The Urban Grind

I never really thought of what a community organizer really was until I listened to a podcast a few nights ago. The subject was that communist Saul Alinsky, who was also a community organizer like Obama. The speaker perfectly defined a community organizer as someone who hits up the local government and corporations for ever increasing benefits to welfare queens, drug addicts and criminals. So being that Obama’s main claim to fame, despite being a senator, was agitating for more handouts, it’s only natural that he would want to milk middle and upper class Americans like cows.

Obama tries to call it refundable tax credits, but it’s really just welfare. Here’s how he’ll raise taxes for his beloved welfare state.

* Obama would raise individual income taxes, increasing the top two income tax rates, with the top rate climbing by 13%, to almost 40%. This tax increase particularly hits small business, which creates the most new jobs in America.

* Obama would raise the top capital gains tax rate by 33%, to 20%.

* He would also raise the top dividends tax rate by 33%, to 20% as well.

* He would raise Social Security payroll taxes by 16% to 32% for families earning over $250,000 a year. He would consequently arbitrarily punish these families with an effective real return from Social Security of less than 0%, while making only a minor dent in the long term Social Security deficit.

* Obama would reinstate the death tax (estate tax) now being phased out under current law, with a top tax rate of 45%.

* The Obama health plan includes a new payroll tax on employers to pay for health insurance.

* Obama would impose several specified tax increases on corporations, including a new so-called windfall profits tax on oil companies.

* Obama’s protectionist trade policies would mean higher taxes and tariffs on trade.

* Obama tries to argue, crassly, that these tax increases would fall only on “the rich.” The tax increasers always start by saying that. But they always end up reaching down towards the middle class because that is where the big money is. The federal income tax was adopted almost 100 years ago with the promise it would only tax “the rich.”

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OBAMA TRIES TO HIDE these comprehensive tax increases with a slew of refundable tax credits he calls middle class tax cuts. The term “refundable” means that if the worker does not have enough tax liability to take advantage of the credit, the government sends the worker a check to cover the full amount of the credit anyway. So if the tax credit is for $1,000, but the taxpayer would otherwise only pay $200 in taxes, the credit covers the $200 tax bill and the government sends the taxpayer a check for the remaining $800. If the taxpayer pays nothing in federal income taxes, the government would send him a check for the whole $1,000.

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When “tax credits” primarily go to this group in the form of checks from the government rather than a reduction in their tax burden, such tax credits are not tax cuts. They are government spending programs hidden in the tax code. I call it The New Tax Welfare. Here is a complete litany of Obama’s proposed new spending programs disguised as tax cuts:

* The fully refundable Making Work Pay Tax Credit would pay $500 to each worker and $1,000 to couples. This is reminiscent of George McGovern’s 1972 election proposal for the government to send a $1,000 check to everyone.

* The Mortgage Interest Tax Credit would provide a 10% refundable credit to offset mortgage interest payments for lower and middle income families.

* The American Opportunity Tax Credit would provide a $4,000 fully refundable tax credit for the first $4,000 of college tuition expenses.

* The Obama campaign says, regarding Health Care Tax Credits, “Obama’s health plan centers around tax credits that…will ensure that health insurance is available and affordable for all families.” These include “a new refundable 50 percent health tax credit on employee premiums paid by employers.”

* The Savers Credit would be made fully refundable and would be expanded “to match 50% of the first $1,000 of savings for families that earn under $75,000.”

* The Child and Dependent Care Tax Credit would be made refundable and expanded to allow “low-income families to receive up to a 50 percent credit on the first $6,000 of child care expenses.”

* The already refundable Earned Income Tax Credit would be expanded to “increase the number of working parents eligible for EITC benefits, increase the benefits available to noncustodial parents who fulfill their child support obligations, increase benefits for families with three or more children, and reduce the EITC marriage penalty, which hurts low-income families.” This, of course, is a welfare program, not a tax cut, because it doesn’t reduce anybody’s taxes, it pays money to low income tax filers.

* The Tax Credits for Clean Vehicles includes a $7,000 tax credit “for the purchase of advanced technology vehicles.” Presumably, this would be refundable as well because surely Obama would not deny it to the great majority of families.

Posted August 28th, 2008 under Presidential Elections, Taxes, The Economy. RSS 2.0 feed. Leave a response, or trackback.