Saturday, June 21, 2008

Obama Proposes a 52% Tax Rate

I hate to raise political discussion here, but this presidential election has to be one the most concerning in my lifetime. There is simply no good choice among the candidates. Sure, McCain supporters will tell you that he is a war hero, and Obama's supports will tell you that he is a great speaker, but neither of them will, IMHO, be a great president.

And quite honestly, they both scare me. McCain for his age, his confusion, and his blind faith in following President Bush. And Obama because we don't know enough about him.

But here is what we do know. Obama intends to raise income taxes, and he intends to raise them big time. I will never forget his statement during the primaries, when he wanted to completely remove the cap on social security taxes. At the present, the tax is only paid on the first $102,000 of income. Obama proposed removing that cap completely, effectively raising taxes on everyone making over $102,000 by 7.5%. Think about that, if you are making over $102,000 a year, your marginal tax rate is 28%, if you make over $170,000 it is 33%. Today you pay 7.5% up to $102,000 for social security. If Obama has his way, the marginal tax rate for the guy who makes $150,000 a year will be 35%.

Obama's answer at the time? He didn't care, he said that he wasn't concerned because only 6%of the population earns over $100,000 a year. He clearly indicated his plan to soak the "rich" - defined as those of us making over $100,000, and he clearly does not care what we say about it.

Obama has changed his position a bit. Now he is proposing to keep the cap from $102,000 to $250,000, so that only those who earn over $250,000 will have this increase. So, the top wage earners will now have a tax rate of 42%, and for those who are self employed, and making over $350,000, their tax rate will now be a whopping 50%!

So, if you work hard, become successful, and do well, Obama wants to take 50% of your earnings for taxes, and he is doing that to the individuals who already pay over 90% of the taxes in this country. Then of course, add in state and local taxes, and that high income tax payer is going to be paying close to 60% of his adjusted gross income in taxes. SIXTY PERCENT IN TAXES!

Of course, all of these income figures are adjusted gross income, so the proposal affects a few less people than presented, but that is not the point. First, as pointed out by the Wall Street Journal, Social Security is not a welfare program. The reason there is a cap on the tax at $102,000, is that the maximum benefit that one can receive is based on a maximum salary of $102,000. I won't repeat the discussion here, but read the WSJ article - Obama is going to increase the social security tax on those making over $102,000, with no benefit to those people.

Obama's argument? He claims that it is unfair for middle-class earners to pay the Social Security tax "on every dime they make," while millionaires and billionaires pay it on only "a very small percentage of their income." In his original plan he was not raising the tax solely on millionaires and billionaires - he was raising it for cops, firemen, college professors, computer programmers, accountants, school administrators, and everyone else who makes $103,000 a year - these people are hardly millionaires. The current revision raises the bar a bit, but people making $250,000 are hardly millionaires - not when the average price of a home in the northeast is $280,000, and real estate taxes run at a rate of 3% or so a year.

And if it is not fair that they don't pay social security tax on "every dime they make" why is it fair to force them to pay taxes on "every time they make" when they will never, ever, see the benefit of that tax?

Someone needs to remind our politicians that this is not a welfare state, and we all need to take care of ourselves. Sure, we need to assist others in trouble, but that does not mean that we keep raising taxes and squandering the taxes on pork and election year handouts.

But I have a unique idea - how about we cut spending by 10%. A measly 10% off of the federal budget. The federal budget is 3 TRILLION dollars (without the Iraq war). Take out mandatory spending - social security, medicare, unemployment benefits and interest on the national debt, and the budget is ONE TRILLION DOLLARS. Take out defense, and the budget is 600 BILLION. See Wikipedia's budget summary for the exact figures.

Cut that part of the budget, across the board, by 10%, and there is a savings of SIXTY BILLION DOLLARS.

I know that none of this affects most Americans, but it should concern every American. If it does not affect you, it affects your community and will undoubtedly effect you as those who are being soaked by taxes raise their prices to make up for the lost income. More importantly, it will affect your children, who will do what you ask them to do - work hard, be successful and earn a good living.

We are not a socialist country. Our foundations are in the concept of work hard, better yourself, and be successful. We cannot punish those who succeed with oppressive taxes, and continue to hand out money to the masses without destroying our economic system, and ultimately, our country.
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