October 13th 2008
Obama’s 95% Tax Break: A Tax-Credit Welfare State
I
t’s so obvious that only Dems can’t seem to figure it out: If a certain candidate promises that 95% of taxpayers will get a tax cut if he’s elected, but only 70% of US citizens pay taxes, it’s got to be sleight of hand.
Well, “sleight” may be the wrong word, because what Obama’s proposing to do here is to turn taxes into a new welfare, with the IRS mailing out the checks instead of Health & Human Services. The WSJ has an excellent piece on it today, Obama’s 95% Solution:
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.” Mr. Obama is proposing to create or expand no fewer than seven such credits for individuals:
- A $500 tax credit ($1,000 a couple) to “make work pay” that phases out at income of $75,000 for individuals and $150,000 per couple.
- A $4,000 tax credit for college tuition.
- A 10% mortgage interest tax credit (on top of the existing mortgage interest deduction and other housing subsidies).
- A “savings” tax credit of 50% up to $1,000.
- An expansion of the earned-income tax credit that would allow single workers to receive as much as $555 a year, up from $175 now, and give these workers up to $1,110 if they are paying child support.
- A child care credit of 50% up to $6,000 of expenses a year.
- A “clean car” tax credit of up to $7,000 on the purchase of certain vehicles.
Here’s the political catch. All but the clean car credit 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.
This tax-credit welfare state is going to be costly. Under it, another 10 million tax-filers would pay zero taxes and get refund checks from the IRS, according to The Heritage Foundation. These refundable “tax credits” would rise under Obama from $647 billion to $1.054 trillion, according to the Tax Policy Center. In the end, tax-credits would pay out four times more than welfare.
So all Obama is saying is that he’s going to bring back the welfare state bigger and badder than ever before.
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Posted in 2008, Economic Policy, Obama | 5 Comments » | 
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October 13th, 2008 at 9:55 pm
Well, someone once said (sorta’) “If you rob Peter to pay Paul, you can always count on the VOTE of Paul.”
October 14th, 2008 at 8:40 am
Odd, JM says he’ll cut them for all Americans, is he proposing welfare too? Can i get a link to that piece you’ve written? No, it doesn’t exist? Are you sad your such a loser?
October 14th, 2008 at 10:37 am
The link is in the piece. It’s in bronze type. Even you should be able to find it.
October 20th, 2008 at 8:29 pm
I truly cannot believe how uninformed many people are of the tax system and I cannot believe that the WSJ is capitalizing on it. So let me clear this for everyone:EVERY WORKER PAYS TAXES. ABSOLUTELY EVERY WORKER, when they receive their salary checks has a PAYROLL TAX DEDUCTION. So all year long, people go and pay their taxes religiously. Now at the end of the tax season, when you have to file your income tax, you might have zero-income tax liability. This means that you don’t OWE the government further taxes because you paid them ALL thorugh your payroll discount. Sometimes peopel get a refund because they paid more taxes on payroll than they owe. Now under Obama, the ONLY people could have a negative tax rate (i.e. receive money from the governmet) are the people who earn less than $10,000. And anyone who thinks it’s wrong to help out a little (the net tax ret would be -2.8%) hard working people who makes less than $10,000 has little sense of solidarity. Here is the table from the Tax Policy Center, a non-partisan analysis group confirming what I just said: http://www.taxpolicycenter.org/numbers/displayatab.cfm?Docid=1967&DocTypeID=1 SHAME on the WSJ for doing such an irresponsible article
October 23rd, 2008 at 8:18 pm
Call it whatever you want. I’ts re-distrubution of wealth.The rich pay and the poor recieve.Jimmy Carter all over again.you will see..