The Coming Tax Hike
Writing by abuhatem on Sunday, 15 of June , 2008 at 5:54 pm
President Obama has upped the ante of class warfare rhetoric to a new level. Obama is promising the biggest tax hike since the second World War on the higher marginal tax brackets. Beware, our draconian, unjust, and repressive progressive tax system has just got harsher. While the rest of the world understands the benefits of economic growth - Russia and Eastern Europe have instituted low flat taxes of around 10-15% each which has precipitated phenomenal growth rates - Obama seeks to take us back to the future of New Deal malaise.
Obama’s irrational mantra is that the current tax system is “unfair.” Fairness, it would seem, entails cutting more and more taxes for lower income Americans and increasing taxes on those of higher incomes. Justice is no Aristotelian maxim for giving each his due or the Jeffersonian equality under the law. Obama believes that flattening our tax system by taxing all income earners by the same proportion would be unjust, even if it provided a tax-exemption to the poor. Instead, Obama calls for making our tax system “more progressive,” and rails against honest commerce - corporations and the upper classes who serve us in our daily lives with gas stations, food, clothing, etc. Please, if you truly hate Exxon and Walmart, then just quit buying gas and food.
Here is our current tax system, courtesy of good ‘ol Ross Perot at Perotcharts.com, his new venture:
The lowest 50% of Americans pay 3.2% of the taxes. The top 5% pays 58.8% of the taxes. And this is unfair to the lower classes? Not to mention the stagnation on economic growth it would cause. Increasing our real per capita GDP means increasing prosperity for everyone.
Taxing the poor does cause them to suffer, as well as Federal Reserve instituted inflation which destroys the savings of the poor and elderly on fixed incomes. I am all for tax cuts for the middle and lower classes, but I am not for tax increases. Instead, we should cut spending.
First are the good parts of Obama’s tax policy:
Obama said his tax plan would give “every middle-class family a $1,000 tax cut.” In addition, his plan aims to eliminate income taxes for seniors who make less than $50,000 a year.
Very good.
Yet Obama replaces this with more taxes on the other guy. Thus this is not a “tax cut” but a tax hike in disguise. Yes, of course, American corporatism protects the big corporations from competition, bails out big business, and gives them corporate welfare and big advantages. There is no doubt this should stop, yet two wrongs don’t make a wright. Or as Frederic Bastiat said in The Law by mutually plundering each other, the rich and poor do not achieve justice in a democracy but a web of injustice.
Obama will destroy the economy. He will increase marginal tax rates to 39% on the top income tax bracket. Two days ago Obama announced he wanted to raise the cap on payroll taxes making the upper income earners - who do not even benefit from what they pay in to social security and Medicare - responsible for paying the taxes of lower income earners. But who is the top income tax bracket? The middle class or anyone who pays taxes.
U.S. News and World Report reports that the Obama tax hike will raise taxes on the top marginal tax bracket by about 15%, making the top marginal tax rate pay net income and payroll taxes of 50.1%. THE MAJORITY IF YOUR INCOME. Does that not strike some people as startling? 50.1%. That is a whopper of a number. It doesn’t approach Jimmy Carter’s 70% but it has still been unheard of in contemporary America.
Bill Clinton, after his election in 1992, decided to concentrate on cutting the deficit and U-turned on a campaign promise made to phenomenally raise tax rates. Instead of Jimmy Carter, we got a Democratic Reagan, with top marginal tax rates barely increased to 39% which were still low and growth inducing.
There may be hope for the Obama taxation monster. And remember although this blog is critical of him, it still endorses him for president. Yet, ardent socialist airhead Naomi Klein writes in today’s Guardian that Obama’s roots at the University of Chicago and links to Chicago school economic advisers may usher in a pro-growth free market Milton Friedman approach to economics, i.e. a more fiscally conservative democratic administration comparable to Bill Clinton’s. Maybe this is all talk and lies out of Obama who has proven himself to be an excellent liar and a very good pandering politician (see AIPAC speech). Klein writes:
Obama’s love of markets and his desire for “change” are not inherently incompatible. “The market has gotten out of balance,” he says, and it most certainly has. Many trace this profound imbalance to the ideas of Milton Friedman, who launched a counter-revolution against the New Deal from his perch at the University of Chicago. And here there are more problems, because Obama - who taught law at Chicago for a decade - is embedded in the mindset known as the Chicago School.
Obama chose as his chief economic adviser Austan Goolsbee, a University of Chicago economist on the left side of a spectrum that stops at the centre-right.
Klein laments Obama’s pro-growth pro-market rhetoric but sees room for hope because of the sheer amount of pandering Obama has done. Who can truly take him seriously in anything he says? He makes his fellow flip-flop Hall of Famers - John Kerry, Mitt Romney, Hillary Clinton, and John McCain - proud. Yet perhaps Obama’s Friedmanite roots will cause him to balance budgets and keep taxes reasonable. Just maybe.
Overall however, what we are hearing from Senator Obama is the same old McGovernite package but this time its masked in Reaganite clothing.
Category: American Politics, Economics
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