::crickets::
On Oct 30, 9:33 am, MANOJ <[EMAIL PROTECTED]> wrote: > http://www.dallasnews.com/sharedcontent/dws/dn/opinion/viewpoints/sto... > American Enterprise Institute: What's really wrong with Obama tax plan > > 12:00 AM CDT on Thursday, October 30, 2008 > > Alan D. Viard is a resident scholar and Alex Brill is a research > fellow at the American Enterprise Institute. Arthur C. Brooks will > become president of AEI on Jan. 1. > > We've heard a lot this month about how Sen. Barack Obama's tax plans > would affect Joe the Plumber – the Ohio man who recently asked the > Democratic nominee whether he planned to raise his taxes. The entire > episode has only added to the confusion over what Mr. Obama is > proposing for middle-class taxes. How should an honest fiscal > conservative see the situation? For those making less than roughly > $200,000 ($250,000 for couples), Mr. Obama would not only make > President Bush's tax cuts permanent but would also offer an array of > new tax credits. > > These "tax cuts" contain some sleight of hand. More than $400 billion > of the money over the next 10 years would take the form of refundable > tax credits paid to people who already pay no federal income tax. And > the cuts would put more money in the pockets of some families. > > Who can be against a boost to spending power and consumption? We can. > > While a few of Mr. Obama's proposals may be sensible, the overall > package would be bad for the economy. Unlike rate cuts for high > incomes or reductions in investment taxes, most of his proposed tax > cuts would do little to reduce the tax penalty on work and saving. For > some households, the penalty on work and saving would increase because > the new tax credits would be phased out as income rises. These > proposals wouldn't deliver the economic growth that incentive-based > tax cuts would. > > Furthermore, there is no free lunch. This middle-class tax relief > would have to be paid for. Middle-class tax cuts might make sense if > they were paid for by spending cuts, but that is not Mr. Obama's plan. > Like his opponent, Mr. Obama points to vague savings from reducing > waste, the kind of savings that never seem to materialize. He also > hopes to reap savings by accelerating our redeployment from Iraq, a > project with an uncertain fiscal impact. > > At the same time, he proposes a wave of new spending on health care, > education, energy and infrastructure programs and declares his > opposition to reforms that would reduce the growth of Social Security > and other entitlement benefits. > > So where would the money come from for the tax cuts and new spending? > Largely from raising other taxes: the ones that have the biggest > impact on economic growth. Mr. Obama would let key parts of the Bush > tax cuts expire, causing the top tax rate on ordinary income to go > back to 39.6 percent, up from 35 percent today. The capital gains and > dividend tax rates would rise to 20 percent from today's 15 percent. > Mr. Obama might also impose Social Security tax at a rate of up to 4 > percent on wages and self-employment income above $250,000, starting > in 2019. > > If rewards for entrepreneurs and firms are reduced through higher > marginal tax rates, incentives to earn, invest and create jobs will be > diminished. Americans will have less incentive to save, and firms will > have less incentive to pay dividends. Tax avoidance will become more > profitable. A smaller capital stock will mean a less productive > economy and lower wages for middle-class and other workers. These > disincentive effects also mean that the revenue gain is likely to be > smaller than Mr. Obama envisions. > > In sum, Mr. Obama may very well give Joe the Plumber a tax break, but > only if Joe does not become too successful. He is offering real tax > favors for the middle class, but not real benefits for the economy. > > Alan D. Viard is a resident scholar and Alex Brill is a research > fellow at the American Enterprise Institute. Arthur C. Brooks will > become president of AEI on Jan. 1. > > WHO else will be on your ballot? Find out, and read their answers to > our questionnaire. dallasnews.com/voterguide --~--~---------~--~----~------------~-------~--~----~ Thanks for being part of "PoliticalForum" at Google Groups. For options & help see http://groups.google.com/group/PoliticalForum * Visit our other community at http://www.PoliticalForum.com/ * It's active and moderated. Register and vote in our polls. * Read the latest breaking news, and more. -~----------~----~----~----~------~----~------~--~---
