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Posts Tagged ‘obama tax

Obamanomics and Taxes: The “Fair” Illusion…

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Senator Barack Obama, Nancy Pelosi and other Democrats often talk of making the US tax system more “fair” by imposing additional taxes on higher earners. They argue this segment of the population should be carrying a disproportionally heavier load than the rest of the populace. It’s a very calculated and clever argument: it appeals to envy and social divisions while at the same time jeopardizing only a small segment of voters. But does it have any basis in reality?

When it comes to the US tax system, the wealthy already pay an astonishingly disproportionate share of all tax revenues. Take, for example, the top two percent of all earners: this group pays an incredible 43.6% ยน of all personal federal income taxes. Yes, you read that right: two percent carry nearly half the load.

Well, you might argue, if they make 43.6% of all income, then that seems reasonable. Not even close: the top two percent of all earners take in 24.1% of all income.

The bottom 50% of all earners contributes a mere 3.3% of all federal income taxes (while earning 13.4% of all income).

Let’s drill down a little further and look at the top five percent: Senator Obama has called on increasing the taxes on this group, and he has defined them as earning $250,000 or more per annum (since then, he’s adjusted that to $200,000 in a television ad; his running mate, Senator Joe Biden, uses $150,000). What do the numbers say about this group?

Well, Senator Biden is closer to the truth than Senator Obama: the top five percent of all earners make $137,056 a year. They currently contribute, wait for it, 57.1% of all federal income taxes. Can it truthfully be said they are not carrying their fair share?

Britain experimented with similar wealth-redistribution schemes in the ’70s: the top earners were subjected to a 90% (yes, ninety-percent!) tax rate. What happened as a result? They left.

Written by westcoastsuccess

November 1, 2008 at 8:59 pm

Obama’s Proposed 87% Increase to Capital Gains Tax Exactly What the Economy Doesn’t Need…

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Senator Barack Obama has proposed moving the Capital Gains Tax from its current 15% rate to 28%, an increase in the tax rate totalling a shocking 86.6%. It couldn’t come at a worse time.

While trillions of dollars in capital has disappeared from the markets, adding a dis-incentive for investors to return to the markets is a sure-fire strategy for lengthening the current downturn. And when companies cannot readily access capital, they can’t build new plants, take on R&D expenditures or do all those other things that lead to the people on “Main Street” gaining access to new jobs.

What’s worse is that Mr Obama does not seem to understand the fundamental difference between a tax rate and tax revenue: changes in tax rates lead to changes in the way people behave. For example, Presidents Ronald Reagan, Bill Clinton and George W. Bush all cut the Capital Gains Tax. Under Clinton, it was 28%. Under George W. Bush it sits at 15%. After each of these tax cuts, tax REVENUE actually increased.

The kind of increase Mr Obama proposes therefore has a dual negative effective with no discernible upside: investment capital stays out of the market and government revenues from the Capital Gains Tax shrink.

So why would Senator Obama consider such an ill-fated move? He thinks it’s “fair”.

You can see Mr Obama’s explanation in the video below – note Jim Lehrer, the moderator, attempt three times to explain to Senator Obama that tax revenue decreases as the Capital Gains Tax increases.

Written by westcoastsuccess

October 31, 2008 at 9:24 am