Fact: Obama proposes no decrease in personal income taxes at any marginal rate.
Obama says that he proposes a “tax cut for 95% of workers.” No he doesn’t. His website reveals what he means by “tax cut”: a one-time, debt-funded tax credit of $500 to $1,000 check in the mail to anyone who Obama deems worthy. This includes a large number of people who pay no taxes to the federal government. Since the United States is running both a huge debt and a huge annual deficit, this check must be sent with money created out of thin air – or with money borrowed from China or other countries. This former is inflationary and will hurt working families. The latter poses a national security risk.
Fact: Obama will raise capital gains taxes on the economy’s engine of growth.
This one is straight from the Obama website, too: “Capital Gains: Families with incomes below $250,000 will continue to pay the capital gains rates that they pay today.” So he won’t hurt middle-class investors. But Obama will raise the capital gains rate on the engine of economic growth – the investors that make above $250,000. This is a very misguided plan given the current state of the U.S. economy. If the financial markets implode, we’ll need to regain strength as soon as possible. The worst thing to do in a time like this is to discourage investment.
Fact: Obama proposes 10 tax credits to achieve “tax relief for middle class families.” But few will help middle class families in the long run.
Each one is debt-funded, and many credits will arrive as checks straight from the Treasury to people who do not pay taxes.
Among the credits is a $4,000 college tax credit that will make college more affordable – for a short while, until tuition rises to match the increase in federal funding. Under Obama’s leadership, we should also expect the cost of child care to rise.
It is fine to offer a limited number of credits for badly-needed services like health care. It is not fine to starting mailing out checks from the debt-laden U.S. Treasury. The checks, not the deductions, will cause the most price inflation.
Thoughts: Instead of sending debt-funded, inflationary checks to temporarily prop up working families, Obama should focus on creating real jobs and real economic opportunity for working families.
Obama should lower all cap-gains rates, cancel all of his tax credits except the health care credit (badly needed after government intervention in the health-care sector drove up costs to unaffordable levels), and propose tax cuts. Yes, tax cuts – not debt-funded tax credits.