Tuesday, September 16, 2008

Washington DC math

After a tax cut, will your taxes be more or less than they were in the previous year?

It's a trick question, because if you use Washington DC math like BO does, the answer is not what you expect at all.

BO claims that he will cut taxes for all but the top 5% of taxpayers.

The reality is that all Americans will pay more under President BO.

BO's proposed "tax cuts" are illusions, but his tax increases are all very real. The "tax cuts" he proposes are to extend the Bush tax cuts and to eliminate the Alternate Minimum Tax.

Extending the Bush tax cuts (for those making less than $250k) is not a tax cut in the way most people would think of it. He is keeping taxes the same and calling it a cut. McCain has consistently been in favor of making the tax cuts permanent, but BO has voted against it every time. Bill Clinton campaigned on a promise of middle-class tax cuts, and then turned around and raised taxes on the middle class. Expect no different from BO.

The AMT was originally implemented to keep the super-wealthy from avoiding all taxes by using various loopholes. In the first year it applied to exactly 135 households. But because it is not indexed to inflation, year by year it has come to include more and more people. Today it would affect nearly 60 million people if it were applied as written. However, for years Congress has passed a year-by-year patch to the law to adjust it so that it still only applies to the wealthiest people. Obama says that he will eliminate the AMT, and counts that as a tax cut for all of the 60 million people it would affect without the yearly patch, even though hardly any of them have ever actually paid the AMT. Interestingly enough, last year BO voted against eliminating the AMT. I guess HE wanted to claim credit for that "tax cut" as President.

So BO is going to cut taxes that you are not paying anyway. Yay hurrah!

But his tax increases are 100% real money out of your pocket.

He wants to nearly double the capital gains tax from 15% to 28%. This is not a tax paid only by fat cats. If you own stock, it will impact you even if the stock is held in a tax sheltered account. If you own a home, it will impact you too. Investors, faced with the prospects of skyrocketing capital gains taxes, are sure to realize their capital gains before BO takes office, preferring a 15% rate to a 28% rate later on, leading to a major selloff, which will drive stock value down. The same market forces will make home ownership much less attractive and drive real estate values even further down. This proposed tax hike is truly disastrous for the economy.

BO also wants to hike taxes on dividends, a move which would further batter stock prices and drive capital out of the market. The hardest hit would be seniors who are dependent on dividends to provide their income.

As if that is not enough, BO plans to increase the payroll tax, a tax which impacts anyone who has a job. This sort of tax increase would destroy jobs and depress wages.

Even dying won't help you to avoid BO's tax increases. He plans to lower the ceiling for estate taxes to $1 million.

And then there is the real crowd-pleaser, the tax hike on those evil corporations. Who could oppose sticking it to them? After all, a corporate tax increase only impacts those who work for corporations or buy stuff from corporations.

Only Washington DC math could describe imaginary tax cuts and real tax increases as a "tax cut for 95% of taxpayers." Since his days as a Chicago Alinskyite, BO has a long track record of wealth redistribution, extorting from the productive to buy the support of the unproductive. The tax code is the single biggest source of power BO could possibly get his hands on, and given the opportunity, he will use it to expand his own power at your expense.

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