When did a welfare check become a "tax cut"? Obama's slight of hand on taxes
Posted by Tony Vilgiate at 10/13/2008 7:31 AM 
Categories: Finanacial Crisis, Political Corruption, Political Culture
Categories: Finanacial Crisis, Political Corruption, Political Culture
I have been asking about Obama's claim to be giving 95% of Americans a tax cut since his tax plan became available online earlier this year. Obama's recent flurry of paid advertisements contrasting his 95% "tax cut" plan to McCain's plan got me doing a little research. In the October 13th issue of the Wall Street Journal an article was published entitled "Obama's 95% Illusion - It depends on what the meaning of 'tax cut' is".
Obama has basically redefined a tax cut to include sending checks from the IRS to people who do not pay taxes. In the good old days, that was at best called a "subsidy" and at worst was called "welfare". The net effect is a massive redistribution of wealth on the largest scale ever in the history of The United States. Obama gets away with this by calling this tax cut "a refundable tax credit" which in practice means that a person can receive these credits even if they have zero tax liability.
The following are some of the "refundable tax credits" proposed by Obama that would actually send a check to people who do not pay taxes: (source the Wall Street Journal article cited earlier)
The plan has a second even more dangerous and unfair component that very few folks are talking about. The way the tax plan works it provides a massive disincentive for working harder to get a head. According to the article, some families with an income of only $40K would see these "refundable tax credits" vanish to the tune of nearly $0.40 per extra dollar on income they bring in, making their net gain from extra work, a new job and/or overtime only $0.60 on the dollar. So Obama claims his plan of "making work pay" in effect is structured to keep a large contingent of the American voter in a bizarre form of fiscal bondage.
The following chart, clipped from the article, shows how Obama's tax plan impacts lower and upper level tax payers.
So tell me... how is that more fair than the current plan? How does that plan provide the incentive to work harder and get ahead by the old fashioned application of one's self? Where in that plan do you see a net marginal tax rate decrease for ANY American, let alone the much ballyhooed tax break for 95% of Americans?
This goes right back to the hidden agenda and lack of candor that Barack Obama is displaying. He is being disenginous with the American Voter, creating an environment of class warfare and frankly worse of all, he is trying to buy your vote with someone elses money.
Obama has basically redefined a tax cut to include sending checks from the IRS to people who do not pay taxes. In the good old days, that was at best called a "subsidy" and at worst was called "welfare". The net effect is a massive redistribution of wealth on the largest scale ever in the history of The United States. Obama gets away with this by calling this tax cut "a refundable tax credit" which in practice means that a person can receive these credits even if they have zero tax liability.
The following are some of the "refundable tax credits" proposed by Obama that would actually send a check to people who do not pay taxes: (source the Wall Street Journal article cited earlier)
- 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. [ that is George McGovern's "thousand dollars to every American" pitch in 1972]
- 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 $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.
"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." - Wall Street Journal
Now this has been pitched as "fair", "patriotic" and "the neighborly thing to do" by the Obama/Biden campaign. I will ask you how in any reasonable way would this be fair to anyone? How is stealing from Group A, laundering the money through a "refundable tax credit" and giving it to Group B fair or patriotic? The plan has a second even more dangerous and unfair component that very few folks are talking about. The way the tax plan works it provides a massive disincentive for working harder to get a head. According to the article, some families with an income of only $40K would see these "refundable tax credits" vanish to the tune of nearly $0.40 per extra dollar on income they bring in, making their net gain from extra work, a new job and/or overtime only $0.60 on the dollar. So Obama claims his plan of "making work pay" in effect is structured to keep a large contingent of the American voter in a bizarre form of fiscal bondage.
The following chart, clipped from the article, shows how Obama's tax plan impacts lower and upper level tax payers.
So tell me... how is that more fair than the current plan? How does that plan provide the incentive to work harder and get ahead by the old fashioned application of one's self? Where in that plan do you see a net marginal tax rate decrease for ANY American, let alone the much ballyhooed tax break for 95% of Americans?
This goes right back to the hidden agenda and lack of candor that Barack Obama is displaying. He is being disenginous with the American Voter, creating an environment of class warfare and frankly worse of all, he is trying to buy your vote with someone elses money.
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