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Smoke, Mirrors and Socialism
Posted by: McQ on Monday, October 13, 2008

The Wall Street Journal puts an ingredients label on the snake oil Obama is selling as tax cut for 95% of Americans:
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.
Those credits include tax credits for college tuition, a savings tax credit, an expansion of the earned-income tax credit, a child care credit, clean car credit and a "make work pay" credit.

All but the clean car credit are called tax "refunds". Or so they want you to believe. The WSJ explains what that means in reality (redistribution of income on a massive level):
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.
Talk about voodoo economics - 1.054 trillion in transfer payments.

And somehow, the top 5% are going to pay for all of this at rates no higher than those found under the Clinton administration.

Uh huh.
There's another catch: Because Mr. Obama's tax credits are phased out as incomes rise, they impose a huge "marginal" tax rate increase on low-income workers. The marginal tax rate refers to the rate on the next dollar of income earned. As the nearby chart illustrates, the marginal rate for millions of low- and middle-income workers would spike as they earn more income.


Some families with an income of $40,000 could lose up to 40 cents in vanishing credits for every additional dollar earned from working overtime or taking a new job. As public policy, this is contradictory. The tax credits are sold in the name of "making work pay," but in practice they can be a disincentive to working harder, especially if you're a lower-income couple getting raises of $1,000 or $2,000 a year. One mystery — among many — of the McCain campaign is why it has allowed Mr. Obama's 95% illusion to go unanswered.
Well now he has the answer. Let's see if he can manage to explain this in the next debate.
 
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Previous Comments to this Post 

Comments
It is divisive and racist to point this out, and it does nothing to help put fresh fruit on Michelle Obama’s table...
 
Written By: Scott Jacobs
URL: http://
I just am not sure McCain is capable of being aggressive against anyone but fellow Republicans.
 
Written By: Crusader
URL: http://www.coalitionoftheswilling.net/
McCain won’t raise this.

But he has to use something close to the words that Obama is using the IRS for Welfare. He won’t. Buying votes with Big Government seems to be in his nature too. He may abhor the scale, but he doesn’t abhor the fundamental principle of it.

I have to say welcome to European Social!sm.

Growing up in Canada, I see the same system about to be imposed here. Heavy Regulations are one way to get social!sm without officially implimenting social!st programs.

The other ingredient is to get everyone hooked. Like a junkie on some program or refund. Back in the Great White North, there few who wasn’t either taking some kind of money from the government or had an immediate relative who wasn’t.

Even though this amount was often relatively small, they all staunchly defended their own little benie (benefit). I would argue that the tax burden was too great, but none of them would support the idea because it may cost them their benie. And I don’t understand the psychology of it, but if the tax cut was greater than the amount of their benie, they still didn’t want to give up their benie and resist the idea of a tax cut.

Everyone has their Achilles Heel in this respect as well. McQ, in your case, I wouldn’t be surprise if Obama offers some kind of military benefit that you may feel is well deserved and overdue. And it may well be. But everyone has one of those. Everyone has something they feel they should be getting money back from the goverment or compensations for something. Everyone has one. And few will put the general good of the economy over their benie. And all Obama and his Social!st friends have to do is find out what benie 50-60% of the people want.

Deserved or not, all they have to do is make you feel like cutting taxes/spending puts your program on the chopping block first. Then all of a sudden you have everyone resisting tax cuts and spending cuts.
 
Written By: jpm100
URL: http://
McQ, in your case, I wouldn’t be surprise if Obama offers some kind of military benefit that you may feel is well deserved and overdue. And it may well be. But everyone has one of those.
Really?

So the fact you may spend anywhere from 20 to 35 years earning a benefit vs. having one invented out of thin air for doing nothing more than being among those in a class whose support politicians covet doesn’t change the equation at all?
 
Written By: McQ
URL: http://www.QandO.net
Do you have friends/relatives in the military, still?

I just pulled that as an example. Perhaps you’re immune. Can you say everyone you know wouldn’t get ’hooked’? Because it seemed to work pretty well back in the GWN.

 
Written By: jpm100
URL: http://
Do you have friends/relatives in the military, still?
Of course - but what does that have to do with earning a benefit vs. being handed one for existing?

How is the earned benefit the equivalent of getting "hooked" any more than a pension plan may be?
 
Written By: McQ
URL: http://www.QandO.net
Yeah, it’s easy to get hooked on a drug, not so easy when the piper comes calling to collect the bill.

Add another trillion, (yes that’s TRILLION,) dollars to a debt load that’s going to increase even more in the next 12 years because the Social Security Trust Fund will have to start paying out more and more, as more and more baby boomers start retiring.

Add to that the trillion or more in new spending that an Obama/Pelosi/Reid government would surely pass.

Add to that the loss of income from a depressed economy, which will be the result if the Obama/Pelosi/Reid government choice of economic policy is enacted.
 
Written By: Keith_Indy
URL: http://asecondhandconjecture.com
No problem, that 5% are an unlimited source of funding and are always there as designated whipping boy.

 
Written By: looker
URL: http://
Well now he has the answer. Let’s see if he can manage to explain this in the next debate.
Does he half to? I am depressed about this to the extent that I don’t believe the MSM will allow it to come up.

The left has ginned up a case in their feverish minds about stolen elections in 2000 and 2004 that they will actually try their best to steal it with the full approval of the so called media.
 
Written By: capt joe
URL: http://
have not half, stupid spell checker :)
 
Written By: capt joe
URL: http://
Under the republican majority, over the last eight years have seen the greatest transfer of wealth (from us to China and the gulf states) that the world has ever seen. How much worse could Obama really be? Who else but republicans would be surprised when tax cuts during a time of war drove us deep in debt? McCain had his chance to stop the maddness and he did nothing.

We have no more idea about what McCain or Obama would really do once in office than we did about George Bush when he promised to be a uniter not a divider.
Elections are like that. We are in trouble however and we need to make a choise. We have one candidate that made his own way into Harvard and graduated near the top of his class. We have another candidate whose daddy got him into Annapolis where he graduated at the bottom of his class. If you think brains are what is needed to get us out of trouble then its no contest.

Other than the fact that he is selfmade, we know little of Obama’s character. We do know that McCain was born in a government hospital, went to government schools and has never had a job in the private sector. Why would anyone expect such a resume to be one of someone to be trusted to empower the private sector? He is calling for the trials of CEOs! Just because he is a republican doesn’t mean that he isn’t a socialist. Just because Obama is a democrat doesn’t mean that he is.





 
Written By: cindy b
URL: http://
Just because he is a republican doesn’t mean that he isn’t a socialist. Just because Obama is a democrat doesn’t mean that he is.
Because Obama has one of the most liberal voting records in the US Senate...and would you like to point out all the extensive private sector experience of Barack Obama, please?
 
Written By: Joe
URL: http://
Under the republican majority, over the last eight years have seen the greatest transfer of wealth (from us to China and the gulf states) that the world has ever seen.
And how exactly did the government do that?
 
Written By: Keith_Indy
URL: http://asecondhandconjecture.com
cindyb, long time no see. Still spewing left talking points, I see.

Obama was made by the Chicago political machine so in a sense he is a made man with everything that goes with that.

Other than going to Hah-vaad, what else has he done. Nothing.
Under the republican majority, over the last eight years
majority over the last 8 years??
 
Written By: capt joe
URL: http://
majority over the last 8 years??
Cap, it’s the Bluto Blutarsky thing - you know, "Did we give up when the Germans bombed Pearl Harbor?"
Or the Joe Biden - "When the stock market crashed, Franklin D. Roosevelt got on the television and didn’t just talk about the, you know, the princes of greed. He said, ’Look, here’s what happened."

You know, it’s not the facts that matter Cap, it’s the point that the Republicans and George Bush are the cause of it all (Pearly Harbor too, I’m sure if you look at someplace like Kos or MoveOn you’ll find GHW Bush had a hand in starting WWII so we’d have to use lots of oil).

 
Written By: looker
URL: http://
I’m sure if you look at someplace like Kos or MoveOn
Oh right, that is where the MSM gets their leads. Like I said why isn’t Soros "retired"
 
Written By: capt joe
URL: http://
After the (Space Alien!)Trig Palin thing, yeah, I think we’ve demonstrated where the MSM gets their stories.

Fake, but Accurate is our motto!
 
Written By: looker
URL: http://
How is the earned benefit the equivalent of getting "hooked" any more than a pension plan may be?
I thought you had a problem with these:
Those credits include tax credits for college tuition, a savings tax credit, an expansion of the earned-income tax credit, a child care credit, clean car credit and a "make work pay" credit.
Because each one of those will find its target audience that will feel they earned it.
 
Written By: jpm100
URL: http://
Because each one of those will find its target audience that will feel they earned it.
What they "feel" and reality, though, don’t quite coincide do they?

All that to say that perhaps your example wasn’t the best.
 
Written By: McQ
URL: http://www.QandO.net
"So the fact you may spend anywhere from 20 to 35 years earning a benefit vs. having one invented out of thin air "

So what benefit is it that you have earned
that you are not getting or are not eligible for?
 
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URL: http://
All that to say that perhaps your example wasn’t the best.
Well, its better now. Thanks.
 
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