#1 Obama's Tax Fallacy: "I gave 95% of all Americans a tax cut..." Really?
01-28-2010, 05:01 AM
- Join Date
- Aug 2005
Barack Obama - "I gave 95% of all Working Families a tax cut..."
First of all 41% of Americans don't even file income tax returns. Secondly, out of the 59% who do file tax returns, 43.4 million out of the 136 million tax returns filed face a zero or negative tax liability. So if 32% (43.4/136) of the those who file don't owe any taxes, and if 41% don't even file income taxes, then that equals 59% who don't pay any income taxes. That leaves the rest of us. So did 95% of the 41% who actually pay income taxes get a tax cut? I doubt it, but even if that were true, it's not 95% of all Americans (or 'working families' whatever that means).
Is a refundable tax credit the same as a tax cut?
But the real fallacy lies in the fact that refundable tax credits are not tax cuts, but rather, they are subsidies. Subsidies are paid for by taking money from some Americans and giving it to others. This is also known as 'spreading the wealth around'.
I'm not very cheery knowing that while I have been faithfully paying my mortgage, people are buying foreclosed houses down the street for $110K less than what I owe. And not only that, but the Government is giving them an $8,500 subsidy out of my tax dollars. It's as if the $110K of potential equity wasn't enough of a subsidy. Also, when the government refunds a person $8,500 to buy a house, it only applies to those who bought houses, not to 95% of all Americans.
The $400 ($800 for joint filers) Making Work Pay Credit is also a refundable tax subsidy. It is only available to those who made less than $75,000 in 2009. Is it possible that 95% of Americans who pay taxes made less than $75K and will get the full credit? Not really.
The earned income credit is a well known tax subsidy. If you made $10,000 and have a child, you will pay no taxes and will get back a $6,000 tax refund. This is not a tax cut, but rather a 60% bonus awarded for not trying very hard.
Non-refundable tax credits represent true tax cuts, as they can only be used to reduce the amount of tax actually owed, with the balance being lost. The child care credit is an example of a non-refundable tax credit, and has not changed in years. The education credit is another example, yet it is already $2,500 per year, so nothing new was stated by Obama when he said he will give out a $10K credit over 4 years. Uh, we already have that, sir.
Another tidbit, right now, all three of my kids are in college. I'm divorced and they live with their mother out of state. I am paying part of the way for one while the other two have full scholarships. Because I don't claim any of them as dependents, I am not allowed any credit for the tuition that I'm paying. I wonder how many others are in the same boat. It's not that I want anything from the Government, but just want to let you know that there are cracks in the real world.
Capital Gains Tax Cut for Small Business?
Finally, Obama wants to give a Capital Gains Tax Cut for Small Business Investment. What does that mean? A capital gains tax cut only applies if someone has an appreciated asset to sell, which they have held for more than one year. So, first you have to have an appreciated asset. Then you have to either have a small business that buys and sells appreciated long-term assets, or would need to sell your business in order to benefit. The only problem with what Obama said is that the lower Capital Gains Tax rate that we already have, which is currently 0% for those in a 15% or lower tax bracket, already applies. Nothing new here.
01-28-2010, 11:55 AM
- Join Date
- Jun 2005
- Woodland Park, Colorado, United States
It still amazes me that O Blah Blah eats with that same mouth from which all those lies come. How does he live with himself?Education without values, as useful as it is, seems rather to make man a more clever devil.
C. S. Lewis
Do not ever say that the desire to "do good" by force is a good motive. Neither power-lust nor stupidity are good motives. (Are you listening Barry)?:mad:
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