Obama’s Tax Plan

I have heard over and over that Barack Obama plans to cut taxes for 95% of Americans.  First of all, that is impossible.  The number of Americans who actually pay taxes is not anywhere close to 95%.  You cannot cut taxes for people who do not pay taxes.  Second, why has McCain not pushed Obama on the lunacy of this kind of tax proposal? 

Obama plans to raise taxes on the wealthiest of Americans, including businesses.  Whenever this happens, the middle class always end up paying for it.  When wealthy Americans have less money to spend, they spend less money.  When they spend less money, the economy slows.  When the economy slows, middle class people feel the crunch.  Businesses lay off workers.  Unemployment rises.

When businesses see their taxes go up, they compensate for the losses.  They do so by raising their prices and passing on the increased costs to those who purchase their goods or services.  The overwhelming majority of these consumers are middle class people.  It’s like Fred Thompson said (tongue-in-cheek) at the convention (not quoting verbatim): “They’re not going to raise your taxes.  Don’t worry.  They’re just going to raise taxes on businesses.  So unless you get a paycheck from a business, or unless you buy something from a business, like groceries, clothing, or gasoline, don’t worry.  This tax hike won’t affect you at all.” 

So, the middle class worker who just got laid off because business slowed down due to the wealthiest of Americans spending less money and investing less in the economy will find that he now has to pay more for groceries, clothing, and gasoline because President Obama thought it was a good idea to raise taxes on the wealthy.  Why can’t everybody get a tax cut?  Wouldn’t that benefit everybody?  Yes, it would benefit even the government.  Lower taxes stimulate economic growth, which creates more jobs and leads to higher tax revenues.  The Laffer Curve demonstrates that in most situations, raising taxes does not bring in more money for the federal budget.  Failing to understand this, Democrats have trafficked in class warfare politics for decades, repeating the same old cliches year after year about the wealthy not paying their fair share in hopes of stirring up middle class resentment against those who have succeeded.  A country that punishes wealth should not be surprised when it loses it. 

Why hasn’t McCain made this argument?  It seems so simple, almost self-evident to me.  But most voters don’t understand economics (thank you, public schools!), and they need to be taught these kinds of elementary truths.  We need an articulate candidate who can fill the role of teacher to the American public.  We need another Reagan.  Unfortunately, Reagans don’t come along very often.

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2 Responses to “Obama’s Tax Plan”

  1. Cory Glover Says:

    All from Factcheck.org:

    “But an independent analysis puts the number who would see no benefit from McCain’s plan at 66 million and finds that Obama’s plan would benefit 81 percent of all households.”

    “Overall, the TPC found that Obama’s plan would produce a tax cut for 81.3 percent of all households, and a cut for 95.5 percent of all households with children.”

    “McCain argues that Obama’s proposed increase is a job-killer. He has a point. It’s true that increasing taxes on those at the top would leave them less money for other purposes, including investment and hiring in the case of business owners. But the number of business owners who would see their rates go up would be only a small fraction of what McCain says. Many would see their taxes go down.”

    “the actual number of small-business employers who would face higher tax rates under Obama is probably far below 663,608, and certainly a far cry from McCain’s ridiculously inflated 23 million figure.”

    http://www.factcheck.org/elections-2008/mccains_small-business_bunk.html

    It’s not quite as simple or elementary as you let on. The reason McCain doesn’t make that argument is that the facts aren’t all on his side. The increases won’t be quite as extensive as he says.

    Neither candidate’s plans make much headway and both, without major cuts somewhere, with further increase the deficit…although Obama’s is projected to be about 1.5 trillion cheaper in the long run.

    I just have one honest question: how can you defend a continuation of Bush’s tax cuts based on the current economy? Sure, everyone has their hands dirty…but it seems to be difficult to deny the failure of the last 8 years.

  2. fenderpooh Says:

    Tax cuts did not cause this economic meltdown. Bad mortgages did, and that can be attributed to a number of factors, but not tax cuts.

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