Investor Business Daily tackled Obama’s ignorance on economics yesterday that I wrote about a few days ago. Here is the exchange in question from the debate:
IBD:
Indeed, data from Congress’ Joint Committee on Taxation show 20% of those with capital gains in 2005 had annual incomes less than $50,000. So Obama’s “tax-the-rich” plan to jack up cap gains rates would in fact become a huge middle-class tax hike.
Add to this his idea to lift the Social Security tax cap on incomes above $97,000, which would hit many of the same people, and you get the idea that Obama doesn’t understand economics at all.
Maybe it’s that he and his wife, Michelle, just reported $4.2 million in income for the last year — with little or none of it in the form of capital gains.
Whatever the case, he obviously doesn’t get it. He’d rather lash out at people he thinks are rich, even if it means bringing in less revenue to the federal government, a point that Gibson clearly made.
What it comes down to, and the word “fairness” is the tell, is that he wants what all Socialist want….redistribution of wealth. How dare you become successful when so many people are suffering. But I will help out your guilt little one by taking as much as I can from your success and giving it to those I feel deserve it more.
Some call him a lightweight on economic issues….I disagree. He knows what he is doing. He is following Karl Marx playbook to the “T”
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The Obamanation is just another poverty pimp with an Ivy league polish. I do have to disagree with you, he understands totaly that his tax proposals would effect everyone. Just like the other day both he and the hidabeast pledge to not raise taxes on the middle class, yet the both refuse to renew the bush tax cuts which without being renewed if you make between 50-80,000 single or joint income your taxes will increase a minimum of $2500-4000.
It’s all Democrat double speak, they are two Marxists that will make Carters Presidency look like an economic boom
I would agree with raising the Social Security Cap on salaries, while maintaining it (or adjusting it) on payments. I see no reason why the cap is there in the first place, and it would instantly ‘fix’ Social Security.
But the Bush tax cuts MUST stay, and I find it very hard to forgive the Republicans for not making them permanent when they controlled Congress.
As for Obamonomics (my new word for Obama-economics, please send me $0.25 every time you use it) he is the most economically ignorant person I can ever remember running for the White House.
when are we going to have a person with half a brain and an iota of common sense run for president? this guy makes me crazy, he is so ignorant to the plight of the middle class. i was at work today and an elderly women came in and asked where the dems were meeting today. i looked her dead in the face and said i didn’t know because i wasn’t a socialist and that i was a moderate. she huffed out of our business.
There is a reason why the rich pay less taxes. They buy and hold then put their expenses in like a bank account. Most already own their homes, yachts, planes etc. The money they made has already been taxed.
Day traders may find it best to buy and hold with higher taxes.
Businesses would add the tax into their cost which would increase prices, which would hurt the little guy the most. This would cause less units to be sold which would create less of a need to make those units, which would create layoffs.
IPOs (when businesses go public) may slow down as more money would be generated when the taxes go back down. IPOs can generate millions if not billions in taxes.
Bond holders might sell. Already government bonds do not beat taxes and inflation. Increasing the taxes would make it less likely people would want to own government bonds. The same goes with money markets. This would put pressure on the treasury to increase the interest rate on bonds. This is already showing up at the municipal level.
Before we begin in earnest, here is what Article 1, Section 8 of the constitution says about taxes:
“The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States…”
Don’t see the word “fair” in their, do you?
But Obama – and this can’t be spun as a thought being mispoken ala his “crackerquiddick” remarks about bitter, gun-toting religious fanatics, for it is dogmatic with these people – wants to raise the capital gains rate first and foremost for the purpose of fairness.
And what evidence does he offer that this is necessary? Fifty people – 50 out of a nation of 300 million – made $29 billion and paid taxes at a lower rate than their secretaries.
And this problem is so profoundly preeminent that he is willing to see a net reduction in taxes collected, which means less money “to finance health care for Americans who currently don’t have it and …to invest in our infrastructure and invest in our schools” as well as other liberal paradsie-to-be programs.
But what of the poor secretary working for the hedge fund manager? Mightn’t she – like 99,999,950 other non hedge fund managing Americans – own stocks? Buoyed by a moral certitude, Obama is going to take more money from her to get at them.
And consider this – the additional amount she is going to pay is almost certainly going to be a higher percentage of her disposable income than that which he reaps from the evil hedge fund managers and other wealthy and succesful investors.
This reminds me of the luxury tax crafted by liberals in the early 90’s. They were just so very certain that it wasn’t fair that rich people were buying expensive items like yachts that they levied a 10% surtax on the purchase of new ones.
What entailed was a consequences so perfectly logical a third grader could follow it.
Turns out rich people make spending decisions just like the rest of us, albeit with bigger numbers. So the 10% increase effectivley removed some buyers from the market. Yacht sales went down, so the owner of the company was worse off. Blue collar boat makers were laid off, so they were worse off. Tax revenues went down, so the governemnt coffers were worse off. To make up for the short fall, the government had to borrow more money, causing interest rates to go up, so borrowers were worse off. The rich guy who wanted a new yacht had to buy a used one, so, to the extent his original desire went unfulfilled, he was worse off. Which brings us to…
The only guy who benefited. It was the one who already owned a yacht – and was therefore presumably rich – and wanted to sell it. Because there was now an increased demand for used yachts, he was able to fetch a higher price and was therefor better off.
A 1999 George Will column explains it nicely:
“In 1990 the Joint Committee on Taxation projected that the 1991 revenue yield from luxury taxes would be $31 million. It was $16.6 million. Why? Because (surprise!) the taxation changed behavior: Fewer people bought the taxed products. Demand went down when prices went up. Washington was amazed…
According to a study done for the Joint Economic Committee, the tax destroyed 330 jobs in jewelry manufacturing, 1,470 in the aircraft industry and 7,600 in the boating industry. The job losses cost the government a total of $24.2 million in unemployment benefits and lost income tax revenues. So the net effect of the taxes was a loss of $7.6 million in fiscal 1991, which means the government projection was off by $38.6 million.”
The title of Gerge Will’s column? “Tax Break for the Yachting Class.” Seems the yacht industry had fallen on such hard times in the wake of the luxury tax that Patrick Kennedy found it necessary to propose legislation that included a 20% tax credit for purchasers of yachts.
Liberals. Ya gotta love ’em for the entertainment value, if nothing else.