WHY BARACK HUSSEIN OBAMA IS WRONG FOR AMERICA ---- TAXES

- B.H. Obama’s Proposal:
o It is utterly important to begin by understanding the basis for the freshman senator’s tax proposals. If you visit the website of change, aka barackobama.com, you will find that Obama declares one of his landmark goals to be to “restore fairness to the tax code.” Obama operates under the notion that in this day and age, the way in which Americans pay taxes is horrifically unfair. Thanks primarily to the Bush tax cuts, Obama believes the rich don’t pay enough in taxes and the middle and lower classes pay too much. This concept of social injustice provides the inspiration for the tax proposals we are about to discuss, and yes, such inspiration is completely flawed and, quite frankly, pretty disgusting (but we’ll talk about that soon enough). For now, let’s take a look at the details of the Barackonomics proposals.


o In his mission to bring wealthy Americans to tax justice, Obama would begin by allowing the top 2 rates of income taxation to return to 36% and 39.6% respectively. 36 and 40 cents of ever dollar the individuals and families in these tax brackets earn will be going to the government. But don’t worry, they’re rich so they can afford it, and that’s all that matters.

o Next up, Obama would remove the cap on the FICA tax (social security), making it applicable to all income, not just earnings under $102,000. Now to better understand such a just and fair proposal, it’s important to go through a brief refresher of how the Social Security tax works. Currently the tax is only enforced on the first $102,000 an individual earns. In other words, say a well-to-do accountant in New York City earns $200,000. Well, only the first $102,000 of that amount would be taxed for Social Security. The remaining $82,000 would be left untouched. In terms of rates, the self-employed pay 12.4% up to the $102,000 limit, while the regularly employed pay 6.2%, an amount matched by their employers. Under the glorious reign of a President B. Hussein Obama, the $102,000 cap I speak of would magically, yet fairly, disappear. All of the $200,000 our New York City account earned, not just the first $102,000, would be taxed. But again, it’s alright folks, the accountant’s wealthy, so we can tax him more and not feel bad about it.

o My friends the fun doesn’t stop there! Next on the Obama agenda would be a near doubling of the capital gains tax. Obama would raise the tax rate from the current 15% to an astounding 28%. Now for those of you who are not particularly familiar with the cap gains tax, it’s actually pretty simple. The capital gains tax, unlike Barrack Obama, is exactly what it says it is. And that is a tax on any profit you might reap from the capital you own and sell. What exactly is capital? Well, the most common forms of capital assets are stocks, bonds, and real estate. So to use another reader-friendly example, say a consultant here in Dallas is an avid investor and owns a handful of stock in AT&T Inc. Well one day our wise investor decides to sell this AT&T stock and collect his profit. Under the current cap gains tax, this individual would fork over 15% of the profits he reaps from that sale to the government. Under the Obama crusade for fairness, that same investor would in fact be forced to hand over almost 30% of the profits he gains from his investments. But don’t worry, because he can afford to invest, he’s probably rich, so increased taxes are definitely justified.

o Ok, that’s it. No more tax hikes….just kidding!! Of course there’s more!! Next on the list we have a proposed doubling of the tax on dividends. President Barrack would raise that tax rate from the current 15% to a whopping 30%. Once again, let me provide a brief refresher on what exactly the tax on dividends entails. When corporations and companies earn a profit, they can do one of two things. They can reinvest the money into the company or they can pay it to the company’s shareholders as a dividend. So a tax on those dividends means that if a small business owner in Alaska decides to invest in his buddy’s start up company, any money he earns as a shareholder will be taxed. Today, 15% of any reward that our Alaskan small business owner receives for investing in a profitable company will be going to the government. However, if the Fairness Express ever takes flight, President Obama would force him to hand over two times what he does now. But come on, the Alaskan guy has to be rich, so it’s only fair.

o Whew.., I think we’re done now. At this time, feel free to take a stretch break, grab a drink of water, lower your blood pressure, count to ten, and then read on.


- The Problem:
o Removing the cap…as if a tax hike of such monumental proportions isn’t enough, Obama’s proposed FICA increase would weaken some of the fundamental tenets of U.S. capitalism and enterprise: entrepreneurship and personal productivity. The removal of the Social Security cap would effectively punish the most ambitious and industrious people in the labor force. As workers earn more money and achieve greater success in their profession, more and more is withheld from their paycheck. And on top of this attack on individual success, employers are going to be less and less willing to award salaries greater than $102,000 as they’re forced to fork over 6.2% of the raise. Incentives are a hugely important and time-tested component of any capitalistic economy, and Obama’s proposed FICA increase would undoubtedly undermine the incentive to create new jobs, new wealth, and higher incomes.

o The cap gains disaster…with the stock market already deep into bear territory and the real estate market experiencing an historic slump, a near doubling of the capital gains tax would by far be the most pernicious of Obama’s tax proposals. When we look at the three primary consequences of such an increase, this bleak reality becomes clear:

§ Damage to the stock markets: Such a drastic increase in the tax on capital gains would wrest drastic and devastating results on capital, real estate, and equity markets. In the event of an Obama presidency, no one in their right mind would want to hold onto stock or real estate, knowing they would have to pay 28% of their profit in taxes, compared to today’s 15%. An impending Obama presidency would trigger mass selling, causing widespread panic in the stock market. The mere prospect of an Obama presidency and resulting cap gains hike would easily send the already ailing stock market into a full fledged crash. And assuredly the real estate market, in perhaps the worst condition it has ever seen, will fair no better.

§ Revenue drop: One of the primary purposes of tax hikes is the reduction of the deficit through increased government revenue (more taxes = more money for the government). Now Barrack Obama would like for you to believe that his tax increases, including the cap gains hike, would accomplish just this. But as it turns out, Barrack would be wrong. History tells us that capital gains tax increases actually do not increase revenue. In fact, it appears that such measures do exactly the opposite. Thus far the cap gains tax has only been increased once, in 1986. And what was the result? The result was a drop in revenues by 44% over the following 3 years! The capital gains tax has been cut a total of 3 times since its inception: 1981, 1997, 2003. Following these cuts, revenues rose by 49%, 49%, and 88% respectively! These numbers are astonishing, but the reasoning is quite clear: people are more willing to sell stock and real estate when they know less of their profit will be taken from them. And greater capital asset turnover means more money for the government.

§ Cut in private investment: Over half of all adults in this country own stock in some form or another, and in 2006, 8.5 million people paid capital gains taxes. These private investors would undoubtedly be devastated by Obama’s crushing increase. Again we must ask the question, who in the world would want to continue to invest when they will never see a third of what they make? Experts estimate that Obama’s cap gains proposals would eliminate billions of dollars in private investment, resulting in a horrendous reduction in economic growth per year. The stock market and private investment are yet another fundamental and integral part of our economic system that Barrack Obama would gravely endanger.


o And don’t forget dividends…just as a capital gains tax hike would discourage private investment, Obama’s proposed doubling of the tax on dividends would dissuade individuals from investing in job-creating companies. Again, who would want to continue putting money into companies knowing that a third of any money they get from such an endeavor would go straight to the government? American companies rely on investments from everyday Americans in order to expand their enterprises and sustain the kind of growth that has the power to create jobs and provide higher salaries for employees. Any increase in the tax on money these companies return to investors will surely have a negative impact on such growth. But doubling the tax?! That would discourage investors in the worst way and have disastrous consequences on companies that will be forced to make cuts themselves (i.e. salary, personnel, new positions, etc.)

o It’s not fair!.... Obama supporter and former VP candidate John Edwards explained Barrack’s tax philosophy better than I ever could when he dubiously claimed, “two Americas...one privileged, the other burdened...one America that does the work, another that reaps the reward. One America that pays the taxes, another America that gets the tax breaks." Liberals often tout this notion of injustice as they campaign for middle class votes, and it is this highly polarizing and flawed belief in “two Americas” that define Obama’s proposals. But is he right? Is America really that unfair? You judge for yourself:

§ The Do-Nothing Wealthy Class that Doesn’t Pay Enough Taxes

· Richest 1% earn 16% of total national income but pays about 1/3 of our federal income tax
· Richest 10% earn 33% of total national income but pays about 2/3 of our federal income tax
· Top 1/5 of U.S. households (census burea divides households into quintiles when calculating income inequality) perform 1/3 of all labor in the economy
· Top 1/5 of U.S. households have most educated and productive workers

§ The Oppressed Lower Classes that Bear Our National Tax Burden

· Poorest 50% earn13% of total national income and pays less than 3 % of our federal income tax

So remind me again, Senator Obama, why do we need to raise the top 2 rates of income taxation, uncap the FICA tax, increase the capital gains tax, and double the tax on dividends? Because the current tax levels aren’t fair for the lower classes? Because the current tax levels favor a bunch of lazy rich folks? Because the current tax levels are oppressive to lower classes? Interesting…


o When they’re added up, all of Obama’s tax proposals could easily amount to the largest tax increase this country has every seen. Now that is change that I can not and will not believe in.