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Monday, October 13, 2008

Other Peoples Money: Let's Just Soak the Rich 10.13.08

Other People’s Money (OPM) is always easier to spend than your own money.  And tax spenders (most of those in Washington, your State Capital or your local City or County government) are always looking for ways (called programs, rescues, infrastructure, or public works) to spend OPM on their projects.   And since, through the election process, these tax spenders were elected, the taxpayer is expected to just stay calm as the OPM (your hard earned tax money) is spent.   But if the tax spenders (particularly those in Washington DC) can change the terminology by using words such as “a next tax cut” or “refundable tax credits”, then the taxpayer may think that the check they could receive or the tax cut they may enjoy, will cost nothing and everything will be fine.  This is what Senator Obama is promising, as he seeks to buy your vote with other taxpayers money.

Warning:  Overspending in Washington will lead to a) new taxes, b) additional Federal debt, c) less of your money due to tax increases and/or higher interest rates.   Warning:  Taxing the rich is the Democrat mantra, being chanted by Obama and his legions of believers, coupled with a mythical “tax cut” for 95% of Americans.  This tax spender slight of hand would appear to most taxpayers as a good deal on the face.  But turn over the coin and what is on the other side? 

            In the Wall Street Journal  on the Opinion Page of October 13, 2008, the following appeared:

“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.” 

            To quote the Tax Foundation (Obama’s Redistribution Plan, Fiscal Note #132, June 25, 2008): “In short, the Obama plan would redistribute more than $131 billion per year from the top 1 percent of taxpayers to all other taxpayers. In 2009, for example, Tax Policy Center figures show that after the income shifting in the Obama plan, the top 1 percent of taxpayers would pay a greater share of the total federal tax burden than the bottom 80 percent of Americans combined. In other words, 1.13 million Americans would pay more in all federal taxes than 128 million of their fellow citizens combined.”

Blogger note:  According to the liberals this is “fair taxation”.   In the opinion on this conservative, this Obama plan is “redistribution of wealth”.   Key those words into Google  and see what other words come up:  Marxism, Communism and South Africa.    America or economic prosperity doesn’t appear.

            But aren’t those rich people idle ladies and gentleman, that according to Senator Biden have a patriotic duty to pay more taxes?   While “taxing the rich” makes for good class warfare rhetoric, it also makes for poor economic and tax policy.   In 2004, small business owners paid 54% of all individual income taxes.   So the “soak the rich” approach to tax policy ends up taxing small businesses, who create most of the new jobs in America.   These are the same small businesses that risk their time, money and effort to build the US economy and create jobs, one small business at a time.  

            To offer straight talk to the American taxpayer: Increasing the Federal income tax rates for the highest income tax payers (top 5%), and “redistributing the wealth” the rest of the tax payers is call socialism.  Giving checks to those who pay no Federal income taxes is called welfare, not a tax cut.  Increasing individual tax rates on top 5% of income earners, increasing capital gains taxes on investments and keeping US corporate taxes the 2nd highest in the world is a recipe for slowing US economic growth, reducing new job creation and reducing owners and workers compensation.   But what the heck, it is just “Other People’s Money”.   

(c) 2008,  Jasper Welch, Four Corners Media   

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