatever, means that more jobs will be needed to produce those goods. It’s as simple as that.
The problem is that Obama uses the politics of “trickle down economics” to pit one socio-economic group against another. It is typical class warfare, and it is un-American. Someone (McCain) needs to meet this head on and use some “straight talk.” There is no “trickle down” theory. The more money that is in the hands of those who make the money, and outside the clutches of government, benefits the entire society instantly. There is nothing to trickle down. When all Americans are treated fairly, we all benefit. That is the American way!
Investor’s Business Daily describes Obama as “the most anti-capitalist politician ever nominated by a major party.” In their editorial, IBD describes the Obama/liberal agenda as follows:
It starts with a tax system right out of Marx: A massive redistribution of income — from each according to his ability, to each according to his need — all in the name of “neighborliness,” “patriotism,” “fairness” and “justice.”
It continues with a call for a new world order that turns its back on free trade, has no problem with government controlling the means of production, imposes global taxes to support continents where our interests are negligible, signs on to climate treaties that will sap billions more in U.S. productivity and wealth, and institutes an authoritarian health care system that will strip Americans’ freedoms and run up costs.
All the while, it ensures that nothing — absolutely nothing — will be done to secure a sufficient, terror-proof supply of our economic lifeblood — oil — a resource we’ll need much more of in the years ahead.
McCain needs to board the Straight Talk Express and let the American people know what Obama is all about, and how McCain is different. Make no mistake, Sen. McCain, an Obama administration IS scary. You should be scared too. You should also hit Obama hard every single time he engages is socialist rhetoric.
All people are capable of abusing the system, and as we’ve seen lately, both Republicans and Democrats are capable of greed and corruption. But it is not the American way to punish initiative and ingenuity. It is not “patriotic” to pay more taxes. All Americans should pay less taxes! In tough economic times, the last thing you want to do is hurt business producers. Who is going to create the jobs? The government?
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