A couple of points about the Obama Tax myth Posted by: McQ
on Friday, October 24, 2008
By "myth" I mean that he'll only raise them on the top 5% of "working Americans".
First of all that's simply not true. Why? Well, because one of things Obama wants badly to do is raise the capital gains tax. Does that effect only the top 5%? Nope. No one ever seems to read the ingredients on the label of snake oil that Obama is selling:
Nearly 80 percent of total stock holdings are held by people who would be subjected to higher investment taxes. Not only does that hurt their future after-tax returns, but it also undercuts the future productivity of the economy, thus crimping the future stream of earnings generated by corporate America. So the whole stock market will suffer from a sort of collective tax punishment.
If your capital gains tax is higher than the tax on ordinary income, why invest?
As for the prosepect of raising taxes on anyone at this time, JPMorgan Chase CEO Jamie Dimon, who is being touted as Obama's possible choice as Sec of the Treasury, thinks it's a dumb idea. In an interview with Charlie Rose, he said:
ROSE: Should we be taxing the wealthy, or should we be taxing the middle class? And what is an appropriate way to engage this economy? Kennedy was famous for his tax cuts that led to increased revenue and everybody, even the Laffer people adopted that as the mantra.
DIMON: You have a very serious issue now, which is you are talking about helping the economy for the next six months to two years. You need—you can't raise taxes in light of that. But we also have, you know, a little bit of inflation and fear of inflation and, you know, if you have too much fiscal stimulation, your long-term rates will go up. So the policy should be reduce taxes a little bit now, provide some of this now, but have a serious, and I mean very serious plan to attack deficit spending going forward. Maybe you won't have all the negative effects of too much stimulus. You know, possibly some directed tax cuts in certain areas could also be helpful...[to] people who need the money, so people who pay a lot more for gas, for example. It should be for lower paid people. It shouldn't be for the higher paid people. So you can do things that target, ameliorate, mitigate the downturn.
ROSE: Does that make you like a deficit hawk?
DIMON: I would be a deficit hawk at this point, yes.
However, deficit hawk or no, we have Obama touting his tax increases and Barney Frank saying taxes need to be increased as well.
Any guess which group is most likely to prevail?
Any guess as to why there is a great sell off going on on Wall Street right now?
James Pethokoukis says:
In 1980, anxious Americans voted for lower taxes and smaller government as the solution to the nation's economic ills. Would the opposite prescription also have led to a 25-year economic boom? With Obamanomics, voters may be about to play a fascinating game of "what if." Except it's for real. When Goldman Sachs ran a sophisticated economic simulation of the effect of a total repeal of the Bush tax cuts, the computer predicted a 3 percentage-point drop in GDP. Maybe investors fear that with perhaps a trillion-dollar budget gap ahead, revenue-hungry Dems will raise taxes further than Team Obama is suggesting—right into the teeth of a weak economy. What if, indeed.
If Goldman Sachs’ simulation is in the ballpark, it’s purely by chance.
We have a lousy record with computer models of very complicated stuff like economies and climates. We don’t know enough to design the algorithm, and even if we did, we don’t have sufficiently accurate (or even complete) data to feed the thing.
That’s true regardless of whether some particular model happens to tell us something we want to believe.
That having been said, I still don’t think Obama’s plan to create jobs by destroying employers is a brilliant idea.
Imagine this: Barack Obama proposes a Social Security payroll tax cut for low earners. Workers earning up to $8,000 per year would receive back the full 6.2% employee share of the 12.4% total payroll tax, up to $500 per year. Workers earning over $8,000 would receive $500 each, with this credit phasing out for individuals earning between $75,000 and $85,000.
RTWT, it looks like the Democrats have the perfect plan for bankrupting the country...
I don’t see why anyone would want to invest in private companies after The One takes over; clearly, all our material wants and needs will be cared for by GOVERNMENT (sorry, "Big government" or "Government" just wouldn’t describe what’s coming accurately enough). It’s not like we’d need a little something put aside for our retirement, or some extra utility from those few pennies a paycheck we can hide from the tax man.
In the face of the coming Utopia, this article is just needless hysteria and a distraction from the real issues. [/sarcasm]
I wonder how many tax increases Congress would pass if 100% of their income was taxable? Seems like a fair trade to me: if you have the power to collect money on behalf of the government, the price is no deductions come April 15.
Greg, as Joe Biden would tell you, you’re being un-patriotic. In fact I’ve noticed a distinctly un-patriotic theme continually played out here as people complain about having to man up and pay their fair share of their patriotic due to keep the government running! And We should know that we can’t support the country without supporting the government, particularly the NEW government which the Democratic party anticipates holding 100% control over in the next 3 months.
So let’s not have any more of this Un-American, Un-patriotic kind of talk about limited government. Limited government limits the Country.