Hillary and Obama-Tax Delusions

[25psi]

Tax Delusions
by Alan Reynolds


This article appeared in the New York Post on February 15, 2008.

Hillary Clinton and Barack Obama both propose to "turn the economy around" in a novel way - by raising tax rates on small businesses, working couples and stockholders in general, including retirees.

Of course, their plans are also meant to raise revenue for their various hundreds of billions in new spending - but the move would fall flat on that front, too.

Start with the deficit. The Bush administration predicts a $409 billion budget shortfall for fiscal 2009. But that rests on absurd assumptions - a sudden $104 billion drop in the price of war in Iraq and Afghanistan, a freeze in non-security discretionary spending - and a speeding up of economic growth.

In fact, this election year's "stimulus" bills are likelier to slow things down in 2009. Seven of the 10 postwar recessions began in the year after a presidential race, including 2001 and 1981.

So, with luck, the next president may start out with an economy that is only fragile or feeble and a deficit not much above $500 billion.

Now, on to tax hikes.

Higher tax rates on dividends and capital gains would crash the stock market yet do absolutely nothing to cut the deficit.
The federal government now takes 33 percent of taxable income above $200,000 on a joint return and 35 percent of income above $357,700. Both Democrats would raise those tax rates to 36 percent and 39.6 percent, respectively.

Even the Tax Policy Center (a think tank famously friendly to tax hikes and Democrats) estimates that raising the top two tax rates might bring in a mere $32 billion in 2010. That's 6 percent of the likely deficit - not a license to start a dozen new programs.

To squeeze a few more pennies from top taxpayers, Clinton and Obama would also phase out all personal exemptions at $250,000. That means large families would pay higher taxes than childless couples with the same income. They'd also phase out itemized deductions - which would force two-earner families in New York and California to pay more federal tax than those living in Texas and Florida.

And this politically suicidal tax discrimination against New Yorkers, Californians and big families would bring in only an extra $15 billion a year.

All in all, these tax hikes add up to, at most, $47 billion a year - only 1.5 percent of federal spending and 0.3 percent of GDP.

And even that assumes nobody makes the slightest effort to avoid the increased taxes. In reality, many two-earner families would become one-earner families; doctors would play more golf; some folks would quit working long hours and others would retire early. Top-bracket taxpayers would maximize deductions (take out a bigger mortgage, put more in the 401k) and minimize taxable income (buy municipal bonds or just spend rather than invest).

Such tax avoidance alone would cut the estimated revenue in half. The tax hikes' adverse effects on the stock market and the economy would more than eliminate the other half.

Meanwhile, both candidates are eager to spend more tens of billions a year on health-insurance subsidies, billions more for biofuels and (in Obama's case, at least) tens of billions more for several more refundable tax credits - checks to people who don't pay income tax. All these shameless vote-buying schemes would only worsen the real budget problem - which is runaway spending, not taxes.

Marginal tax rates are now much lower than they were in 1993 to 1996 on all incomes, large or small. And tax rates are much lower on dividends and capital gains. Yet the individual income tax brought in 8.5 percent of GDP last year - the same as in 1996 and much more than under the higher tax rates of '93-95.

Why do lower rates bring in as much money? In part because people do less to avoid taxes once rates are cut, in part because lower rates promote economic growth.

But the Democrats have an ideological bias against recognizing these clear facts - a naive faith in higher tax rates and an aversion to confronting excess spending. So they plan on two more tax hikes that won't work.

Obama wants to bring back the 28 percent tax on capital gains. In fact, our experience in the first Clinton administration proves that this would lose a lot of revenue: Investors would sit on stocks rather than sell and pay the tax.

The cap-gains tax dropped from 28 percent to 20 percent in 1997 - and revenues from that tax alone accounted for 12 percent of all individual income-tax payments from 1997 to 2000 - up from just 7.9 percent from 1993 to 1996.

Obama and Clinton also want to raise the tax on dividends from 15 percent to 39.6 percent. But that would just compel investors to liquidate blue-chip stocks at distress-sale prices and get back into tax-exempt bonds, cutting revenues further.

Higher tax rates on dividends and capital gains would crash the stock market yet do absolutely nothing to cut the deficit.

Other presidents have tried and failed to tax their way out of a budget squeeze. During the 1990 recession, the first President George Bush raised tax rates on "the rich," mostly by ending their deductions and exemptions. It didn't work: Individual income taxes brought in 8.3 percent of GDP in 1989 and just 7.6 percent of GDP by 1992.

President Bill Clinton then piled on another layer of high tax rates, 36 percent and 39.6 percent, while also greatly hiking taxes on Social Security benefits of working seniors. That failed, too: Individual income taxes brought in only 7.8 percent of GDP in 1993 and '94, 8.1 percent in 1995.

Federal revenues did not get much above the 1989 level until 1997 - when they rose because the capital-gains tax was cut.

In short, Obama is a "tax-and-spend" liberal, while Hillary is a "spend-and-tax" liberal. If either actually launched their gargantuan spending plans on the basis of imaginary revenues expected from taxing the rich, he or she would quickly end up having to tax the stuffing out of the middle class.

http://www.cato.org/pub_display.php?pub_id=9224

[clear]

Great read. Any more articles about taxes?

[Iroc Joe]

Very interesting, thank you for posting.

[Kryptix]

From what I hear they are giving tax cuts to the middle class to stimulate the economy then they roll back the taxes to before the Bush tax cuts. Worked great before. SOmebody has to pay for all the shit we are doing. We can't keep borrowing from China can we?

[Joe]

From what I hear they are giving tax cuts to the middle class to stimulate the economy then they roll back the taxes to before the Bush tax cuts. Worked great before. SOmebody has to pay for all the shit we are doing. We can't keep borrowing from China can we?

How about we cut what we spend by adjusting the programs we have?

[Chuck 98 RT/10]

How about we cut what we spend by adjusting the programs we have?

Can't do that. The children, the greenies, the libs, the conservatives, the democrats, the republicans, the single parents, the unemployed, the minorities, the Katrina victims, nobody can survive without those programs.

[moldyhands]

i love how that article just makes bold claims about the candidates' tax strategies but doesn't actually back those up. i can do that too!!!

mccain is in favor of having US Army soldiers rape girls when they turn 13. this is an egregious belief that, if instituted, would mean millions of young girls would be scarred for life.

[Kryptix]

How about we cut what we spend by adjusting the programs we have?

Sure, thats fine and all but what would you cut back? What is McCain saying he will cut?

[Chuck 98 RT/10]

mccain is in favor of having US Army soldiers rape girls when they turn 13. this is an egregious belief that, if instituted, would mean millions of young girls would be scarred for life.

That's bullshit Moldy. Why would any post-pubescent 13-year-old be scarred for life just because she got banged down by a few soldiers, when she's probably banging the high school basketball team anyway? Sometimes your logic scares me.

[adric]

i love how that article just makes bold claims about the candidates' tax strategies but doesn't actually back those up. i can do that too!!!

mccain is in favor of having US Army soldiers rape girls when they turn 13. this is an egregious belief that, if instituted, would mean millions of young girls would be scarred for life.
His entire family was Navy, why would he leave the "spoils of war" for only the Army? <jk>

Unfounded personal attacks rate right up there with vulgarity as the last refuge of a limited mind.

[Kryptix]

Well McCain says he will cut taxes. But he will increase spending for war.

YouTube - Bomb bomb bomb, bomb bomb Iran

[clear]

How about we cut what we spend by adjusting the programs we have?

And tax less!!!!!!!!!! which puts more money in the system whichs puts more money in the gov hands!

If only we lived in a ideal world.

[Joe]

Sure, thats fine and all but what would you cut back? What is McCain saying he will cut?


FYI, NONE of the presidents can do ANYTHING they promise.

Their party has to submit the bills, then they have to pass muster and THEN they can choose to either veto or not veto.

SO honestly, I don't give a shit what any of the three promise.

All I care about is what will make it to the president's desk and what that president would be inclined to veto.... Billary and Obama would not veto ANYTHING that would raise taxes or take my guns away... those two things scare me enough....

[TampaDude]

How about we cut what we spend by adjusting the programs we have?

+1 Exactly! Taxes are so high because the government SPENDS WAY TOO MUCH!!!

[Kryptix]

So what are our candidates saying they will do to cut spending? Anyone?

[Joe]

So what are our candidates saying they will do to cut spending? Anyone?

Who cares what they "say" they will do...

ALL 3 of them are in a position to currently submit legislation to do so...

I don't see a SINGLE one of them submitting these "wonderous" plans they talk about...

When one of them becomes president, they will loose the ability to do ANYTHING about spending other then to simply "pass or veto" what the rest of the congress put on the table.

The REAL people pulling everyone's legs in the sheeple fields of the US, is congress having the sheeple think that the presidential vote is the "most important".


If anyone wants to know what they "would veto or pass", simply look at their voting records in the office they currently sit in... that will give you all the info you need.

[DSG]

Well McCain says he will cut taxes. But he will increase spending for war.




Under the tax cuts of GWB, the US Govt has had record revenue. What part about this you Democrats don't get is beyond me....Cut taxes=more money to the Govt because the people get to keep more of THEIR own money. And people I know that have more money tend to spend it. Higher tax have always and will always stall economic growth.

[Chuck 98 RT/10]

Under the tax cuts of GWB, the US Govt has had record revenue. What part about this you Democrats don't get is beyond me....Cut taxes=more money to the Govt because the people get to keep more of THEIR own money. And people I know that have more money tend to spend it. Higher tax have always and will always stall economic growth.

They don't get it.

They think if regular guy can afford x then regular guy can afford the excessive taxes on x.

What they don't realize is the taxes put x out of reach for regular guy so regular guy just says "fuck it" and doesn't buy anything.

[Scott]

Under the tax cuts of GWB, the US Govt has had record revenue. What part about this you Democrats don't get is beyond me....Cut taxes=more money to the Govt because the people get to keep more of THEIR own money. And people I know that have more money tend to spend it. Higher tax have always and will always stall economic growth.


I have said the same thing here 100 times and never once get a factual reply on it or anything at all. I have even posted links to the actual stats with the treasury dept showing the increase in revenue with the cuts, record revenue mind you. Taxing the shit out of people has never and will never work. Look around the globe at overtaxed nations and you will see stagnant or decreasing economies.

Cut spending plain and simple. A lot of it in unnecessary social programs. When people work for what they need and the government stops giving it to them so easily will we start getting our financials in order. Most of all taxing the shit out of businesses is NOT a good thing.

And to think the Dem politicians want to add national heath care on the back of our economy. :tard:

[DSG]

I have said the same thing here 100 times and never once get a factual reply on it or anything at all. I have even posted links to the actual stats with the treasury dept showing the increase in revenue with the cuts, record revenue mind you. Taxing the shit out of people has never and will never work. Look around the globe at overtaxed nations and you will see stagnant or decreasing economies.

Cut spending plain and simple. A lot of it in unnecessary social programs. When people work for what they need and the government stops giving it to them so easily will we start getting our financials in order. Most of all taxing the shit out of businesses is NOT a good thing.

And to think the Dem politicians want to add national heath care on the back of our economy. :tard:

And Obama wants to sent $845 Billion over the next two years out of the country to combat Global Poverty and talks about Change and Hope.

Well I HOPE he doesnt become president.

[Chuck 98 RT/10]

And Obama wants to sent $845 Billion over the next two years out of the country to combat Global Poverty and talks about Change and Hope.


Global poverty? The only reason there is global poverty is because those impoverished countries are the most corrupt in the world. And he wants to give them money as if it will ever trickle down to the poor people? Naive or stupid, take your pick.

[Joe]

And Obama wants to sent $845 Billion over the next two years out of the country to combat Global Poverty and talks about Change and Hope.

Well I HOPE he doesnt become president.

Source?

Not that I like Obama, but I wouldn't think ANYONE would be that retarded if they are running for president....

[Iroc Joe]

Source?

Not that I like Obama, but I wouldn't think ANYONE would be that retarded if they are running for president....

It's true, I'll look for a source later.

[jabtay]

http://www.usnews.com/blogs/capital-commerce/2008/02/20/does-obama-want-a-trillion-dollar-global-tax.html

What this bill would do, in short, is commit the United States to the U.N. declared goal that industrialized countries should spend 0.7 percent a year of their gross domestic product on foreign aid. Over the next decade or so, that would work out to around $850 billion. When the bill passed the Senate Foreign Relations Committee last week, Obama said that "as we strive to rebuild America's standing in the world, this important bill will demonstrate our promise and commitment to those in the developing world.

[Kryptix]

Under the tax cuts of GWB, the US Govt has had record revenue. What part about this you Democrats don't get is beyond me....Cut taxes=more money to the Govt because the people get to keep more of THEIR own money. And people I know that have more money tend to spend it. Higher tax have always and will always stall economic growth.

Ok. :lol: GDP has always risen and had record revenue; another thing you that you fail to mention is that the value of the dollar has lowered (which automatically raises the GDP by itself) and we still borrow money making things worse. People work harder for less. We're in a recession or about to hit one. Implying that GWB and Co. has done good for the economy is pretty laughable.

As I see it, lowering taxes for the middle class will boost the economy and revenue. The middle class constitutes around 20% of the GDP. Lowering their taxes won't effect the GDP that much and it will help the economy. That is what Democrats are planning to do. Lower your taxes to stimulate the troubled Bush economy and raise the taxes of the uber rich. I don't see a problem. Revenue will be much higher. People that need the money will have it and people that already have plenty of money will still have it.

[Joe]

As I see it, lowering taxes for the middle class will boost the economy and revenue. The middle class constitutes around 20% of the GDP. Lowering their taxes won't effect the GDP that much and it will help the economy. That is what Democrats are planning to do. Lower your taxes to stimulate the troubled Bush economy and raise the taxes of the uber rich. I don't see a problem. Revenue will be much higher. People that need the money will have it and people that already have plenty of money will still have it.

If this is true, please define what income is "middle class" and what income is "uber rich".... if you look at Hillary and Obama's definition you may be shocked...

So, list their definition of those two things for me...

[BERT-O]

http://img.photobucket.com/albums/v648/daniel15mtsu/Obama.jpg

[TampaDude]

:)

:lol:

[Kryptix]

If this is true, please define what income is "middle class" and what income is "uber rich".... if you look at Hillary and Obama's definition you may be shocked...

So, list their definition of those two things for me...

ORLY? and why would I be shocked? It seems to me that you guys are the ones who should be shocked or surprised as it seems nobody here knows much about what they are talking about. Just callin it like I see it.

[25psi]

:)


Wow, I've seen Obama been called many things....but a Neo-Conservative is not one of them.

That guy probably tells his friends "Nope, Mr.Obama is just to right-wing for me".........sheesh.

[Joe]

ORLY? and why would I be shocked? It seems to me that you guys are the ones who should be shocked or surprised as it seems nobody here knows much about what they are talking about. Just callin it like I see it.

Thanks for avoiding the question as normal. :roll:


Just callin it like I see it...

[Josh]

that's all Kryptix does is dodge questions.....it is really a wonder he isn't a senator or something yet.

[adric]

wiki shows middle class (meaning income) as betwen 30K and 55K. The rest are "rich" in comparison. This shifts by location and other factors.

http://en.wikipedia.org/wiki/Personal_income_in_the_United_States

As for what Hillary/Barack thinks middle class is depends on whether you are getting benefits or paying for them.

[25psi]

Not even mentioning the fact that Hillary or Obama believe that anyone who can live perfectly fine without the government is "rich".


Those Capital Gains taxes don't care how much you make.

[Kryptix]

Well why do I have to answer a question like that? It seems like a baited trap. They have written books trying to answer his loaded question. I'm sure it will be something like what it was in in the 90's but it will have to be adjusted for the lowered currency and the amount of debt people have. I can't really answer some of your questions. I guess you can start by looking here for the answer.

http://en.wikipedia.org/wiki/American_middle_class

Everyone wants to believe they are middle class. … But this eagerness … has led the definition to be stretched like a bungee cord - used to defend/attack/describe everything. … The Drum Major Institute … places the range for middle class at individuals making between $25,000 and $100,000 a year. Ah yes, there's a group of people bound to run into each other while house-hunting

--------------------------------------------------------------------------------

Thanks for avoiding the question as normal.


Just callin it like I see it...

You're very welcome. Now if you want, read the passage below and answer this question. Define around? :P

Clinton And Obama Disagree On The Definition of Middle Class
24 votes
Vote Submitted by Nomadelle 2 months ago ShareThis

Every politician in the U.S. presidential race claims to be fighting for the middle class. However, they are not able to define who exactly is middle class. Hilary Clinton thinks anyone who earns around $97K is middle class, while Barak Obama disagrees.

[Kryptix]

Not even mentioning the fact that Hillary or Obama believe that anyone who can live perfectly fine without the government is "rich".


Those Capital Gains taxes don't care how much you make.

Funny thing is that Hillary wants to lower capital gains tax while if the Bush tax cuts were extended to 2010 it would raise the tax by 15%. Also Bill CLinton supported the capital gains tax cut in 1997.

[jabtay]

Funny thing is that Hillary wants to lower capital gains tax while if the Bush tax cuts were extended to 2010 it would raise the tax by 15%. Also Bill CLinton supported the capital gains tax cut in 1997.
Of course Hillary supports it, she learned all she knows from Bill. She is taking all his ideas and running with them.

[Joe]

Funny thing is that Hillary wants to lower capital gains tax while if the Bush tax cuts were extended to 2010 it would raise the tax by 15%. Also Bill CLinton supported the capital gains tax cut in 1997.

How does lowering capital gains taxes and raising the general tax percentages help anyone? :dunno:

BTW, According to her voting record (http://www.senate.gov) you will find that A LOT of people are "rich" when she is saying to "tax the rich"....

[25psi]

Funny thing is that Hillary wants to lower capital gains tax while if the Bush tax cuts were extended to 2010 it would raise the tax by 15%. Also Bill CLinton supported the capital gains tax cut in 1997.

My bad, only Obama wants to restore the Cap. Gains tax to the high rate, but they both want to raise the dividend tax.


Why the hell is there a cap gains AND a dividend tax? Talk about a way to make investment taxes seem less then they really are.

[HullBreach]

My bad, only Obama wants to restore the Cap. Gains tax to the high rate, but they both want to raise the dividend tax.


Why the hell is there a cap gains AND a dividend tax? Talk about a way to make investment taxes seem less then they really are.

Couldn't agree more. I still think barriers to investment, and punishment via taxation for successful investment are some of the biggest anchors dragging on our economy.

[whitebread]

And Obama wants to sent $845 Billion over the next two years out of the country to combat Global Poverty and talks about Change and Hope.
and yet he wants to end free trade. trade has done and will do more to combat global poverty than handouts ever have or will.

[whitebread]

Couldn't agree more. I still think barriers to investment, and punishment via taxation for successful investment are some of the biggest anchors dragging on our economy.
yep. the democrats complain about the trade deficit and want to throw up barriers to trade because they blame it on unfair practices by other countries. but in reality, reducing taxes on saving and investment (the egregious offenses of the "rich") is the solution, which they of course oppose.

[25psi]

and yet he wants to end free trade. trade has done and will do more to combat global poverty than handouts ever have or will.

I like it when the anti-trade group points at a country with virtually NO government(a non functioning legal system, poor property rights etc.) and blame it on trade/free markets.

[whitebread]

ya, i also like it when the anti-trade group is also the group calling for us to reform our image in the world and end our arrogance and unilateral action. that sure fits real well with a unilateral withdrawal from a binding agreement with our closest neighbors and a closing of our markets to the rest of world (the access to which is a lot more important than the issue of iraq to most). but i'm sure ending the isolation of iran and syria will offset the damage of isolating our trading partners in an area that profoundly affects the quality of life of billions throughout the world.

in addition to that, i'm sure the statement that the united states isn't even vibrant or strong enough to trade with mexico won't embolden our enemies at all.