NYC Letter: Drink The Kool-Aid: Obama Tax Cuts

Countdown 20 days to go

UPDATE 10.15.08: Mr. Obama explains his tax policy of "fairness" here. Mr. Obama's "fairness" supplants the primary and pedestrian objective of raising revenue with, ah, "fairness", which, ah-um, will increase taxes, produce less revenue, and enlarge the 7,500 pages of the current tax code (United States Internal Revenue Code, Title 26).

As the linked video shows, Mr. Obama, using an income ceiling of $250K, has pledged to both raise and not raise the capital gains tax. This is a neat trick.

[Hat tip: V de T]

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Yeh gimme money (that's what I want)
A little money (that's what I want)
That's what I want (that's what I want)
So gimme money (that's what I want)
That's what I wa-ah-ah-ahnt, ye-ye-yeh,
That's what I want.

MONEY (THAT'S WHAT I WANT)
Song: Berry Gordy and Janie Bradford
Recorded: Barrett Strong, 1959
Covered by the Beatles, 1963
Obama Campaign Anthem, 2008

Meanwhile in Toledo:

Plumber: Your new tax plan is going to tax me more. Isn’t it?

Obama: It’s not that I want to punish your success, I just want to make sure that everybody that is behind you, that they have a chance for success too. I think that when you spread the wealth around, it’s good for everybody.

Well, certainly good for everybody getting a little of the spread-around.

Here is a question, how does Mr. Obama give a tax cut to those who pay no taxes? [Pause.]

OBAMA'S 95% ILLUSION
It Depends On What The Meaning Of 'Tax Cut' Is.

OP-ED October 13, 2008 (WSJ) - 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...

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."

Mr. Obama's genius is to call it a tax cut.

OBAMANOMICS: BLEED DOWN SOCIALISM
"I'm Barack Obama And I Approve This Kool-Aid"

Here is another question, why does Mr. Obama give a tax cut to those who pay no taxes?

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.

... 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. ...

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.

Worth the full read.

Drink the Kool-Aid. Punish success.