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Tax or Welfare?

Discussion in 'Political Zone' started by ABQCOWBOY, Feb 11, 2009.

  1. ABQCOWBOY

    ABQCOWBOY Moderator Staff Member

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    http://www.ask.com/bar?q=What is Pr...www.wsj.com/article/SB121910303529751345.html

    Obama's Tax Plan Is Really a Welfare Plan

    AUGUST 19, 2008

    Barack Obama's tax plan is the opposite of supply-side economics. He proposes to raise marginal rates for just about every federal tax. He also proposes a raft of tax credits that taxpayers can receive if they engage in various government-specified activities.

    Moreover, the tax credits would mostly go to those who pay little or nothing in federal income taxes. His trick is to make the tax credits "refundable." Thus, if the tax credit is for $1,000, but the taxpayer would otherwise only pay $200 in taxes, the government would write a check to the taxpayer for $800. If the taxpayer pays nothing in federal income taxes, the government would pay him the whole $1,000.

    Such credits are not tax cuts. Indeed, they should be called The New Tax Welfare. In effect, Mr. Obama is proposing to create or expand a slew of government spending programs that are disguised as tax credits. The spending on these programs is then subtracted from the total tax burden, in order to make the claim that his tax plan is a net tax cut overall.

    On the tax side of the ledger, the details released by his campaign last week confirm what a President Obama has in mind for our most productive citizens. The top individual income tax rate, for example, would be increased by 13%, to 39.6%; the next-highest rate would be raised to 36%. The top rates on capital gains and dividends would rise by a third, to 20%

    The Social Security payroll tax would be raised between 16% to 32% for families making over $250,000 a year. This means that the real returns these people get from their lifetime payments into the retirement program will be driven below 0%, according to my own previous research, which was published by the Cato Institute and elsewhere.

    Mr. Obama also wants a permanent federal estate tax, with a top rate of 45%; his health-insurance plan includes a new payroll tax on employers; and he also contemplates several increases in the corporate income tax, including a new so-called windfall profits tax on oil companies.

    Then there is the spending side of the ledger. Mr. Obama proposes a fully refundable Making Work Pay Tax Credit, which would have the government pay out $500 to each worker and $1,000 to couples -- reminiscent of George McGovern's 1972 election proposal for the government to send a $1,000 check to everyone.

    His American Opportunity Tax Credit would provide a $4,000, fully refundable tax credit for college tuition expenses. His Mortgage Interest Tax Credit would provide a 10% credit -- refundable -- to offset mortgage interest payments for lower- and middle-income families. His Health Care Tax Credits, which the campaign says "will ensure that health insurance is available and affordable for all families," include "a new refundable 50 percent health tax credit on employee premiums paid by employers."

    Currently existing tax credits would also become spending programs in the Obama tax program. The Savers Credit would be made fully refundable, and would be expanded, according to the campaign, "to match 50% of the first $1,000 of savings for families that earn under $75,000." The Child and Dependent Care Tax Credit would be made refundable and expanded to allow "low-income families to receive up to a 50 percent credit on the first $6,000 of child care expenses."

    The Earned Income Tax Credit is already refundable. Mr. Obama would expand it to "increase the number of working parents eligible for EITC benefits, increase the benefits available to noncustodial parents who fulfill their child support obligations, increase benefits for families with three or more children, and reduce the EITC marriage penalty, which hurts low-income families." In short, welfare spending is to be increased by paying more money out to low-income income tax filers.

    The latest Congressional Budget Office data shows the bottom 40% of income earners already pays no income taxes. Indeed, they receive a net payment from the federal income tax system -- meaning from the taxpayers -- equal to 3.8% of all federal income taxes, because of the refundable tax credits under current law. The middle 20% of income earners, the true middle class, pays 4.4% of federal income taxes.

    Overall, the bottom 60% of income earners pay less than 1% of federal income taxes on net. When "tax credits" primarily go to this group in the form of checks from the government (rather than a reduction in their tax burden) it is simply an abuse of the language to call the spending a tax cut.

    Consequently, to say, as the campaign does say, that the candidate's tax plan is a tax cut on net -- and that it would limit taxes to 18.2% of GDP -- is grossly misleading. The Obama tax plan would sharply increase real taxes. It also would come nowhere near to paying for the massive increases in federal spending he has proposed, including the spending that is disguised in the form of refundable tax credits.

    Mr. Ferrara is director of entitlement and budget policy for the Institute for Policy Innovation. He served in President Reagan's White House Office of Policy Development, and as associate deputy attorney general under the President George H.W. Bush.

  2. Bob Sacamano

    Bob Sacamano Benched

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    I wish everyone would quit calling it "Obama's plan"

    unfortunately everything the Government does will be named after this neophyte
  3. BrAinPaiNt

    BrAinPaiNt °¤~Cold Eternal~¤° Staff Member

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    [IMG]

    Why are they operating on Shemp?

    Or is it really moe?!?!
  4. ABQCOWBOY

    ABQCOWBOY Moderator Staff Member

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    I don't think you can get away with calling it Satan's Plan iR.

    :laugh2:
  5. BrAinPaiNt

    BrAinPaiNt °¤~Cold Eternal~¤° Staff Member

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    Sounds like a good name for a metal band.
  6. WoodysGirl

    WoodysGirl Do it for the Vine! Staff Member

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    Well isn't that the norm, tho?

    Most spending bills, stimulus, government aid, etc is named after the President.
  7. ABQCOWBOY

    ABQCOWBOY Moderator Staff Member

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    I'm versitile like that.

    :D
  8. Bob Sacamano

    Bob Sacamano Benched

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    lol, you remember that thread? good times

    I don't think as many Pressez have been this in over their head though
  9. Doomsday101

    Doomsday101 Well-Known Member

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    Obama is calling it his plan and continue to press congress to vote on it.
  10. Bob Sacamano

    Bob Sacamano Benched

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    pffff
  11. WoodysGirl

    WoodysGirl Do it for the Vine! Staff Member

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    But that wasn't your original gripe. You said you wish they would stop naming things after him...and what that has to do with you thinking he's in over his head doesn't make sense to me.

    I get you don't like the package, but one doesn't seem to have anything to do with the other.

    Similar to all other presidents who have pushed their agenda. This ain't brand new.
  12. Bob Sacamano

    Bob Sacamano Benched

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    I believe I called him a neophyte
  13. WoodysGirl

    WoodysGirl Do it for the Vine! Staff Member

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    Your first comment was:

    So you don't like the fact they're calling it Obama's plan because he's only been in office 3 weeks?
  14. Bob Sacamano

    Bob Sacamano Benched

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    because he's so inexperienced as a politician

    and I post fragmentary responses

    JFYI
  15. WoodysGirl

    WoodysGirl Do it for the Vine! Staff Member

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    Yeah, but he's the president and by default anything that's being pushed by the white house is going to be attributed to him.

    You could find other things to gripe about, but I don't think a policy named after him should be one of 'em.
  16. Bob Sacamano

    Bob Sacamano Benched

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    I've found other things to gripe about

    I thinking taking undeserved credit is a pretty good thing to gripe about, but that's just me
  17. WoodysGirl

    WoodysGirl Do it for the Vine! Staff Member

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    He'll also get the blame (as other presidents have) if it fails. Will it be undeserved then?

    I just don't get it. *smh*
  18. Bob Sacamano

    Bob Sacamano Benched

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    blame Obama? that's not a phrase



    how did we get like this WG? always fighting?

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