1. Welcome to CowboysZone!  Join us!  Come on!  You know you want to!

Obama's 95% Illusion

Discussion in 'Political Zone' started by Bach, Oct 13, 2008.

  1. Bach

    Bach Benched

    7,645 Messages
    0 Likes Received
    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.


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

    Beast_from_East Well-Known Member

    13,943 Messages
    1,718 Likes Received
    I think the reason McCain's campaign has not tried to raise this issue is because of the complexity of it.

    I mean, how are you going to explain what you just typed in a 30 second commerical?

    Another problem is that the 95% claim has basically gone unchallenged by McCain, thus most voters assume it is legit.
  3. Heisenberg

    Heisenberg Pow! Pow!

    8,815 Messages
    80 Likes Received
    The $4000 tuition credit is real high on my list of things I like about his economic plan. Doing some community service and being able to go back to college? I like it.
  4. WoodysGirl

    WoodysGirl Do it for the Vine! Staff Member

    63,456 Messages
    2,314 Likes Received
    I'm not sure what's different from that and the current tuition and fees deduction I used last year. There's also the Hope credit and a Lifetime Learning credit, as well. I guess the community service idea is different. But how can you hold a person accountable for actual service?

    The extra mortgage interest credit would be a plus...and maybe the part of the tax credit for those paying child support.
  5. Royal Laegotti

    Royal Laegotti Dyin' ain't much of a livin', boy!

    4,971 Messages
    0 Likes Received
    Just as I thought, I'm screwed! It would be more profitable for me to quit my job and stay at the house! Americans can't let this guy win!:(
  6. ZB9

    ZB9 New Member

    1,024 Messages
    0 Likes Received
    anyone who really believes that 95 percent crap is either a sucker or an idiot. :)

    Look at how much spending Obama and Biden are proposing. I suppose they are going to balance the budget also? LMAO
  7. Royal Laegotti

    Royal Laegotti Dyin' ain't much of a livin', boy!

    4,971 Messages
    0 Likes Received
    He's gonna UNbalance my budget for sure! If that chart is correct he taxes to death the poorest and the richest. Hardly the advocate for the poor he claims to be, again if that chart is correct.
  8. Cajuncowboy

    Cajuncowboy Preacher From The Black Lagoon

    27,478 Messages
    0 Likes Received
    Do you know how much his proposals have in new spending? I said NEW spending????

    1 Trillion dollars.

    Any person who votes for this idiot is even more of an idiot than he is. In these economic times to think this guys proposals are anything more than a swift kick over the edge for our economy is irresponsible and downright reckless.
  9. DaBoys4Life

    DaBoys4Life Benched

    15,621 Messages
    0 Likes Received
    have you seen an oBama commercial might as well be a movie
  10. Big Dakota

    Big Dakota New Member

    11,875 Messages
    0 Likes Received
    :bounce::laugh2: Pepsi, doritos and porn......
  11. Beast_from_East

    Beast_from_East Well-Known Member

    13,943 Messages
    1,718 Likes Received
    But Obama has these catch phrases that work really good in a 30 sec spot. Like, "change", "more of the same", "cant afford 4 more years", ect....

    All McCain has is "maverick" and Palin has made that a joke line now, doesnt really work in a 30 sec commercial because most people are laughing and not paying attention to what the ad is saying.

    You McCain guys know I am right on this, dont tell me that the first image you think of when you hear "maverick" is not Tina Faye, thanks to SNL.
  12. Royal Laegotti

    Royal Laegotti Dyin' ain't much of a livin', boy!

    4,971 Messages
    0 Likes Received
    Maybe they should "goose" their campaign with the name "iceman"! Or maybe more "Sarah barracuda" in their ads!:D
  13. numnuts23

    numnuts23 Active Member

    2,044 Messages
    5 Likes Received
    So I should vote for a guy because he has catchy phrases? Sure hope those catchy phrases work on other countries leaders. Maybe Obama can dupe them, just like he has the American public.
  14. Viper

    Viper Active Member

    2,190 Messages
    0 Likes Received
    I'm gonna just think about myself. It's time the government looks out for me. I've got two kids in college, my 38 year old wife is in her third year of college. Why should I have to pay for it? It isn't my responsibility. No more 16 hour days, no more working 7 days a week! Obama's my mama, he'll take care of me.


    [sarcasm off]
  15. Achozen

    Achozen Sounds From The Lair

    5,076 Messages
    0 Likes Received
    Please, no personal attacks. :(
  16. Cajuncowboy

    Cajuncowboy Preacher From The Black Lagoon

    27,478 Messages
    0 Likes Received
    Just stating the facts. Just stating the facts.
  17. Heisenberg

    Heisenberg Pow! Pow!

    8,815 Messages
    80 Likes Received
    Considering that I want a President who is much smarter than I am, and by all accounts, Barack is one smart cookie, I'll take it as a good thing.
  18. Royal Laegotti

    Royal Laegotti Dyin' ain't much of a livin', boy!

    4,971 Messages
    0 Likes Received
    You don't have to be too smart to fool sheeple!;)
  19. Achozen

    Achozen Sounds From The Lair

    5,076 Messages
    0 Likes Received
    Calling someone an idiot because you think someone is an idiot, is a fact?
  20. Cajuncowboy

    Cajuncowboy Preacher From The Black Lagoon

    27,478 Messages
    0 Likes Received
    If you are going to elect a guy who proposes 1 Trillion in brand new spending and targeting the guys who create jobs in THIS economy, yes.

Share This Page