I'm a Pundit Too

Wednesday, October 15, 2008

Taxes, Lies, and Distortions

As we head in to the final weeks of the campaign, the candidate’s plans for taxation are becoming clear. Both candidates claim that their tax plan will help the middle class, but which one is best for the country as a whole? Which tax plan will help all Americans achieve the American dream? Which proposal will allow small and large businesses to grow, while helping the employees to keep more of their own money? Which plan will encourage capital investments so that companies can grow? Which candidate truly understands that taking money from one person to redistribute to another is nothing more than socialism? Senator Barack Obama this week proved that he is all in favor of bringing socialism into the forefront of our American economy.

This week while campaigning in Toledo, OH, Obama was asked about his tax proposal of increasing taxes on any business making more than $250,000. A plumber from Toledo informed the candidate that he was in the process of buying a plumbing business that would bring in more than $250,000 a year. He also informed Mr. Obama that he would have to work 10 to 12 hours a day to make his business successful. Obama’s response was very enlightening. He said that his purpose was not to punish the man, but to ensure everyone else behind him had a chance at success. He went on to say that he believed that when you redistribute the wealth around to everyone, then we are all much better off. Please tell me, why does Obama believe that he has the right to tell anyone how much that they may earn?

The Obama campaign claims that the $250,000 mark for business would not affect a vast majority of small businesses. Unfortunately the Small Business Administration standards are a bit different than Obama. As an example, the owner of a Tire Fabric Mill can have up to 1000 employees and still be considered a small business. I am not a mathematician, but in order to stay below the $250,000 mark set by Obama and the owners of the mill would have to pay a paltry $250 per employee. Let us not forget that there is equipment and materials to buy out of that $250,000, plus they need to pay for the utilities. I can hear the whining already, how many Tire Fabric Mills are there in the U.S. So to quiet the incessant whining, let’s look at the numbers for a roofing contractor. According to the same standards from the SBA, a roofing contractor can make up to $14 million and still be considered a small business. How can a company make that much and still be considered “small”? Again, $14 million is not all profit that is the amount of their annual receipts. They still have make payroll, pay liability insurance, buy materials, buy tools, pay for any advertising, pay for company vehicles and their maintenance, and lastly pay the local, state, and federal governments.

Obama is fond of saying that under his plan, 95% of Americans will get a tax cut. Unfortunately only 70% of wage earners actually pay federal income tax. We all pay social security and Medicare taxes, but there are about 30% of the low income wage earners that pay virtually zero federal income tax. He plans on sending them a rebate check for taxes that they never paid. He also plans on raising the Capital Gains tax. Even though history has shown that every time the Capital Gains rate has been cut the revenue into the government coffers has increased. In the 1990’s, when the Clinton Administration raised the rate, tax revenue dropped. Obama is betting that the vast majority of the voting public will blindly accept his proposals without doing any real thinking on the matter. Basically, he believes the voters are either stupid or lazy. Sadly, there are plenty of people willing to display the ignorance on this matter.

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