Democrats and tax cuts

Everytime I hear a Democrat presidential candidate mention how they want to give the middleclass a taxcut, I remember Bill Clinton’s 1992 promise to give the middleclass a break – which he completely abandoned in 1993. I remember his excuse that he’d worked harder than he’s ever worked in his life and still couldn’t find a way to toss the middleclass a coupla bones. Then he proceeded to hike our taxes – all of us, even people who were dead.

Well, now I’m listening to Barack Obama, Hillary Clinton and John Edwards promising tax cuts to the middleclass. Even their proposals are weak – Obama is promising a $500 tax credit. A $500 tax credit shakes out to a whopping $41/month savings – $82 if you’re in a family. $0 if you don’t pay taxes – most of the people who don’t pay taxes can thank President Bush who raised the minimum income level for filing taxes. He eliminated 16 million workers from the tax rolls in 2001 by that simple swipe of the pen. And now Obama is buying their vote with $0 tax cut (how much is $0 from $0?).

To his credit, Obama is proposing elimination of seniors with an income under $50,000 from the tax rolls. I’d go along with that – I like simple tax cuts.

But the Wall Street Journal reports the bad news;

The changes will be financed in part by raising the tax rate on capital gains and dividend income to as much as 28%, a level last seen in 1997. That is a higher amount than the campaign had endorsed. Earlier this year, the Obama campaign said it would raise those rates to 20%.

Earlier this year, Mr. Edwards said he, too, would raise the capital-gains tax rate to 28% from 15% and boost income taxes on those making more than $200,000 to finance tax cuts and other benefits for middle- and lower-income families.

The underlying message of the Democratic candidates’ plans — that wealthier people should pay higher taxes and lower- and middle-income people should pay less — echoes the theme many Democrats in Congress have adopted.

Double the capital gains tax – which reduces investments and hinders the economy. Oh, and they don’t mention that doubling the capital gains tax also affects what you pay when you sell your house.

What Democrats don’t know, don’t understand or don’t care is that half of Americans are invested in the economy – raising taxes on capital gains eventually effects us all. I suspect that Obama wants to lower taxes on seniors because he knows he’ll make it up by doubling the taxes on their dividends and capital gains. One way or the other, people will have less money invested in the economy to save taxes – that only hurts the economy.

But the Big Brother aspect of this reported by Bloomberg;

The plan would also simplify tax filing for many Americans by having the Internal Revenue Service provide pre-filled tax forms using financial data it receives from employers and banks. The service would be available to filers without complex taxes, or those with only wage and bank-interest income.

Yeah, I’d like that. I got a bill from the IRS a few weeks ago telling me that I owed them about $4000 from 2005 because of information they received from one of my financial institutions. After I spent a few harrowing weeks proving my innocence (because with the IRS, you’re guilty until you can prove otherwise), they sent me a letter apologizing for the inconvenience. Yeah, so I’m going to let them pre-fill my tax forms. Nice try, Obama.

The Washington Post quotes Obama;

“In our new economy, there is no shortage of new wealth,” he told the Tax Policy Center. “But wages are not keeping pace. . . . This isn’t the invisible hand of a market at work. It’s the successful work of special interests.”

The Bureau of Labor Statistics would disagree; wages are up. They’ve been going up, and unemployment is down to the lowest and longest sustained rate in history. But it seems that Democrats are determined to end that – then blame the economy on Republican policy that has saved this economy.

Instead of taxhikes and faux-taxcuts, lets see spending cuts. Democrats are real good at telling us how WE can do more for government – for a change let’s see if they can make government do more for us with less money like we have to do everytime they slap a tax hike on us.

Category: Economy, Politics