Posted by Charity on September 19th, 2007

Following the Democratic presidential candidate election theme for ’08, buying America’s votes with the money we will steal from the “rich” taxpayers once we take office, Barack Obama has announced a tax cut plan.

Here’s all you need to read to know what you’ll be getting: “Obama’s plan was short on some specifics.”

But there are some semi-specifics that do need a good fisking. Allow me to assist.

They said the largest cost would be for a “Making Work Pay” credit that would offset payroll taxes on the first $8,100 of earnings, generating up to $500 per person or $1,000 per family. The campaign said that would eliminate income taxes for 10 million classified as low income.

The campaign also said the credit would phase out for wealthier taxpayers, but wouldn’t say what the income cutoff would be.

Isn’t that nice that Obama wants to “eliminate income taxes for 10 million classified as low income”?

What I don’t understand is why this is needed. For example, we do not pay federal income taxes – thanks to Bush’s tax cut for the rich – and we make over 160% of the poverty level for our family size (per 2007 guidelines). (I hate to make this personal, but not being a tax preparer, I have no other examples to use.)

Who are these poor that are paying taxes and how poor can they possibly be?

I know that this might upset the world view of some but the poor do not pay income taxes.

The campaign said Obama’s plan to eliminate taxes on seniors making less than $50,000 annually would mean 22 million elderly would no longer need to file an income tax return or hire a tax preparer.

Correct me if I’m wrong, but usually by the time someone is a senior, they have no dependents and their mortgage is paid off. Why do these people – making upwards of $50,000 – need to be exempt from paying taxes? Do people suddenly stop benefiting from government services when they are seniors?

Yeah, I know that I would not get the coveted boomer vote if I was running.

Additionally, the IRS would send prefilled tax forms to 40 million workers who take the standard deduction and have a bank account. They would simply have to sign and return it, which Obama estimates would save more than $2 billion in tax preparer fees, 200 million hours of work and “an incalculable amount of headache and heartburn.”

This has to be the stupidest idea I have ever heard. I’m sorry, there is just no sophisticated way to say that.

Does the calculation of work hours saved take into account the work hours spent by the government in preparing and mailing people’s tax returns? Does the calculation of tax preparer fees saved take into account the amount of money it will take to pay for the government to do this?

Tax preparer fees are not an issue for people with simple returns. Just look at this Turbo Tax site. Note that simple returns are – what’s that? Oh yeah, free.

Is it almost November 2008? Because I don’t know if I can take much more of this pandering to the poor and elderly. Especially when,

Obama’s campaign also didn’t say how much each of his proposals would cost, only that the total would be between $80 billion and $85 billion each year when fully implemented.

The piece closes with the obligatory “equal time” quote from Republican National Committee spokeswoman Lisa Miller.

“In their ’08 Budget proposal, Obama and his Democrat colleagues are proposing the largest tax increase in the history of our country, but while on the campaign trail he promises $80 billion in relief,” Miller said. “Which Obama should we believe?”

4 Responses to “The Good Kind of Tax Cuts”

  1. Sounds like he wants to use the tax system to redistribute wealth downward. I have no problem with that. BTW, you do pay federal tax. It comes out of Bob’s paycheck. The government holds on to it all year and uses it. It’s just that you get it all back again at the end of the year. They don’t pay you interest, but there is the EITC if you want it. Why don’t you let them hold on to someone elses money so you can spend more than a buck per child per day on food? And it’s a fallacy to say old folks don’t have dependents or mortgages. I see lot’s of old people working hard jobs to make ends meet all the time. I took a cab today and the driver was like 100 years old. There’s a guy working the checkout down at Shaw’s who’s like 1000. I feel bad for these folks. Plus I hate worrying that my cab driver might have a heart attack while he’s driving me on the highway.

    Hard work, and bootstraps and free enterprise have their place, but I think where those ideas fall down is with vulnerable populations. The least of us. Old people, for example, shoudn’t be expected to fight commuter traffic, do manual labor, or deal with the rat race. They’re old. Give them a break. There should be safety nets for old people. It’s about respecting our elders and taking care of each other. Medicare and Social Security don’t make old people lazy or stifle their creativity, as are often the charges from the right against such socialist programs. They provide some security and dignity to the elderly, and to the rest of us by extension. And we absolutely can afford it. If we can afford to occupy Iraq. We can afford to take care of our elderly. What kind of nation are we if we let them down?

  2. “Why don’t you let them hold on to someone elses money so you can spend more than a buck per child per day on food?”

    A few things:

    1. There is no reason why we should NOT contribute to the tax base. In fact, I think it is a crying shame that we don’t pay more in taxes. We use the same services (not social services, I mean like roads and defense) as everyone else. Why shouldn’t we pay?

    2. If I had a million dollars, I would still be frugal with my food budget. That decision has more to do with good stewardship and wanting more money freed up for other uses.

    3. My children have plenty to eat. And most of it is very delicious homemade stuff. No one is going hungry around here.

    “There should be safety nets for old people.”

    Cutting income taxes for working seniors does nothing for the problems you talked about. Nor is it a safety net.

  3. Cutting income taxes for working seniors does nothing for the problems you talked about. Nor is it a safety net

    It may not be a safety net, but it would let them keep a few more crumbs throughout the year. It wouldn’t hurt.

    But you’re saying I’m off-topic, huh? Maybe a little. But what about Social Security and Medicare? Should we keep them, or toss them out the window?

  4. I’m not a fan of Obama at all, and he’s too vague with a lot of his proposals. However, what he’s trying to do is alleviate the undo burden that poor people have to pay in terms of payroll taxes (like Social Secuirty and the like) and to alleviate the squeeze play that a lot of seniors are in because their Social Secuirty benefits (and what little savings or pension benefits they have) aren’t enough for them to get by. I think the “standard deduction and have a bank account” thing was about making it easier for people to save their own money without having to itemize on their tax forms.

    I agree with the GOP that a lot of what the Dems are proposing would amount to the “largest tax increase in the history of our country” on the rich mostly, which I guess is the largest since the 1993 tax increases…which helped to balance the federal budget. I think it’s past time to start paying off some of those bills that the GOP didn’t want to deal with when they were in power.

    I also could make the same argument that GWB used the same ploys in his campaign in 2000 to buy the votes of Americans by promising to give them a tax break, but I won’t dig up the past too much.

    “I think it is a crying shame that we don’t pay more in taxes.”