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The Truth About Obama’s Tax Cuts

Posted by rightwinger on November 6, 2008

As I go about running errands today several people have said they are so excited that they are getting a tax cut because they make under $250,000. First off this number has changed.  Originally it was $250,000, then it changed to $200,000.  I’ve heard it as low as $45,000.  Well the truth is there aren’t going to be any tax cuts.  The Bush tax cuts will remain for a so called 95%, for those above the determined amount the Buh tax cuts will expire.  So you aren’t really getting a tax cut.  You will remain at the same tax level as you are today.  For those that don’t pay taxes, they will receive an entitlement check.  Obama’s tax plan doesn’t add up.  It essentially is a massive entitlements program that will increase the percentage of Americans who do not pay taxes.

“It [my economic plan] starts with tax relief. There’s been a lot of talk about taxes in this campaign. And the truth is, my opponent and I are both proposing tax cuts. . . . I want to put a middle class tax cut in the pockets of 95% of workers and their families. My opponent doesn’t want you to know this, but under my plan, tax rates will actually be less than they were under Ronald Reagan.” — Barack Obama

Assorted pundits of the left and right keep telling us that the tax issue has lost its political power. They must not have been paying attention to the Presidential campaign, and especially not to Barack Obama. One of the Democrat’s main political feats this year has been to portray himself as a more formidable tax cutter than John McCain.

As the quote above shows, Mr. Obama has made tax-cutting central to his candidacy, going so far as to compare himself to Ronald Reagan in the bargain. His claim about tax rates under Reagan happens to be false, because the Gipper left office with only two income tax rates, 28% and 15%, down from a top rate of 70% when he won in 1980. By contrast, Mr. Obama is proposing not a single tax rate cut, and his proposed top income-tax rate would be closer to 42%.

Millions of Obama voters have been led to believe their taxes will go down, and they are likely to be sorely disappointed if they discover the opposite next year. This includes increases in energy prices via carbon taxes or cap-and-trade regulation.

Read the full article for yourself.

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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:

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.

Read the article for yourself.


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