A Tax Plan That Isn't

Barack Obama love to tout that his tax plan that will cut taxes for 95% of families in this country.  That's a great claim.  How he arrived at the 95% of the number has never been fully explained, but it sounds great at first glance.  But I think we should take a second look.

First, what rates are going to be reduced to achieve that role?  Well, the sort answer to that is "we don't know".  The campaign literature does not specifically state which parts of the tax code would be amended to lower tax rates or change what is considered income.  When cornered, Obama campaign officials and talking heads can't (or won't) answer that question. 

Why is that important?  Because the Internal Revenue code specifically lays out every tax rate, income level, exemption, exception, and rule.  Unless a politician is willing to get specific on what will change, then nothing may change.  In other words, the candidate is merely talking out his ass.

Second, 47% of all Americans pay NO FEDERAL INCOME TAX.  That's right, almost one half the country pays no federal income tax.  Note that this is not the same as "have no tax withheld".  The point is that the government -- through the coercion of backup withholding -- takes your money, regardless of your obligation, holds it, then gives it back to you interest free.  In other words, 47% of you -- especially the young, the working poor, and a big chunk of the middle class -- make a coercive 0% interest loan to the US Government every payday.

So-- who is really seeing a tax cut here?

Third, why do politicians always talk about giving tax cuts to American families?  What about us single folks?  Why not give US a tax cut? Families get all sorts of fancy exemptions:  dependents, head of household, etc.  I think single Americans should rise up and demand that any tax cuts or changes to the law are equitably applied to singles as well as families.

What do we know about this tax plan?  Well, when you dive deep into the hear of the proposal, what you really see is that Barack Obama's plan is not about tax cuts.  It's not about modifiying a hideously broken tax system that is complex, difficult, and crime-inducing.  It's not about making our tax system more equitable.  His plan is really about the much-maligned wealth redistribution that "Joe the Plumber" uncovered.

How?  Because the plan is about rebate and refund checks, the great majority of which go to those 47% of Americans that do not even OWE FEDERAL TAX.  That's right.  The only way you can say that 95% of Americans are going to see a tax reduction is to admit that the actual taxpayers are going to see yet another massive transfer of wealth from their wallets to someone elses.

It's really no different than those fancy "manufacturer's rebates" that car dealers pass out.  Why not just lower the cost of the car by the rebate in the first place?  Or, in the case of taxes, why not modify the system to not take the money from people that could use it, instead of writing them checks back?