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Taxing time if Obama wins
Posted by: McQ on Tuesday, June 10, 2008

CNBC's Maria Bartiromo lays out the Obama plan for your money if he's elected president:
"He's going to take the capital gains tax at 15 percent right now all the way up to 25 to 28 percent. . . . Sell anything, like a home or stocks, and make a profit . . . [almost] 30 percent of the profit will go to the government instead of 15. Right now [the top income tax rate] is 35 percent, Obama wants to take that to 39 percent . . . We're talking about people who make over $200,000. That's not rich. So it's actually going to impact more people than you may think."
And then there's his promise of a windfall profits tax as dicussed by Bartiromo and other here.

Says one of the analysts, Ron Insana, with whom she speaks:
"We've seen this happen before during the last oil price shock in the 1970s and it's not a terribly efficient way to address some of the problems that we're seeing in the energy sector. This is a multifaceted extremely complex problem that isn't going to be solved by taxing oil companies....With respect to raising taxes at any time, whether you're taxing the rich or raising capital gain, dividend taxes, I think it's counterintuitive that any one of those steps would be helpful to the U.S. economy and quite detrimental given the load that everyone is carrying at the moment."
The more I hear about Obama's plans the more I realize that John McCain may be right - it appears he's running for Jimmy Carter's second term. And we all know what Americans did about that.

Nothing like raising taxes during a slowing economy to remind us of the "joy" of the blessedly short Carter era.
 
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Comments
Dude, you’re racist for daring to criticize THE LIGHTWORKER. How many churches have you burned down!??!

The upside to the Marx Brother (get it? It hits on both his idealogy and race- what a home run!!!) getting elected will be to see the fun when his delusional worshippers start to turn on him.

 
Written By: shark
URL: http://
But we must put an end to this *malaise.

*Just in case you’re not old enough to remember.
 
Written By: tom scott
URL: http://
Party Like its 1917
 
Written By: jpm100
URL: http://
Can you say .. Market Selloff ?
 
Written By: Neo
URL: http://
The more I hear about Obama’s plans the more I realize that John McCain may be right - it appears he’s running for Jimmy Carter’s second term.
Hmmm. Sounds familiar. Where have I heard that before?
 
Written By: Billy Hollis
URL: http://
Obama responds
 
Written By: Neo
URL: http://
Maybe I have not been in the US for a long time, so maybe I am off the mark, but I personally would consider an income over 200K per year to put you in the rich class. I guess maybe upper middle class if you only count rich as super-rich.

If 200K is only a highish salary, then I should be moving back pronto.
 
Written By: Harun
URL: http://
200k is combined income for couples, right?

 
Written By: Is
URL: http://
Don’t forget about his plan to raise the FICA cap to $200,000 or $250,000 which will take another $12,000 out of peoples pockets. Unless of course, he includes complex rules to prevent only the "middle class" from having to "pay" it. Which really means you’ll get a rebate, which probably means you wont be able to file your tax returns in 5 minutes as promised.
In response to Obama’s editorial in the Quad City Times last September suggesting the payroll tax ceiling be repealed, critics asked how that fits with his promise not to raise taxes on anyone who makes less than $200,000 or $250,000 (Obama has cited both figures). Obama’s response, from his Web site, is, "We may want to include a ‘donut hole’ to ensure that lifting the payroll tax cap does not ensnare any middle class Americans."

The "donut hole" idea is that wages up to the ceiling would be taxed as usual, followed by a non-taxable amount up to $200,000 or $250,000, and then all wages above that would be taxed.

"It’s dubious whether anyone who earns between $100,000 and $250,000 should be called ‘middle class’," comments Prante, "because only about two percent of Americans earn more."

Of more concern to Prante is the prospect of taxing high-wage income at rates well above 50 percent. Obama has called for the top federal income tax rate to revert from 35 percent to 39.6 percent. Add to that an uncapped payroll tax rate and the typical state’s top income tax rate, and the result is a top marginal tax rate of between 55 and 61 percent.

"When government takes 60 cents of a high-income person’s next dollar of wage income, the taxpayer has less incentive to work but more incentive to game the tax system with complex tax planning," says Prante.
 
Written By: Keith_Indy
URL: http://asecondhandconjecture.com
Depending on where you live, $200K is not rich. Figure two people, one self employed make $200K in New York. The state gets about 7%, plus say 3% in sales tax. Social Security takes another 10%, and lets figure an effective Federal tax rate of 20%. Around here, a $250,000 house would cost them about 12,000 or another 6% in taxes.

These people face an effective tax rate of just under half their income, and their kids will pay full ride for tuition at nearly any college they attend. Theybetter be stashing money away for retirement, because there aren’t many pensions around anymore. What everybody assumes is that these people have, and will always live at this income level. More likely they have a few years of really good income, somebody loses a job or gets ill, or the business hits a slow patch, and these people are facing some stark times.

My wife and I make a lot less than $200K and we’re living it. I owe as much on my kids educations as I do on my house. If the economy keeps going, and we both can work till full retirement, we’ll do OK. Otherwise, the outlook is somewhere between OK and grim. But combined income, we’re now in six figures - the evil rich!
 
Written By: MarkD
URL: http://
When the market tanks, how long will it take to blame it on a racist conspiracy to make Obama look bad?
 
Written By: jpm100
URL: http://
"We’re talking about people who make over $200,000. "

Close enough for me. Being in the 97th(approx.)* percentile of households certainly seems more than middle class. Give me 200k/yr and I will feel rich enough.

* http://factfinder.census.gov/servlet/QTTable?_bm=y&-geo_id=01000US&-qr_name=DEC_2000_SF3_U_QTP32&-ds_name=DEC_2000_SF3_U
 
Written By: timactual
URL: http://
But the capital gains tax increase won’t affect individual investors, because they only own stock in 401(ks). So sayeth Obama, anyway:

"But that’s not something that’s going to affect the average person with a 401(k). When people start talking about how, well, there are millions of Americans who own stock, most of them own stock in 401(k)s that — where their taxes are deferred and they pay ordinary income taxes when they finally cash out."
 
Written By: DIffus
URL: http://
The folks who earn over $200,000 are the upper 3% of this country in income. The rest, 97% of all Americans, are not going to be affected.

Increasing capital gains rates, aptly termed "unearned income" in the tax code, will have a minimal affect upon 401Ks. Review the buying-selling done by fund managers and you will find almost 100% turnover in the portfolio on a year-to-year basis. Most of these trades do not qualify for capital gains treatments currently. Addtionally, as my finance profs always said, any fund manager who bases his buy and sell decisions on tax implications is a fool. You sell when prospects for future appreciation are nil, and buy when you expect future gains.

Additionally, on a personal basis most tax payers (again the 97% of us at least), do not buy and sell stocks based on capital gains. And, dividend income (also unearned income), is rarely a factor for any Americans. As a side comment, dividend income is taxed at ordinary rates currently.

Current US tax law treats gains on sale of personal residences as orindary income. (Exception being the one time exclusion for cerain tax payers after a certain age.) Ms Bartirmo is clearly incorrect in citing this as an example.

In general, Ms Bartirmo is talking on behalf of perhaps the lucky few, the upper 3%, rather than for the remaining 97% of American wage earners.
 
Written By: Continuum
URL: http://
The rest, 97% of all Americans, are not going to be affected.
Oh, my. Its true. Each generation needs to learn things for themselves the hard way.

The problem I have is that I get enrolled in the refresher course for something I already know whether I like it or not.
 
Written By: jpm100
URL: http://
Of course, the reason Obama wants to increase the capital gains tax has nothing to do with economics...

http://www.taxfoundation.org/blog/show/23137.html
OBAMA: Well, Charlie, what I’ve said is that I would look at raising the capital gains tax for purposes of fairness.
Obama should stick to talking about what he knows best, dreams of better times, ’cause when he gets into specifics he sounds badly informed.

http://www.taxfoundation.org/blog/show/23051.html
Sen. OBAMA: Well, you know, I haven’t given a firm number. Here’s my belief, that we can’t go back to some of the, you know, confiscatory rates that existed in the past that distorted sound economics. And I certainly would not go above what existed under Bill Clinton, which was the 28 percent. I would—and my guess would be it would be significantly lower than that. I think that we can have a capital gains rate that is higher than 15 percent. If it—and if it, you know—when I talk to people like Warren Buffet or others and I ask them, you know, what’s—how much of a difference is it going to be if it’s 20 or 25 percent, they say, look, if it’s within that range then it’s not going to distort, I think, economic decision making. On the other hand, what it will also do is first of all help out the federal treasury, which is running a credit card up with the bank of China and other countries. What it will also do, I think, is allow us to make investments in basic scientific research, in infrastructure, in broadband lines, in green energy and will allow us to give us—give some relief to middle class and working class families who have been driving this economy as consumers but have been doing it through credit cards and home equity loans. They’re not going to be able to do that. And if we want the economy to continue to go strong, then we’ve got to make sure that they’re getting a little relief as well.
And a big question, how are these windfall profit taxes not going to be passed on directly to the consumer? Are they going to also pass a law saying they can only charge such and such a price for gas?
 
Written By: Keith_Indy
URL: http://asecondhandconjecture.com
Obama, like most liberals, seems to have an extreme lack of knowledge of basic economic principles.

Regarding Buffett - I saw part of a recent interview with him where he stated he was voting for either Obama or Hillary, whichever was the candidate. He said he thought they could make the country better. He also is in favor of a big estate tax. He may have managed to acquire a lot of dollars, but I’m not sure about acquiring much knowledge along the way.
 
Written By: Rohan
URL: http://
I’m trying to understand how those b@stards think I’m stupid enough to think a windfall profits tax is going to change the price at the pump.
It’s more politics of envy.
 
Written By: looker
URL: http://
"In general, Ms. Bartirmo is talking on behalf of perhaps the lucky few, the upper 3%, rather than for the remaining 97% of American wage earners."

The lucky few. Looker, you ask how those b@$tards think you’re stupid enough? Because of attitudes like continuum’s. The top 3% are ’lucky.’ Their investments and portfolios and dividend incomes just fell into their lazy laps. They didn’t do anything to earn them. Everyone knows those 3% fatcats need to be squeezed until they bleed. They don’t invest. They don’t support industry. They just blow it all on gin and tonics with Muffy and Skip down at the club.

And that’s why the Dems are a shoo-in come November. Too many economic morons and envious slugs just eating up Urkel’s happy-talk.
 
Written By: Christopher
URL: http://
He also is in favor of a big estate tax. He may have managed to acquire a lot of dollars, but I’m not sure about acquiring much knowledge along the way.
There are some very good arguments for big estate taxes. They would help prevent future Paris Hiltons from becoming celebrities, at the least.
 
Written By: Arcs
URL: http://
Yikes. The economic ship is going down and this idiot thinks the best idea is to shoot holes in the hull.
capital gains rates, aptly termed "unearned income"
This is an unfortunate mischaracterization of capital investment. Lets say I own a small bakery. I can produce 100 loaves of bread a day and net a profit of 1$/loaf — My daily profit is 100$. Now, if I invest 500$ (capital) in an industrial mixer I can produce 200 loaves a day. My profit has doubled to 200$ a day. That 500$ investment will net me an additional 200$ (additional profit - capital investment) over the course of a week. Is that 200$ "unearned"? The obvious answer is NO.

So why should it be considered "unearned" if the source of the investment capital is someone other than myself? Do venture capitalists not earn their income? Do bankers not earn their income? Did Warren Buffet not earn his income?
 
Written By: ck
URL: http://
OBAMA: Well, Charlie, what I’ve said is that I would look at raising the capital gains tax for purposes of fairness.
That message might just resonate in a down economy.

When crystal waters ebb, only jewels rest easy in the mire. Bumboats want to see yachts turn turtle.
It’s just human nature.

Cheers.
 
Written By: PogueMahone
URL: http://
It’s just human nature.
if history is any demonstration slavery is just human nature.
No cheers for that I’ll wager.
 
Written By: looker
URL: http://
"Cheers" is merely a salutation.

Cheers.
 
Written By: PogueMahone
URL: http://
He also is in favor of a big estate tax. He may have managed to acquire a lot of dollars, but I’m not sure about acquiring much knowledge along the way.
Big estate taxes are an easy way to pick up family businesses at firesale prices. Ask Buffet.
 
Written By: jpm100
URL: http://
I for one hope that if Obama is elected he and his liberal ilk pass all of this baloney. This way, when the economy goes through the floor and the rich become poor, maybe the Dems will lose 100 seats in 2010 and we can get a real President in 2012.

Because Obamanomics is Carternomics 32 years later. And we know what that did to the US.
 
Written By: James Marsden
URL: http://
"Cheers" is merely a salutation.
I know, it was a joke.
 
Written By: looker
URL: http://
"The lucky few".

A man who I worked with long ago sat down in the late 80’s and looked at PC board construction. He thought he saw a market for turnkey assembly of custom designs in small runs, and has grown his place to rapid prototyping, design consultation, and impressive growth in all kinds of design, testing, and manufacturing capacity. He’s employing people (this guy was a local-band guitarist) and living it up at the Yacht Club, and he deserves every penny of it.

With vampires like the one quoted above creeping around, I don’t know why he does it — knowing what’s coming — but I wish him luck.
 
Written By: Billy Beck
URL: http://www.two—four.net/weblog.php
Remember that those "lucky" 200k earners are not only already paying higher taxes, but they also don’t get any breaks on government programs (think college money, tax rebates, etc.), so the effective tax rate is even higher already.
 
Written By: Neo
URL: http://
Yeah, sure Billy, he *earned* it. Does he drive on public roads? Did he go to public schools? Is his business and life protected by public law enforcement? Does government pass regulations to keep his workers safe, well paid, and healthy so he doesn’t have to worry about it? Don’t these regulations also protect his customers from defective product? And when he grows too big and wealthy, doesn’t government step in and increase his taxes and level the playing field to keep all the angry working families from forming a mob and coming after him?

Earned indeed.

****

Haha! I just had to try on the Stupid Statist Hat and see what it feels like. Amusing but sickening.

 
Written By: Grimshaw
URL: http://
My wife will be graduating with her second degree next year. Working full-time will put us close to the 200k line. We would most likely surpass it after a couple of years or so. At this point, there is stronger incentive for her to work part-time to stay below this threshold. We would make less money and spend less money in the economy (less daycare, less luxuries, dining out, vacations, etc, etc). This means slower ecnomic expansion and less opportunity in the economy for all. Why is it so hard for some to understand that this is a bad idea? Or, is it simply jealousy? We both worked and took out loans to put us through grad school instead of sitting on our a$$es. What is so unfair?
 
Written By: Is
URL: http://
With vampires like the one quoted above creeping around, I don’t know why he does it — knowing what’s coming — but I wish him luck.
There is them that does and them that scowls. Some people think that the "lucky few" are just thieves and that if they weren’t stealing they would have that money.
 
Written By: capt joe
URL: http://
The more I hear about Obama’s plans the more I realize that John McCain may be right - it appears he’s running for Jimmy Carter’s second term. And we all know what Americans did about that.
Heh...
McCain later added: When I was a kid, we had to walk to school... in the snow... uphill... both ways.
 
Written By: PogueMahone
URL: http://
See, this is just proof Obama can produce miracles: he made the guy who said "the issue of economics is not something I’ve understood as well as I should" look like a savant!

Pogue has a point though about resonating with voters.
 
Written By: ck
URL: http://
Do not discount the role of luck in making fortunes (or losing them.) Right place, right time, etc. Of course, if you are skillful, luck is not as important but sometimes it can be very, very important. But even if they are lucky, they aren’t thieves, and its probably not a good idea to be too jealous and want to grab their stuff.

I mean, don’t you guys think Obama is DAMN lucky that a US Senate seat opened up for him and he only had to run against Keyes? Was that his skill?
 
Written By: Harun
URL: http://
The only real question in an Obama victory is there enough seats open in congress in 2010 to create gridlock?
 
Written By: jpm100
URL: http://
He also is in favor of a big estate tax. He may have managed to acquire a lot of dollars, but I’m not sure about acquiring much knowledge along the way.
Big estate taxes are an easy way to pick up family businesses at firesale prices.
They are also quite easy to avoid, as you can simply set your estate up as a trust fund, and it goes to the kids skilling the estate tax. The Kennedy Clan has been pulling that trick for ages. They pay a minute fraction of what they would if they did it the way us dumb yokals do.
 
Written By: Scott Jacobs
URL: http://
Do not discount the role of luck in making fortunes (or losing them.) Right place, right time, etc

Harun that is correct, but besides the point. In my observation, to be truly successful in the world you require hard work, talent and or ingenuity, and a little luck, you need all three in order to stand out from the crowd.

But the truth is that it is those people who do stand out who most often make or create those new things which bring advancement to our lives. And they also employ people. I never got a job from a poor man or even a middle class schlub like me.

I never understood the politics of envy. Personally I do not think of myself as very successful. I am middle class and barely scrape by. But i never wanted to steal a richer man’s money. I only feel indignant when those who do have a high level of wealth then break the rules out of Greed, like Ken Lay, or any member of congress.
 
Written By: kyleN
URL: http://impudent.blognation.us/blog
They are also quite easy to avoid, as you can simply set your estate up as a trust fund, and it goes to the kids skilling the estate tax. The Kennedy Clan has been pulling that trick for ages. They pay a minute fraction of what they would if they did it the way us dumb yokals do.
Actually Buffet makes more of his money from estate tax dodge products used to avoid just that thing.

The problem I see is there are a lot of family business which have high asset value, but low yearly profit. For example, a $2,000,000 business where the owner is doing $100,000 take home. Say the death is shortly after helping to put a child through university. There’s a good chance there won’t be cash lying around to pay the inheritence and not enough cash to afford a good tax dodging lawyer.

Idk. I don’t like taxes paid twice. And I just don’t like the idea I need to jump through hoops to skirt a law that shouldn’t exist in the first place.
 
Written By: jpm100
URL: http://
Someone (I wish I could remember who) once wrote, "Tax’n’spend—the crack-cocaine of liberals." And how.
 
Written By: Bilwick
URL: http://
I’m trying to understand how those b@stards think I’m stupid enough to think a windfall profits tax is going to change the price at the pump.
It will change the price, it will be moving up, or we lose the oil companies. But then again, that may be the leftists plan.

Didn’t Buffet cut a deal with Bill Gates so that most of his fortune goes to the Gates Foundation? And doesn’t the Gates Foundation disburse its funds mostly overseas? Really, Buffet is no differet than a polition, speaking platitudes to the public but doing something entirely different.
 
Written By: tonto
URL: http://
"Do not discount the role of luck in making fortunes (or losing them.) Right place, right time, etc."
"Luck is the residue of design." (Branch Rickey)

A real life-making lucky break could roll right over an imbecile and he’d never know it. This is not the sort of thing that winds up feeding on the blood of the working class for fun & profit. In order to be a real freebooter of the sort that sets off the envy-weenies, one must know enough about one’s business be able to {ahem} exploit (there’s a dirty word for you) what we’re talking about, which are rightly known to rational people as "opportunities".

What’s most interesting to me is the fact that there can be no moral attribute attached to what we’re calling "luck", but that doesn’t stop the vampires from indicting it.

How disgustingly puny. It’s revolting.
 
Written By: Billy Beck
URL: http://www.two—four.net/weblog.php

 
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