Obama Being Exceedingly Clear About His Tax Plan
By Daniel Miessler on September 13th, 2008: Tagged as Election 2008 | Obama
Send this to all your McCain friends (especially those making less than 200K/year/household) who think Obama wants to raise their taxes. They need you to send this because they believe whatever they hear, regardless of source, as long as it agrees with their pre-existing perspective, i.e. Obama-bad, McCain-good.
They need to be shown the idiocy of voting for a candidate that will give the tax breaks to a small percentage of people on top—a percentage, I might add, that they are not a part of.
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The tax issue is only part of the story in this clip. A bigger issue in this election is the fact that Obama is talking about the issues (when he isn’t forced to defend himself against absurd accusations) and McCain is NOT talking about issues (or is distorting Obama’s record).
Comment by Carl M — 9/13/2008 @ 2:33 pm
Why punish success? Should we all feel better knowing that the “rich” are going to pay and pay? That’s class envy!
What gives government the right to take money from certain people and give it to others?
A flat tax rate is the only fair way to tax.
Comment by Dave Largo — 9/13/2008 @ 5:09 pm
Yep, a flat tax SOUNDS fair. What could be fairer than everyone paying a set percentage of their earnings? No deductions for ANYTHING. Everyone shares the burden equally.
Except that the burden would NOT be equal. There are people who make barely enough money to afford their rent and food. They don’t even DREAM of home ownership or health insurance. They don’t dream of getting their kids into college because the schools in their poor towns don’t appropriately prepare their kids for college .. and they couldn’t afford college even if they did. (Of course the kids may get scholarships for their first year, but unless they are able to make appropriate academic progress — by no means a certainty when they have had poor schooling before college .. and have nobody at home who knows what is necessary to succeed in college.) So, they don’t go to college .. or they drop out .. and they take low paying jobs, and the cycle continues. A flat tax would shift a large amount of the tax base from the wealthy (who CAN afford it) to the poor or middle class (who can LESS afford it).
While a flat tax is “fair” by one definition of the word, it is far from fair as far as spreading the BURDEN of taxes equally.
This isn’t to say that we should tax upper brackets at 90% (which we don’t). If taxes were too high, then there would be people who would not bother working harder to earn that next million since they’d only get to keep $100,000. Take a look around. I see no evidence that the current tax structure (or the Clinton tax structure) is keeping the wealthy from doing everything they can to make even MORE money.
It’s got nothing to do with envy. It’s about people who can afford to help the country pay for it’s military and its borrowers doing so.
You ask: “What gives government the right to take money from certain people and give it to others?” The answer is that the people give that right to the government. There are MANY things that are best done in a centralized way. Those that pretty much everyone agrees with are: military and interstate infrastructure. In addition to those, there are some things that we really have no choice about now. Because the government borrows money, it must pay interest on that money. There are other things that we the people (through our elected representation in Washington) have given the government the right to spend money on. You can disagree that they are valid things for the federal government to spend money on, but you can’t question the government’s right to do so. Should we spend money on an FBI? a CIA? (I think that most people would say yes.) Should we spend money on education? (Most people would say yes, but this is less unanimous.) Individual taxpayers don’t get to pick what the government spends money on. (People who objected to the Iraq war didn’t get to opt out of paying for it.)
But the way you phrased the question indicates that you may be asking about the legitimacy of welfare. Of course, welfare is a small fraction of the federal budget, but it was debated by our representatives, and they decided that it was likely that we would be better off if we made an attempt to end the cycle of poverty. You can argue that this hasn’t worked as well as they might have hoped. But, what gives them the right? We do.
Comment by Carl M — 9/13/2008 @ 7:38 pm
Have you read Greenspan’s comments on McCain’s proposed tax cuts? Uh huh. :)
Comment by Marisol — 9/13/2008 @ 9:25 pm
What you have to ask is how these “rich” small business owners are organized. I need some hard evidence, but according to most conservative “think tanks” many small business owners operate as a sole proprietorship or an LLC. This means that all income from the business goes on the individual’s tax return. People that don’t organize as an S-Corp or a C-Corp are going to be paying higher taxes. For many people the trouble of organizing a corporation and hiring all the necessary CPAs is not worth it from a hassle standpoint, eventhough they could pay less taxes than a corporation would. This is where cutting taxes on the so called rich would be a benefit.
Then there’s the issue of corporate taxes. From what I’ve read Obama wants to raise taxes on corporations. This is a bad idea. If a corporation’s taxes go up by 10% then you can surely bet there will be at least a 10% budget cut across the board. If your IT department has a $2M operating budget be prepared to get rid of $200,000 at a minimum, which is about 4 entry to mid-level head count. It’s no wonder that people get PO boxes in Ireland or Hungary and organize their corporations there where they pay 12% and 16% respectively.
Comment by John — 9/13/2008 @ 9:29 pm
Without proposing support for Obama or McCain’s tax initiatives, I want to reiterate something John said. What people don’t understand about all these tax plans is the implications they have on the working folks. Like John said, if Corporate taxes are raised, you think corporations are just going to eat it? That they are going to just settle for lower earnings? Shareholders wouldn’t be happy with that.
So either a) corporations will pass the tax increases down to the consumers/clients in the form of higher costs of goods and services, or b) reduction in budgets like John said. The latter could easily translate into job losses or reduction in quality of goods. The former could result in an economic slowdown for some industries (product is just too expensive and we can’t afford it, so we’ll just find a cheaper alternative - outsourced goods/services - or cease purchases and business with that company altogether.
So individual tax cuts while corporate tax increases aren’t always a good thing. But on the other hand tax increases on individuals and corporate tax cuts are not necessarily the answer. I really need to learn more about the Flat Tax plan because the concepts do sound VERY fair. I mean, you want equality, so everyone pays 30%? That sounds pretty fair. Make $20,000/year? Your tax is $6,000. Make $100,000? Your tax is $30,000. Like I said, sounds fair to me, but I don’t understand it all yet.
Comment by Jonathan — 9/14/2008 @ 5:03 am
McCain’s trying a tax technique that Regan tried back in the 80’s called “trickle-down economics” (or “Reganomics”). Basically you give tax breaks to 200K+ folks (mostly big businesses) and the savings trickle down from on high.
The flaw in the design is that, even though companies will raise prices when their taxes go up, the inverse is not always true. If you cut a company’s taxes they’ll realize that they can get a greater profit without cutting prices… so nothing changes and we get screwed.
Comment by Zealot — 9/14/2008 @ 7:10 am
To Zealot. Trickle down economics does work, but what people are looking for is a kick in their pay check or savings in lower priced goods. That is where people think it does not work. If multiple company’s profit margin increases due to tax cut, expense reductions, or better management it allows them to cut prices to compete. Now if the board of directors says they want to keep the profits and the stock prices high it might not trickle down to individuals in the form of a pay check or lower priced goods, but it does in terms of their 401K or Roth IRA. As I told one of my friends, don’t complain about the evil oil companies. Put your retirement investments in oil until Bush leaves office and enjoy a bigger or earlier retirement. An individual’s wealth is no different than a company. I look at myself as a company of one. I have short and long term debt, as well as short and long term investments. Americans tend to only look at their pay check and not retirement accounts, land equity, etc. as a form of income/wealth. If the big evil corporations are making money I am happy because I have a Roth IRA and a 401K. The more money they make the earlier I can retire.
Comment by John — 9/14/2008 @ 7:47 pm
@John
Good advice for people who have retirement savings that they can invest as they please. But, many people (MANY people) either do not have any retirement savings or have only a retirement plan through work that they cannot control in any way (or at least not in sufficient detail to move retirement savings into the oil sector). That’s not a viable solution for them.
The thing is that there is NOT an easy answer to the economic woes of the country. There’s NOT an easy answer to the question “Which type of tax system is best for the country?” There’s NOT a one-size-fits-all answer for how to invest wisely. It’s just not that simple.
Comment by Carl M — 9/15/2008 @ 1:00 am
@Carl M
You are correct that many 401K and pension plans either have no choice or limited choice Blame your HR department for the latter since they approve all the mutual funds in the company 401k.
However, everyone has access to Roth IRAs. The fact that people CHOOSE not to have them invalidates your statement that they are not a viable solution. Most financial advisors believe that the 6% that most companies do a 401K match on is insufficient for retirement. Therefore if you are on the ball you will be contributing to your own retirement in addition to what you get through your employer. If you open a Roth with Fidelity or any of the other large firms you have your choice of mutual funds that you can put your retirement in. There are free market solutions that people can participate in to bolster their retirement and short term wealth. The fact that they may not be informed is one barrier to entry. We don’t need higher taxes, but rather we need to educate people on how to take care of themselves and make wiser decisions for themselves. I also believe that people should depend on their extended families (or clan for you Asians and Scots) if they hit on hard times. The private sector solved the wealth problem hundreds of years ago if you look at it from the clan perspective.
Comment by John — 9/15/2008 @ 2:16 pm