Posts Tagged ‘welfare’

Socialism in Sheep’s Clothing

Thursday, October 16th, 2008

Or “How to give tax cuts to people who already don’t pay taxes”

That has been the big question of the Presidential campaign, and one puzzlingly unasked by McCain — How can Barack Obama, as he claims, give a tax cut to 95% of Americans when roughly 40% of Americans already don’t pay a penny in taxes?

The answer: You massively expand welfare to include tens of millions of new recipients, and call it a “tax cut”.

The Wall Street Journal explains it nicely:

For the Obama Democrats, a tax cut is no longer letting you keep more of what you earn. In their lexicon, a tax cut includes tens of billions of dollars in government handouts that are disguised by the phrase “tax credit.”

…Here’s the political catch. All but [one of his tax credits] would be “refundable,” which is Washington-speak for the fact that you can receive these checks even if you have no income-tax liability. In other words, they are an income transfer — a federal check — from taxpayers to nontaxpayers. Once upon a time we called this “welfare,” or in George McGovern’s 1972 campaign a “Demogrant.” Mr. Obama’s genius is to call it a tax cut.

The clincher? As with all things government, it would start out huge, and grow…

The total annual expenditures on refundable “tax credits” would rise over the next 10 years by $647 billion to $1.054 trillion, according to the Tax Policy Center. This means that the tax-credit welfare state would soon cost four times actual cash welfare.

Who would pay for this? Ostensibly the evil rich, of course. Obama’s proposed tax hike on those making over $250,000 would be the largest tax hike in American history. The primary government program it would fund would be to simply turn around and divvy that cash out among everyone else.

This is not freedom — it is socialism, plain and simple.

The real problem is that while theoretically the rich would pay for it, it would actually hurt practically everyone. For those under the $250,000 line, it would hurt in the form of an income-based dropoff in handouts that would act as a massive disincentive to work harder for that 3% raise…

Because Mr. Obama’s tax credits are phased out as incomes rise, they impose a huge “marginal” tax rate increase on low-income workers. The marginal tax rate refers to the rate on the next dollar of income earned. …[T]he marginal rate for millions of low- and middle-income workers would spike as they earn more income.

Some families with an income of $40,000 could lose up to 40 cents in vanishing credits for every additional dollar earned from working overtime or taking a new job…. The tax credits are sold in the name of “making work pay,” but in practice they can be a disincentive to working harder, especially if you’re a lower-income couple getting raises of $1,000 or $2,000 a year.

Translation: That $1.50 an hour raise blue-collar Joe just got? Under Obama’s tax plan, it would become $1.10. Why? Because Obama is all about “fairness”, and his idea of fairness is that you should be punished for making more money.

Hat tip: Brian Dunbar

But doesn’t the Government just print more?

Wednesday, April 30th, 2008

It’s not too hard folks….

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