Tuesday, September 30, 2008

Barack Obama’s Socialist Income Redistribution Tax Policy

George Bernard Shaw must have had Barack Obama in mind when he suggested that “a government that robs Peter to pay Paul can always depend on the support of Paul.” Income redistribution and handouts are the basic philosophy of American liberals; it is how they get elected, re-elected, and govern once in office, using the tax code as a weapon against America’s most productive citizens.

Barack Obama’s plan would end the Bush tax cuts causing three bad things to happen. First, it would increase the capital gains tax rate from 15 percent to as high as 28 percent, which everybody except Sen. Obama knows will reduce rather than increase the money government collects on capital gains.

The next two components are aimed at Americans making $250,000 or more a year, one that makes every dollar of earnings subject to the 6.2 percent employee portion of the Social Security payroll tax. Currently, that rate applies only to the first $102,000 of income. For people who work for someone else, their employer’s tax bill will also rise, and in the case of people who are self-employed, their Social Security taxes will double.

Then, he will increase the top marginal rate on income to 39.6 percent. That means that a person working for someone else will pay 47.25 percent of their earnings in taxes to the federal government (39.6 + 6.2 + 1.45 for the Medicare tax), and self-employed workers, who pay both the employee and employer portions of payroll taxes, will pay a tax rate of 54.9 percent (39.6 + 12.4 + 2.9). State and local tax payments are in addition to these figures.

Barack Obama’s “Fairness Doctrine” states: If you earn $250,000 or more a year, we are going to take about half of your earnings.”

However, most Americans see fairness as a condition where everyone is treated the same, or as the dictionary says, the “treating of all sides alike, justly and equitably,” as opposed to the idea that some are treated differently because of their income level or other criterion.

Democrat vice presidential candidate Sen. Joseph Biden goes one step further, suggesting that anybody making more than $250,000 is not patriotic unless they subscribe to Sen. Obama’s Fairness Doctrine to give half their earnings to the government. In response to a question from ABC News reporter Kate Snow, Mr. Biden said someone making that much “is gonna pay more. It’s time to be patriotic, Kate. Time to jump in, time to be part of the deal, time to get America out of the rut.”

However, in addition to the fundamental unfairness of the Obama-Biden plan, and leaving aside Mr. Biden’s asinine remark, such naive ideas are dangerous and will wreak havoc in the economy, because these onerous taxes will hit the most productive segment of our society.

According to IRS data, two-thirds of small business profits are earned in households making at least $250,000 per year, and the Small Business Administration tells us that the nearly 26 million small businesses in the U.S. employ more than 50 percent of the nation’s private sector workforce, and generated 60 to 80 percent of the annual net new jobs over the last decade. Furthermore, the number of women-owned businesses, black-owned businesses, Hispanic-owned businesses and senior-owned businesses has grown substantially in recent years. Small business owners are the people Mr. Obama and Mr. Biden have in their sights. But is it really smart to punish them with higher taxes?

Mr. Obama seems proudest of the part of his plan that promises a tax cut for 95 percent of Americans. But that’s not possible, since 44 million Americans pay no income tax at all. So, since he can’t give a tax cut to all 95 percent, he’s going to give those 44 million the money they would have gotten in the tax cut if they actually were paying taxes.

But that, ladies and gentlemen, is not how the United States works, and that is not how the United States ought to be run. This nation was built upon people who worked through their adversity, who conquered their challenges, who did not depend upon government to get them over the bumps in the road. It is only fairly recently that our government has begun to function as a savior, which is Mr. Obama’s philosophy.

The vast majority of us can succeed merely by taking advantage of the opportunities provided to us in this wonderful country, and by working to succeed. We do not need or want handouts from the federal government.

Our problems can be solved by reigning in the size and growth of government, and spending less so that no American has to pay a third or more of what they earn in federal taxes. Get government out of the way so that family, friends, neighbors and private sector initiatives can help the disadvantaged, and get America out of Mr. Biden’s rut.

Barack Obama calls his plan “change we can believe in,” but his socialistic tax and spend vision is change we should be afraid of, because it will wreck our country.

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