10/15/2008

WSJ on "Obama's 95% Illusion"

Much of this is similar to a piece that I had back in August, but their piece is still well worth reading.

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:

- A $500 tax credit ($1,000 a couple) to "make work pay" that phases out at income of $75,000 for individuals and $150,000 per couple.

- A $4,000 tax credit for college tuition.

- A 10% mortgage interest tax credit (on top of the existing mortgage interest deduction and other housing subsidies).

- A "savings" tax credit of 50% up to $1,000.

- An expansion of the earned-income tax credit that would allow single workers to receive as much as $555 a year, up from $175 now, and give these workers up to $1,110 if they are paying child support.

- A child care credit of 50% up to $6,000 of expenses a year.

- A "clean car" tax credit of up to $7,000 on the purchase of certain vehicles.

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," or in George McGovern's 1972 campaign a "Demogrant." Mr. Obama's genius is to call it a tax cut.

The Tax Foundation estimates that under the Obama plan 63 million Americans, or 44% of all tax filers, would have no income tax liability and most of those would get a check from the IRS each year. The Heritage Foundation's Center for Data Analysis estimates that by 2011, under the Obama plan, an additional 10 million filers would pay zero taxes while cashing checks from the IRS.

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. . . .

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4 Comments:

Blogger Hamster said...

Conservatives need to send a message to the idiots running the McCain campaign that they don't know what they are doing and that they are causing McCain to lose this election.
Just because they engineered a victory for George Bush doesn't mean they can use the same old tactics to fight off Obama.
This isn't 2000 or 2004.
There's just 3 weeks left
If they can't get a cohesive campaign together they're going to go down as the gang who couldn't shoot straight.

10/15/2008 2:50 AM  
Anonymous Anonymous said...

So much for trying to simplify the tax code.

Obama can call his plan the full employment act for tax accountants and tax lawyers.

10/15/2008 6:47 PM  
Blogger sdavis said...

This is one of the scariest things I've seen in years.

Well, folks ... the American Dream will be capped at $250k beginning November 4th or very shortly thereafter. Construction crews must complete the installation of the glass floor for those who don't pay taxes first.

Last one to leave ... please turn out the lights.

10/16/2008 10:57 AM  
Blogger Noor said...

I truly cannot believe how uninformed many people are of the tax system and I cannot believe that the WSJ is capitalizing on it. So let me clear this for everyone:
EVERY WORKER PAYS TAXES.

ABSOLUTELY EVERY WORKER, when they receive their salary checks has a PAYROLL TAX DEDUCTION. So all year long, people go and pay their taxes religiously. Now at the end of the tax season, when you have to file your income tax, you might have zero-income tax liability. This means that you don't OWE the government further taxes because you paid them ALL thorugh your payroll discount. Sometimes peopel get a refund because they paid more taxes on payroll than they owe. Now under Obama, the ONLY people could have a negative tax rate (i.e. receive money from the governmet) are the people who earn less than $10,000. And anyone who thinks it's wrong to help out a little (the net tax ret would be -2.8%) hard working people who makes less than $10,000 has little sense of solidarity. Here is the table from the Tax Policy Center, a non-partisan analysis group confirming what I just said: http://www.taxpolicycenter.org/numbers/displayatab.cfm?Docid=1967&DocTypeID=1 SHAME on the WSJ for doing such an irresponsible article.

(On a side note, I don't see conservatives screaming at McCain's $5,000 check he's giving to people, even if you pay zero income... interesting...)

10/20/2008 11:31 PM  

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