Obama’s Tax Gimmick

First Obama was for small budget deficits. Then he decided he really wanted more investment. For a while it looked like he was going to support universal health care. But now he wants young poor workers to subsidize rich old men and women.

My Way News – Obama’s ‘no income taxes on seniors’ draws critics
WASHINGTON (AP) – If you’re a senior citizen and earn less than $50,000 a year, Barack Obama has a deal for you: a life free of federal income tax.

Sounds appealing, right? Maybe to many seniors. But tax policy experts in Washington are giving it bad reviews. They see it as another subsidy for senior citizens, who already get federal help through Social Security and Medicare and often have economic advantages over other demographic groups.

Seniors typically have paid off their mortgages, many have investments and usually don’t pay taxes on their Social Security benefits. The kids are usually grown, so they’re not saddled with day care or college costs.

“The odds are the retired folks – they’re getting pensions, they’re getting Social Security, they have investment assets, they own a house – so … they’re better off than somebody who is 30 or 40 years younger who’s trying to buy a house (and) trying to start saving,” said Clint Stretch, managing principal of tax policy for Deloitte Tax.

What is Obama thinking? Is he serious? I realize he is not much smarter than George W. Bush was in 2000 when it comes to policy, but even Bush’s income tax cuts could theoretically have worked.

Obama’s tax plan looks like a bigoted attempt to buy off the vote of rich seniors, forcing young workers who are trying to afford health insurance, buy a home, or pay off their student loan to subsidize those with a lot more wealth than they have.

18 thoughts on “Obama’s Tax Gimmick”

  1. Easy. Old people pay attention and vote. Young people don’t do either. Take money from young people and give it old people and you end up net positive for votes. That simple.

  2. Obama is sending a simple message. Attention Senior Citizens. Vote for me and I promise you won’t ever pay income taxes again.

    The media hype aside, Obama knows most young people don’t vote in high numbers – and usually that is a good thing for the country.

    He has been try to buy other votes (i.e. the $1000 instant vote-for-obama-energy-tax-credit-for-families).

    He is hoping to swing enough American voters on these bribes promises to win some narrow races that are too close to call.

  3. I just wanted to make sure that there was no economic logic behind it.

    Sometimes Obama is simply wrong. But this is worse than wrong. It’s absurd, as I imagine even he knows it.

  4. It is not absurd. It will ensure he carries Florida. That is rational.

    To me, Obama makes the most sense, and scares me less, when he does things which are motivated by pure political cynicism, like this. Then, I think I know what I am dealing with: A cruddy little political skank who will say anything — in a soothing speaking voice. When I start to think he believes some of his own I-Am-The-Black-Messiah crap, then I really worry. So, more of this, please.

    If he wins, he will just raise taxes on other people, or break his promise, or — most likely — both. He will say that the devastation of eight years of Bush-o-nomics were far, far worse than he realized, and that all must bear the burden.

  5. This is horrible. I had read earlier about senior citizen enclaves within cities and counties trying to opt out of paying taxes that support schools, parks, etc and found it absolutely appalling. This is far worse than McCain’s gas tax holiday. Yeesh.

  6. I remember that in 1992 a substantial part of Bill Clinton’s campaign stump speech was a promise for a “Middle Class Tax Cut”. Sometime between the November election and the January inauguration, Clinton announced that because the economy was even worse than he thought, there would be no middle class tax cut.

    The intrepid journalists of our media never mentioned it again. The closest any Clinton Administration official came to talking about the middle class tax cut pledge was when George Stephanopolous said that Bill Clinton had kept all the campaign promises that he had intended to keep.

    I finally got a middle class tax cut after George Bush became President.

    The likelihood of Obama carrying Florida probably depends on how well the retired folks remember this episode. I can guarantee that the media will not remind them about it and given the general incompetence of the Republican party, the McCain campaign probably won’t remind them about it either.

  7. Lexington,

    I haven’t heard anything more of this since it came out. Is Obama still pushing it, or has it become like the Obama-for-President emblem, an embarrassment within 24 hours of its launch?

    Eddie,

    Agreed. McCain’s gas tax holiday amounts to a garbled version of Obama’s energy tax credit. This is just wealth redistribution of the stupidest sort — it’s a parody of everything the Democratic Party supposedly opposes.

    Mark in Texas,

    Well said. There is no reason to believe what Obama says, either in terms of his track record, or of those who were in similar situations.

  8. I know plenty of senior citizens that have to make tough decisions between food and medicine every day. The situation is not as rosy as this article projects. Most are living check by check and can’t afford things like new toothbrushes (this actually happend to my neighbor).

    Obama’s tax plan for senior citizens DOES lower their taxes, which IS a good thing! Think about it…how much in taxes could the possibly be paying anyway with no income? (I understand invesment taxes are there as well, but nothing like regular taxation). Also only low and middle class seniors will recieve tax cuts…not your wealthy country club types ;).

    Not only does the Obama tax plan provide relief for middle and low class families, but also stimulates the employment level. Tax cuts are given to companies that bring jobs back to the country. Also small-businesses are given tax cuts as well.

    These things all make sense regardless of democrat or republican! It is a bi-partisan approach to a major issue.

    McCain wants to lower taxes for oil corporations who’ve had record profits for yet another year. Not to mention all the other corporations who are quietly laughing their way to the bank as the American family suffers. He does not even mention the American family as part of his tax plan (rich or poor)!

    Not only that, but his tax plan is ONE PAGE LONG. Come on! Throughout all his economic plan jargon (15 pages), he has left 7 vague paragraphs to talk about taxes. In his economic plan, when I searched for the word ‘family’ it came up a total of 4 times [in 15 pages]! In contrast Obama has a full fledge taxation plan.

    Also, John McCain has voted WITH Bush 95% of the time, and you can see where that got us…Barack Obama has stayed consistent with his ideals throughout his whole voting record.

    Sources:

    http://www.govtrack.us/congress/votes.xpd?person=400629

    http://www.barackobama.com/pdf/taxes/Factsheet_Tax_Plan_FINAL.pdf

    http://www.johnmccain.com/Images/Issues/JobsforAmerica/briefing.pdf

  9. AmericatheBeautiful,

    You haven’t explained why it’s better, more just, or more economically productive to transfer wealth from working families with small children where the couple makes $99,999/year to a senior couple that makes $99,999/year.

    Instead, your analysis is in a vacuum, conflating poverty with a very comfortable income.

    Considering a candidate based on how much he repeats a mantra would seem to be a mistake. More important is an analysis of his policy, such as Obama reintroducing the marriage penalty. [1]

    [1] http://www.weeklystandard.com/weblogs/TWSFP/2008/08/obama_declares_war_on_women.asp

  10. Consider that Obama has pleged to end the Bush tax cuts. When Obama repeals the Bush tax cuts it is going to cost parents $1000 per child every year when that tax credit goes away.

    Also consider that the Bush tax cuts eliminated the marriage penalty. I guess that if gays can’t marry than straight married couples deserve to get pounded at tax time.

  11. Mark in Texas,

    Recall that Obama’s tax plan does not increase net taxes for families making less than 250k per year and individuals making less than 200k per year).

    Tdaxp,

    Thank you for your constructive response! I truely appreciate it.

    I would like to point out that in the first sentence is enough moral justification for the ultra-wealthy to distribute a bit of their income to the poor senior citizens that should be respected in society. These people have worked hard all their lives only to reach a point where they need to choose whether they should buy food or medicine.

    First off your working family with 2 children will not be affected by this at all, they will not pay any more in taxes, so long as their net household income is below 250k. The average family earns far below 250k dollars per year. [1]

    Second, Obama’s reintroduction of the marriage penalty is justified. Remember that those couple’s pre-tax income would be more than 350 thousand dollars per year. If they did pay 350k a year and had a 40% tax (that is a rough estimation), then the family would net 210k per year after taxes. With 210 thousand dollars per year saved and invested properly, by retirment that couple will have well over 10 million in the bank. That tax increase for wealthy families in that bracket only nets about 2-4% anyway. What that article (which you cited in your previous post) failed to mention is that those taxes are 54% stacked, meaning that taxes are deducted in order, so that the total amounts to significantly less than 54%…roughly in the high 30’s.

    Also a senior making $99,999 would not qualify in Obama’s tax plan. The tax eliminations only apply to seniors making less than 50k per year.

    I am merely pointing out McCain’s disregard for the middle class family. He has not even mentioned any type of relief or support for the middle class, let alone repeat it.

    [1] http://www.census.gov/hhes/www/income/histinc/f07ar.html

  12. ATB,

    Thank you for joining this conversation!

    Your first paragraph redirects away from Obama’s proposal, into a defense of social security as such. However, Obama’s proposal is that middle- and high- income seniors should not pay taxes irrespective of their capital wealth. Your response would make more sense if Obama’s tax cut wasn’t for the rich.

    On your second paragraph, I do appreciate it if Obama will be pushing large family sizes through the tax code. Small family size is a security issue [1], after all. However, this does not attract the injustice and warped economics of taxing a capital-poor couple or family in order to provide a tax cut for a capital-rich family.

    Your third paragraph appears to dash my hope that Obama would be using the tax code to create large families, as it starts off “Obama’s reintroduction of the marriage penalty is justified.” You make the point that Obama’s marriage penalty applies only to upper-earners, but then I don’t understand (from a political point) why he would want to further rile Hillary supporters by putting a special tax on high-earning single women.

    My point about the senior couple making $99k/year stands.

    Your final paragraph again uses the mantra standard of evidence. (How often a buzzword is repeated –what a strange measure!) Now surely, by this standard Obama is the most HOPEful and CHANGEoriented candidate available. This is because McCain’s policies have already been laid out without buzzards: so the 2001 tax cute is extended, a gas tax holiday is proposed, etc.

    [1] http://catholicgauze.blogspot.com/2008/08/americas-demographic-change.html

  13. America the Beautiful

    Since you seem to follow Obama’s campaign promises more closely than I do, perhaps you can address this issue:

    Obama has promised to end the Bush tax cuts. The most important of those tax cuts for most of the population is the $1000 per child tax credit. For your postulated working family with two children, that is $2000 per year. ISTR that Obama has proposed a tax credit of $1000 for families earning less than some amount. That would still be a tax increase of $1000 for that postulated family.

    What is McCain offering to the middle class family? He is promising to not raise their taxes by $1000 per child per year.

    Obama is promising to raise their taxes by $1000 per child per year. Even if he knew how many states there are in the US of that Russia has a veto on the UN Security Council, Obama’s promise to raise taxes on everybody with children seems like enough reason to vote against him.

  14. tdaxp,

    I don’t know how to clarify it any further. I will try to oversimplify. Senior citizens earning less than 50k will be the ONLY people benefitted by the propsal, and that tax cut will be funded by a slight increase to the extremely rich.

    “However, Obama’s proposal is that middle- and high- income seniors should not pay taxes irrespective of their capital wealth. Your response would make more sense if Obama’s tax cut wasn’t for the rich.”
    –This is simply not true. Please refer to the Obama tax plan readily available on his website, and in a previous post of mine.

    “However, this does not attract the injustice and warped economics of taxing a capital-poor couple or family in order to provide a tax cut for a capital-rich family.”
    –Also not true, please refer to the tax plan aformentioned. that seems more like a conservative “reaganomics” strategy anyway…

    I don’t see how one could consider the woman the ‘second’ earner. If both spouses are earning, their income is combined. With that example it could also be interpreted that the man is actually the ‘second’ earner, so he could take heavier taxes! It is completely, to quote you from another article, absurd.

    “You make the point that Obama’s marriage penalty applies only to upper-earners, but then I don’t understand (from a political point) why he would want to further rile Hillary supporters by putting a special tax on high-earning single women.”
    –So you agree that the Obama tax plan only raises taxes for upper earners.

    With the link that you’ve left for us, I take it very offensively, so please excuse my emotions.– That is ABSURD! It is an outrage that white people have a problem with becoming a minority! This behavior is ridiculous. WHO CARES what nationality or ethnicity the person is. This is pure racism. Being the second generation of my family in this country, I am just as much a loyal and patriotic american as the next man or woman! It saddens me to see that there are people in this country who so ignorantly stick to their xenophobia and will not assimilate with the rest of the population. As everyone is created equal, one’s race should not matter at all, in any situation. The fact that this is even a concern among white people is a serious dissapointment to me.

    Also, I am glad to have found such a talented debator

    Mark In Texas–If you have a 1000 dollar tax hike and a 2000 dollar tax cut, obviously you’re paying less. (just an example, point being you will not pay more in taxes as a middle class family) Please review the Obama tax plan.

  15. ATB

    Americans already got a $1000 tax cut per child when George Bush delivered on his campaign promises to cut taxes. Obama has promised to get rid of George Bush’s tax cuts. If the family with two children loses their $2000 of child tax credits but gets back a $1000 tax credit, they will still be paying $1000 more in taxes. For families with more than two children it is even worse.

    Since I was obviously not clear enough the first time let me try to put it more directly.

    George Bush tax cut included $1000 tax credit for each child. That is the law today.

    Barak Obama has promised to end the tax cuts implemented by George Bush. That means that American tax payers will pay $1000 more in taxes for each child than they do today after Obama does away with the Bush tax cuts.

    If Barak Obama gives everybody a $1000 tax credit that benefits people with no children by $1000. People with one child remain the same. People with 2 children pay $1000 more in taxes every year. People with 3 children pay $2000 more in taxes every year. People with 4 children pay $3000 more in taxes every year.

  16. Mark,

    I hate to not say much right now but i am exhausted from a long day.

    First off, in the situation of 2 parents and 2 kids (1 or both in college) there is actually a net savings of more than the bush plan has. its all spelled at in the .pdf file.

    Not only that but with this huge debt that we’ve built up as a government, slightly higher taxes might not be a bad idea

  17. This back-and-forth is important, but it’s also somewhat perociale. Everyone is comparing their candidates in how they cater to a favorite constituency. A general “American” approach would be to ask which candidate’s tax policy will do more to help or harm the American economy. This comes down to the unsexy but important issue of capital gain taxes. Obama, but not McCain, wants to raise capital gains taxes.

    Both Obama and McCain offer to buy the support of certain groups, such as those who drive (McCain), those who are old (Obama), and so on. Only McCain has a tax policy that does not increase the de facto risk premium, because under low capital gains taxes, risky investments that pay off are rewarded more.

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