One of Barack Obama's most potent campaign claims is that he'll cut taxes for no less than 95% of "working families." He's even promising to cut taxes enough that the government's tax share of GDP will be no more than 18.2% -- which is lower than it is today.
I'd rather get lower tax rates as my preferred way to pay less taxes. It is simple to understand and you don't have to fit into special categories to pay less. But Barack isn't aiming for my vote. The 44% of tax filers who do not even have to pay income taxes will be eligible for credits that Obama bills as tax cuts. Only the clean car credit below is restricted to people who actually pay income taxes.
- 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.
So Barack is aiming for the votes of people who aren't net taxpayers. These people already get more than they pay for.
A mortgage tax credit? That's the worst one on the list. We are paying enough already for irresponsible home buyers. We need to subsidize their recklessness even more? This is unfair to renters and to savers.
We are talking big money. Taxpayers have to pay so that credits can be handed out to others.
The total annual expenditures on refundable "tax credits" would rise over the next 10 years by $647 billion to $1.054 trillion, according to the Tax Policy Center.
I am expecting that Barack will shaft me so he can play leftist social engineer.
|Share |||By Randall Parker at 2008 October 14 12:10 AM Politics Money|