Sunday, November 02, 2008
Barack Obama on taxes, this afternoon
I'm cleaning up my home office watching the various candidates at their rallies on this penultimate day of the election campaign. Barack Obama defended his proposed tax increase on the "rich," saying that he only wanted those over $250,000 to pay income taxes at the rate they were paying before the Bush tax cuts.
I could live with that given the fiscal condition of the federal government. The problem is, Obama is not actually proposing to return our tax rates to pre-Bush levels. Rather, he wants us to pay federal income taxes at that old rate. That is another matter entirely. Many states, including New Jersey, used the room created by the Bush tax cuts to raise their taxes. For example, the federal government cut our marginal federal income tax rate in the last seven years by 4.9% (more or less), but New Jersey has increased it by 2.6%, effectively taking away more than half of the Bush tax cuts. The result is that a return to Clinton-era federal tax rates -- which sounds so reasonable to those 45% of Americans who pay no income tax at all and the many more who pay virtually none -- is a less than complete way of saying that that many of the "rich" will pay substantially more than they did in 2000. I'm sure that Democrats, including particularly New Jersey Democrats, think that I am unpatriotic or selfish for objecting to these increases, but I think Obama is dishonest for claiming that he only wants to revert to the status quo ante.
14 Comments:
By 
, at
Sun Nov 02, 03:53:00 PM:
And during that time, your FICA tax has gone up, and the limit on Medicare removed. If Bambi has his way, you'll have no cap on FICA, amounting to a 6.2% tax on earned income over the current limit.
For those earning 250K, that's about 10K right there ...
By , at
Sun Nov 02, 05:19:00 PM:
I would like to take issue with part of your closing statement "but I think Obama is dishonest for claiming that he only wants to revert to the status quo ante." However, I wholeheartedly agree with its beginning: Obama IS DISHONEST.
Luc
By , at
Sun Nov 02, 05:42:00 PM:
Obama dishonest? That is not the change we were looking for.
By , at
Sun Nov 02, 05:55:00 PM:
And so it goes... the media continues to ignore the basic facts of the case in this election contest. This reminds me of a story that was circulating in the middle 1950's, at the height of the cold war.
The USSR were eager to prove their superiority over the United States in every way possible. So they held a car race in which only two cars would be entered, one American and the other a Russian.
It turns out that the American car won. But in Pravda, the news story appeared stating, "The Russian car placed second, while the American car finished next to last.....
Does this sound familiar today?
By , at
Sun Nov 02, 06:23:00 PM:
And ler's not forget eliminating the cap on social security with no added benefits. As a self-employed person (paying both halves) my marginal rate will be over 50%. Of course, the Dems have been dishonest for years on the marginal rates--eliminating deductions and exemptions as income rises, etc. I suspect it's because they realize that the vast bulk of Americans--even those eagerly checking Obama's cynical "what's in it for me" website tax calculator-- would deem having to pay over half your income to the government as not at all "fair" (and the objection to same as neither "selfish" or "unpatriotic"). Goody
By 
CMT, at
Sun Nov 02, 06:45:00 PM:
This says it all...
http://1.bp.blogspot.com/_L6pDyjqqsvY/SQ0vaAppDII/AAAAAAAAWuc/sAtIdUuHAH8/s1600-h/obama+campaign+office.jpg
By , at
Sun Nov 02, 08:39:00 PM:
So you're claiming Obama is dishonest because NJ raised its state income tax?
Move.
By , at
Sun Nov 02, 08:40:00 PM:
If I believed what Obama has said during this campaign about raising taxes, I would be only mildly concerned. I’d rather not pay the additional taxes that his announced tax-raising plans would cost me, but I could probably adjust to doing so reasonably well.
My problem is that I don’t believe Obama. Based on the 46 years or so of his life that preceded the last 10 months or so of this campaign, rather than what he has said during the campaign, I do not believe he will be content with only the tax increases he has spelled out during the campaign. Even if I am wrong about him, I find it hard to imagine that the newly-increased Democratic majorities in Congress will not go further in raising my taxes than Obama’s announced plans. When they do so, it doesn’t seem likely that Obama will veto the increases.
By , at
Sun Nov 02, 08:44:00 PM:
Claiming, Anon, claiming? Publicly supporting a half truth is a time honored sneaky political ploy, but it could hardly be considered an honest one.
Obama is either dishonest or ignorant of the tax code. You choose.
Meta-4: that does sound so familiar.
By , at
Sun Nov 02, 09:34:00 PM:
I hear so much bitching about taxes. I think Obama should simply stop the taxation on all Americans! NO TAXES! You don't pay taxes, I don't pay taxes, NO ONE PAYs TAXES!
This should make everyone happy.
No Taxes.
By Georg Felis, at
Sun Nov 02, 09:46:00 PM:
Anybody who believes yet another Democratic Presidential candidate who proposes a middle-class tax cut, deserves to have their money taken away before they hurt somebody. Problem is a lot of *our* money will be taken with it.
By Escort81, at
Sun Nov 02, 09:48:00 PM:
Has anyone seen any poll numbers asking those making more than $250,000 what their views are on the proposed hike (or reversion to pre-Bush rates)? I wouldn't be surprised if well over 50% are untroubled by it, because they support Obama for other cultural reasons. Obviously, that doesn't make it good policy, and even if 90+% in that bracket approved of it, it, that is only a static shot and doesn't take into consideration the taxpayers who will be in that bracket sometime in the next 10 years who don't like the idea. Just curious about the poll info, though; I haven't seen any.
I think it is important to remember that we are talking about marginal and not effective tax rates. Going to this IRS publication, and scrolling down to page 3, and looking at the right hand side columns, the effective federal tax rate for those making $500,000 and above in 1999 (when the Clinton rates were in place) was around 28% in the aggregate, if I am reading that correctly. Between $200,000 and $500,000 of income, it was 24%. The first few hundred thousand are taxed at lower rates, after all.
Now, TH has the correct approach to look at the total tax burden on higher income earners, taking into consideration state and local taxes, when looking at taxes from an individual standpoint. Looking at it from an aggregate standpoint, we are already in a situation where the top 1% pay nearly 40% of the federal income taxes collected.
In the old days like the 1960s, there were statutory marginal rates near 90%, but nobody really paid that. Effective rates in top brackets were higher in the 1990s than in the 1960s, I believe.
If you think Reid-Pelosi-Obama are going to be tough in terms of high income earners and income taxes, wait until they focus on the Estate Tax / Death Tax. The top marginal rate in 1999 was 55% for estates over $3,000,000 (note that many estates are comprised of appreciated assets, including stocks, bonds and real estate, but at some level exist because of income streams that have already been taxed). I think marginal rates will go up and brackets will be played with.
It's a great time to be a tax accountant or a tax lawyer!
By Gary Rosen, at
Sun Nov 02, 11:52:00 PM:
Escort81 - As you say, the top marginal rate in the '60s (early '60s) was 90%, but I believe JFK cut it to 65%. Imagine that, a Dem cutting taxes!
By Dawnfire82, at
Mon Nov 03, 08:28:00 AM:
By today's standards, I think JFK would have been a Republican.
