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Obama’s tax plans need second look

Wednesday, September 17, 2008 | 9:28 a.m. CDT; updated 2:40 p.m. CST, Monday, February 2, 2009

As best I am able to determine, the overwhelming agenda of the Barack Obama presidential campaign is "change," accompanied by rather vague notions of how, what, when, where and why. If I remember correctly, we have not just survived but prospered as a republic since tossing the British out 200 and some years ago.

To be sure, there have occurred assorted glitches and warts; however, by virtue of a bit of constitutional tinkering and an industrious and resilient population, we have survived a Civil War, triumphed over slavery, overcome a Great Depression and won two World Wars. Consequently, where is the need to scrap a system that has provided security, freedom, opportunity and scientific advances for more than 200 years? If it ain't broke, why fix it?

Inasmuch as its issue of change has yet to be defined substantively, the campaign is concealing a weak agenda by resorting to the preferred tactic of attacking the previous administration. President Bush remains the villain - "selected not elected." Hurricane Katrina, Haliburton, "illegal" wiretapping, Bush lied and tax cuts for the wealthy all have been draped around Sen. John McCain's neck with the censure that he voted with the president "90 percent of the time." How else would one expect McCain to vote? Voting with Pelosi and Reid would hardly have gained him respect.

The tax policy bogeyman deployed largely to excite class envy needs badly an exposure to sunlight. We all know that the Republican Party is either oblivious or hard-hearted toward the middle and lower classes because their tax cuts go only to the very wealthy. We know this to be true because the Democrats have said so for years. Would they lie to us?

I am sufficiently versed in the fundamentals of arithmetic to add and subtract numbers. Contrary to what many of us are asked to believe, the rich are not exempt from taxation. In 2006, the top 10 percent of earners paid 70.8 percent of the taxes compared to the 67.3 percent in 2000 before the Bush tax cuts. Also, the top 50 percent paid almost 97 percent, leaving very little for the other half to pay. (All figures are from Tax Foundation, a nonprofit, nonpartisan organization.)

Consequently, it is not that difficult to divine that in the event of any round of tax cuts, those who actually pay them will receive proportionately the larger share of relief. And it is also arithmetically impossible to give much in the way of cuts to those who pay little or no taxes, other than in rewarding a lack of earning with tax credits and handouts.

In addition, the myth that the Bush tax cuts benefited none but the wealthy is not hard to dispel. For example, a single person earning $30,000 in 1999 paid $8,400 in taxes but paid $4,500 in 2008. A married person with $60,000 income under the Clinton administration paid $16,800, while the tab dropped to $9,000 under Bush. Those married making $125,000 saw a reduction from $38,750 to $31,250.

That reducing the tax burden across the boards increases revenues by encouraging investment and creating of jobs is not a phenomenon advanced solely by Republican administrations. President Kennedy also recognized the incentive provided in permitting workers to keep more of the money they earn. By reducing the highest marginal income tax rate from 91 to 70 percent and the highest corporate tax rates from 52 to 48 and 20 percent, JFK caused tax revenues to grow by 65 percent from 1965 to 1970.

It appeals to the basic instinct of class envy popularized by folklore's Robin Hood to take from the rich and give to the poor to fight injustice and tyranny. But when one crunches the numbers, the years of the Kennedy, Reagan and Bush tax cuts introduced the most sustained periods of prosperity and growth in history.

Sen. Obama's vow to reduce taxes for 95 percent of the people sounds good until the fine print reveals that 40 percent pay no taxes. Taking from the most productive in order to cut a $500 or $1,000 check for nontaxpayers hardly seems a good business procedure.

Truth in arithmetic is a constant - liars may figure but figures don't lie.

J. Karl Miller retired as a colonel in the Marine Corps. He is a Columbia resident and can be reached via e-mail at JKarlUSMC@aol.com.

 


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