Obama will raise: the top two individual income tax rates by 25%; Phase out personal exemptions and all itemized deductions; the capital gains tax rate by 33%; the tax rate on dividends by 33%; the top payroll tax rate from 16% to 32%; a new payroll tax on employers of 7%; reinstate the death tax rate of 45%; the corporate tax burden by another 25%.
Incentives are turned against savings, investment, entrepreneurship, business expansion, job creation, work, and economic growth. With higher marginal tax rates, the reward for these pro-growth economic activities is reduced, and so these activities decline.
Obama’s tax plan is exactly the opposite of the supply side economics that Reagan adopted, which produced the astounding 25 year boom of the 1980s. When Obama adds his $trillion in entitlements we will be staring at a deep depression.
Obama’s tax plan specifies that this tax cut is a $500 per worker income tax credit for workers making up to $75,000 per year, and for families making up to $150,000. Such a tax credit is a welfare check.
Obama wants tax credits for child care, education, housing, retirement, health care, welfare, and other giveaways with checks from the federal government for these purposes.
Consequently, they are not tax cuts. They are new federal spending programs hidden in the tax code. This is why I call it The New Tax Welfare. These new tax welfare programs alone would cost an additional $1.3 trillion over 10 years. by Peter Ferrara
McCain will increase the dependent’s exemption from $3,500 to $7,000. That would cut taxes for middle class families in the 25% income tax bracket by $875 per child.
McCain also proposes a tax credit of $5,000 per family and $2,500 per single worker for purchasing health insurance. This is a huge tax cut for the middle class, $1.3 trillion over 10 years.
McCain will abolish the Alternative Minimum Tax (AMT) that will save middle class families a pending tax increase of $2,700 on average per year, another middle class tax cut of $60 billion each year from current law.
McCain’s tax plan includes pro-growth tax cuts that provide exactly what the economy needs right now. McCain will make the Bush tax cuts permanent. McCain will also reduce taxes on savings and investment through expensing of capital investment.
These pro-growth tax cut will do far more for the middle class and working people than a $500 per worker tax credit. The tax cuts will reverse the current economic downturn, restore economic growth, create jobs, and revive income and wage growth.
They would “spread the wealth around” by creating prosperity for working people and the middle class, not by stealing from those who have already produced their own wealth.
The top 1% of income earners pay 40% of all federal income taxes, almost twice their share of national income. The top 20% pay 86%. Clearly, federal income taxes are now paid primarily by these upper income taxpayers.
The bottom 40% of income earners pay no federal income taxes on net. Instead they actually receive payments from the income tax system equal to 3.8% of all federal taxes paid. The middle 20% of income earners, the true middle class, pays 4.7% of all federal income taxes.