Monday, October 27, 2008

Redistribution of Wealth and "Fairness"

The Obama campaign has repeatedly said that their tax plan is "fair" and that the rich needs to pay more. They contend that the tax policies of the Bush Administration has helped to expand the gap between the rich and the poor, and they essentally need to pay their fair share. The implication is that the middle class pays a disproportionate amount of federal income tax. Lets examine this premise.

According to the National Taxpayers Union, in 2006 the top 10% of wage earners in the USA, (who make over 100,000 per year and up pay 70.79 % of the federal income taxes. Furthermore, if you look back, according to the same website in 1999, the same top 10% paid 66.45%. So the so-called rich are paying a higher percentage of federal income tax than ever before.

There are two facts that must be said. To cut taxes across the board is to give the rich a bigger tax break than the middle class. If you cut taxes by 5% across the board, the rich get a bigger tax break. Why? because they pay so much more in taxes. Take for example a person whose taxable income is $500,000 per year, at 35% they pay $175,000. Take a person who's taxable income is $50,000, at 25%(Which is the tax bracket for this income group)they will pay $12,500. So if the government lowers tax rates across the board by 5%. They person making 50K will now pay 10,000 in federal taxes. The 500K income earner will pay $150,000. The rich person's tax break will be more than the middle class earner's tax bill. Both income earners recieved the percentage of a tax break, but the "rich" person's tax bill goes down by a much higher dollar amount.

Barack Obama wants to redistribute wealth. He said as much to Joe the Plumber. He said that "if you spread the wealth around, it is good for everyone." One the one hand to many, this might sound good. They might think, "Yeah, stick it to those greedy bastards." But one has to understand the consequences of puntative taxes. The fact of capitalism is that the "rich" employ the rest of us. Whether it is a huge corporation like Haliburton or Microsoft, or a small business owner who employs 15-20 people, lower and middle class Americans are employed by people like this. If the government under an Obama administration decides to raise taxes on Corporations and small business owners, these new taxes will drag the economy down. Any company, large or small, is in business to make money, not to employ people. If profits are not there, the company will cease to exist. A company that has its taxes raised, will have to cut jobs to keep its profit margins or risk its ability to compete.

The last thing this country needs, with the economy in its current state, are tax and economic policies that will hurt and push the economy into a deep recession or worse.

Oh, how I wish that Mitt Romney were the man at the top of the GOP ticket. A brilliant economic mind was thrown under the party bus by single issue voters.

No comments:

No, there is no anti-Israel Bias at the NY Times.

Recently the New York Times published an Op-Ed of a Palestinian who describes the deplorable conditions that he says exist in Israeli prison...