In a stump speech yesterday Senator Obama said those who do not wish to pay higher taxes were simply SELFISH. Of course someone who gives as little to charity as the senator does, shouldn’t be lecturing people on being selfish.
Obama Claims that his tax policy is all about being fair. Its all about economic justice and nothing about economic prosperity for all. It will retard growth and suppress tax revenues, doesn’t sound very fair to me.
As you can read below, his talk of “fairness” is a myth:
O’S ‘FAIR’ FALLACY
By RICH LOWRY
October 31, 2008 —
THE growing cast of characters at McCain rallies includes Joe the Plumber, Tito the Builder and now “Barack the Redistributor.”
John McCain is keying off Barack Obama’s comment to Joe about “spreading the wealth around,” and his 2001 rumination in a Chicago Public Radio interview about the Supreme Court “redistributing the wealth.” Cautious even then, Obama didn’t commit himself on whether the court should force “redistributive change,” but his use of the R-word was enough to make it his moniker at McCain events.
Obama is an exotic bird – a self-described tax-cutter for “95 percent of working Americans,” with a predilection toward socialistic language and concepts. The key to the riddle is the nature of his tax program.
Obama proposes a dog’s breakfast of tax credits, including a $500 refundable work credit that applies even to people who owe no income taxes: The IRS would cut them a $500 check every year. This essentially is a government payment dressed up as a tax cut, to be partly funded by new taxes on the top 5 percent of earners.
So Obama is redistributing wealth – but in an eminently salable way. Call it “redistributive change we can believe in.”
His plan wouldn’t increase the incentive to work, invest or save. In fact, the opposite: People who earned more would lose part or all of the tax credit. But, for Obama, it’s a matter of justice rather than economics.
In a Democratic primary debate, ABC’s Charlie Gibson pointed out to Obama that increasing the capital-gains rate in the past has initially reduced revenue. Obama replied that he wanted the increase “for purposes of fairness.”
But how unfair is the US tax system? It’s already steeply progressive: IRS data show that the top 1 percent of filers paid 40 percent of federal income taxes in 2006. The top 5 percent paid 60 percent. The top half paid 97 percent.
The bottom half of filers, in contrast, pays 3 percent. Millions of these people have an income-tax liability less than zero, thanks to existing refundable tax credits.
Obama couches his work credit as relief from the payroll tax funding Social Security. Even here, the system is already redistributive. American Enterprise Institute economist Andrew Biggs points out that low earners get a roughly 4 percent rate of return on their Social Security taxes, while high earners get a 1.5 percent rate. Obama would heighten the disparity, “pushing it closer toward a welfare-program approach.”
None of this means average workers aren’t under stress or that tax credits in themselves are nefarious.
Rising health-care costs have eroded wages, and McCain has a well-considered policy (including a tax credit) to help workers cope with these costs. A well-crafted increase in the per-child tax credit, meanwhile, would counteract the perverse way our entitlement system redistributes wealth from households with children to childless adults.
But Obama’s tax program pursues a foolhardy goal – redistribution for its own sake – in an unworkable manner. As Alan Reynolds of the Cato Institute has written, Obama is seeking to balance some $4.3 trillion of new spending over the next 10 years on the top 5 percent of earners.
Yet experience shows that raising taxes on these earners doesn’t produce as much revenue as expected – because people find ways around the Tax Man.
Regardless, there’s simply not enough money to be had from “the rich.” This is why socialistic European countries have tax systems arguably less progressive than ours. To fund their extensive welfare states, they must resort not only to onerous income-tax rates, but also to high payroll and sales taxes paid by everyone.
American workers should beware the siren song of “the Redistributor.”