Here's the effect Obama's tax plan would have on Tiger Woods:(HT TaxProf Blog)When Tiger Woods collected his $1,350,000 check for winning the U.S. Open golf championship this month, his federal and California taxes approximated $586,000. So, Tiger got to keep about $764,000, or 57 percent of his winnings. ...
It was fortunate for Tiger that his most-recent U.S. Open win occurred in 2008. Under twin tax proposals from Obama to 1) remove the "cap" from Social Security taxes for individuals earning over $250,000, a plateau Tiger has long since surpassed in 2008, and 2) eliminate the "Bush" tax cuts, thereby raising the top marginal federal income tax rate to 39.6%, Tiger's taxes on his winner's check would have increased to approximately $776,000, a boost of almost $190,000. Instead of Tiger keeping 57% of his earnings and the government taking 43%, under the twin Obama tax proposals, Tiger's federal and California taxes would have amounted to 57% of his winnings, leaving Tiger with just 43%. ...
The twin Obama tax proposals would result in an increase in federal income taxes for self-employed people earning over $250,000 of about 39% and would take the top federal tax rate on self-employment income to its highest level since 1971. It would also take the top marginal tax rate (federal and state taxes combined) in some states to over 57% on self-employment income. For employees, the top federal tax rates would increase by about 30%.
Only once since 1917 has there been a tax-rate increase equal to or greater than the two twin tax proposals being made by Obama. That tax increase, the Revenue Act of 1932, was proposed by Herbert Hoover. The result was an even greater budget deficit, plummeting tax revenue and a lengthier Great Depression.
2 comments:
Ah...the old scare em with the tax hike meme. Every election season we get the scare about raising taxes... and of course more promises of tax cuts...but if every tax cut is desirable and every tax hike undesirable, well, that means the optimal tax rate must be zero. Of course that would leave us with no functioning govt.
Once one accepts the reality that one needs some level of taxation, then it's just a matter of where to draw the line.
Here's the problem with such a critique: it ignores the reality of the budget deficits which are massive and growing.
Now you can either cut spending and/or raise taxes. The old canard about somehow cutting taxes and reducing the deficit just doesn't work. Bush promised it would but it has not. Even under Reagan we had swelling budget deficits thanks to deep tax cuts and massive spending increases in defense spending. I think those were necessary at the time, but the argument offered of being able to have tax cuts, massive defense spending, and lowered deficits did not work out.
No one likes to raise taxes and I know many say why don't we just cut govt spending...but anyone against any tax hikes must be intellectually honest and give a listing of specific budget cuts...not some vague nebulous talk about waste or pork or whatnot.
It's always easy to talk of cutting govt spending in the abstract; the tough part is actually going through the budget and finding the items to cut and then getting those cuts passed.
Bush and by extension McCain have no plan to pay for the war in Iraq. This is the first war that the American public has not been asked to pay for. That's immoral and that also divorces from the equation one of the ways any administration is held accountable when they take the country to war.
In fact, in the midst of war, Pres Bush and Congress enacted a massive tax cut for the wealthy. That was stupid in retrospect.
Our budget deficit is a de facto tax on us and even more importantly, future generations.
It's wrong to just concentrate on one side of the ledger; you have to address both realistically.
Let's take social security; in order to keep it solvent you either you raise taxes or cut benefits. If someone advocates cutting benefits, then that needs to be brought to the public.
I'm not sure that Obama's tax plan is the optimal, but at least he is trying to deal with reality, instead of just punting the ball down the field for others to clean up later.
Independent analysis shows that McCain's plans would likely result in a deficit 3 times higher than Obama's. That's a huge hidden tax.
The record is clear; there has been a huge competency deficit in this administration and unfortunately Sen McCain seems determined to follow the same path.
We need sober reasoning that admits that we need a balance of taxes and govt spending along with a robust private sector. The only real debate should be over the optimal mix. But we shouldn't pretend that taxes are not a part of the equation, and that all taxes are somehow evil.
The world's largest bond fund manager, the legendary Bill Gross of PIMCO, drafted a letter to Obama anticipating his election.
"Dear President Obama," the letter began. "You have inherited a mess. Your predecessor, fixated on emulating a former Republican icon from a far different economic era, chose to emphasize tax cuts for the rich and excessive consumption for all Americans," Gross wrote. "He promoted deregulation and free markets when, in fact, the markets and their institutions needed tough love."
Gross goes on to predict that the next president will inherit the first $1 trillion budget deficit.
Warren Buffet is another legendary investor who supports Obama.
Investment professionals and economists are largely supporting Obama this year, and very few seem to have any confidence in "don't-know-much-'bout-economy" McCain.
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