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It’s income redistribution

Posted by Richard on September 30, 2008

Barack Obama has promised to give the "middle class" a tax cut in the form of a $1,000 check. And he's redefined "middle class" to mean 95% of Americans. Ken Blackwell dissected Obama's "tax cut" and explained what he's really promising:

The statistics speak for themselves. Only 62 percent of Americans pay federal income tax, meaning that 38 percent get a 100 percent refund of any taxes withheld. So Mr. Obama's 95 percent that will receive money from the government includes roughly 33 percent of Americans who pay no income tax. One-third of Americans pay no income taxes yet would receive a government check of perhaps $1,000 or more.

That is pure income redistribution. Some pundits argue that this is Keynesian demand-side economics. It is not. Having the government take money from business entities or affluent individuals and giving it to those who pay no federal income taxes is not Keynesian. It's Marxist.

Businesses and corporations do not pay taxes; we do. Businesses don't have huge piles of money sitting in the closet that they simply turn over to government when taxes increase. For every dollar that you increase taxes on a business, they simply increase their prices by a dollar. Who then pays the tax? We do. We do, when the product that we bought last week for $20 suddenly costs $21.

Mr. Obama's plan for universal health care and increased spending on just about everything costs hundreds of billions of dollars. To keep his promises to provide those things while eliminating the deficit and giving checks to lower-income families, he will have to raise taxes by hundreds of billions of dollars. But if lower-income Americans receive a check for $1,000 under the Obama plan yet have to pay $2,000 more when buying food and clothes, they are worse off.

RTWT.

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2 Responses to “It’s income redistribution”

  1. Sherrill56 said

    John McCain accuses Senator Obama of being in favor of income redistribution. What Sen. McCain failed to mention is that income has been redistributed to “our friends” in the upper 2% income brackets as a matter of policy since the Reagan years. These folks have reaped all the benefits of living and doing business in the U.S. without paying their fair share. The rest of us have been too busy struggling to keep our heads above water to notice that these robber barons are buying Gulfstream jets and homes in the Caymans with one hand while they ship jobs off to China with the other. Republicans promised that jobs and rivers of money would flow downstream to the rest of us. It didn’t happen. Instead, we’re stuck with the bill, like enablers in some horribly dysfunctional family, propping up these losers. They have not created the jobs as Reagan and two Bush’s promised. Now that the house of cards has collapsed, the middle class is picking up the pieces. If Sen. Obama wants to make the tax code more fair, call it what you want. I say “bring it on.”

    Obama/Biden ’08

  2. rgcombs said

    Sherrill, you’re either deliberately demagoguing and trying to snow us or you’ve been snowed and are woefully economically ignorant.

    The economic pie is not this static thing that just magically exists and gets distributed in some fashion. The people buying jets and fancy homes have ”created” wealth, adding to the size of the pie. And creating jobs, both directly and indirectly (who do you think builds their jets and homes?). Income ”re”distribution is when you take it from those who ”create” wealth and give it to those who don’t, not when you let the creator keep most of what he or she created.

    By the way, “the rich” that Obama plans to soak aren’t just the people buying jets (that’s mostly Hollywood liberals). They’re mainly small business people employing around 10-100 workers and reporting incomes in the low to mid six figures (a significant portion of which is retained earnings in the company for debt service and future growth, not take-home pay for lavish living). There are many more of them than there are super-wealthy athletes, entertainers, and CEOs, and they create both most of the new wealth and most of the new jobs. Punish them even more for their efforts and they’ll create less wealth and fewer jobs.

    No jobs created? Nonsense! In just the four years after the Bush tax cuts took effect in 2003, 8 million new wage-earner jobs were created (check the Bureau of Labor Statistics website, bls.gov; I don’t have time to hunt down the right PDF), plus who knows how many self-employment, contractor, and other non-traditional work opportunities that BLS doesn’t adequately measure.

    Yes, the rich have gotten richer, but so has everyone else. Economist Alan Reynolds has demonstrated fairly conclusively that income inequality hasn’t changed significantly since the 1980s.

    As for the wealthy not paying their “fair share,” that’s utter garbage. According to the Tax Foundation, 2006 IRS data show that the top 1% of taxpayers ($388,000+) earned 22% of adjusted gross income, but paid 40% of individual income taxes. “That means the top 1 percent of tax returns paid about the same amount of federal individual income taxes as the bottom 95 percent of tax returns.”

    You think that’s not their “fair share”? OK, what ”would” be their “fair share”? Should the top 1% pay 50% of all income tax? 60%? Do you want the top 1% to pay the same amount as the other 99% of us put together?

    If this is how you really think (and not just cynical posturing to try to sway the rubes), then I feel sorry for you. It can’t be fun to be so full of resentment and envy and to have such a chip on your shoulder.

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