Why does Obama want to raise taxes?

[gdnp]

Tax those horrible people who make too much money. If your boss makes more than $250,000 tax the crap out of him/her.

Vote for higher taxes on your boss!!! Put him out of business. ...No wait....what???

We are taxing profits, not revenues here. AFAIK Obama is not proposing any changes in business taxes, so revenues reinvested in the business would not be affected either. Sounds like a straw man.

There's something I don't get. If you are making 250,000 bucks per year, in my book, that makes you a fat cat. I really don't care how you make it.

And the idea that somehow this tax will strangle small business doesn't make sense to me. If you take the money you earn in your small business, and use it to pay employees, or expand your business, or keep the lights on in the store, it isn't taxable income. How would this have any effect on small business at all?

I would agree with your point except for your characterization of everyone who makes over 250K as a fat cat. I fall into that category but work long hours for my money and live what I think most observers would consider an upper middle class lifestyle. I also support Obama, including his tax policies. I have no problem with those who think I should be shouldering a larger portion of the tax burden, since I agree. I would just like to see those who have passive income from investments taxed at the same rate as the income I work for.

 

[Cleon]

After the past eight years, if you still believe Republican rhetoric about cutting spending and fiscal responsibility, then all I have to say is that I have a bridge in Brooklyn to sell you.

 

[WildCat]

One clue: someother countries such as Germany have higher taxes, yet manage to have living standards the same as in the USA (and in some areas, better). It's all about how you spend the tax money, and on what; the USA isn't too logical about it all, not to the benefit of its entire population, anyway.

Germany (and most countries in Europe) have higher personal taxes, but very low taxes on businesses. In fact, the US has some of the highest business tax rates in the world and this hurts us as far as competing with foreign companies. I'd trade higher personal taxes if it meant lower business taxes, but in general Americans are too stupid to realize that any tax on a business gets passed on to them, the consumer, or they pay for it through lower wages. In fact, many Americans want higher taxes on businesses, and then are shocked when those businesses move overseas.

eta: And guess which candidate wants to raise taxes on businesses?

 

[WildCat]

We are taxing profits, not revenues here. AFAIK Obama is not proposing any changes in business taxes, so revenues reinvested in the business would not be affected either. Sounds like a straw man.

Not true, Obama wants to raise taxes on businesses by "closing loopholes". He's another stupid American who thinks those taxes come out of profits, and not from higher prices to consumers or lower wages for workers.

 

[Tricky]

Not true, Obama wants to raise taxes on businesses by "closing loopholes". He's another stupid American who thinks those taxes come out of profits, and not from higher prices to consumers or lower wages for workers.

You're assuming that any business owner who loses some of his salary (to taxes or whatever) will simply raise prices. That is not how the market works. In most cases, he will simply make less money. Businesses don't fail because of oppressive taxes, or else they would all fail. Businesses fail because they are out-competed.

I present you gdnp as an example of a person who will be impacted by taxes on the upper income bracket, but who still agrees with them.

Not all Americans are stupid, nor are they all motivated by money alone.

 

[Grizzly Bear]

2) The USA has far too large a deficit. It has to learn to live within its means, as do we all.

The fiscal deficit is huge, for starters.

Except both of their spending plans will increase the national deficit, as implied earlier (Article) -- I posted the article in another thread, however I believe it has some relevance to this.

Income taxes, you mean? He only wants to raise income taxes on people making over $250,000/year (Approximately the top 2% of taxpayers).

You might want to read into this article. For starters, the top 40% of Americans pay 99 percent of all income taxes, while the top 10 percent making 87,000+ paid in excess of 70% of income taxes. (2004 figures). And since the 1970's the tax burden on the super-rich have been rising even faster than the other groups.

81% of households would get a tax break and a majority of taxpayers would get a bigger tax break under Obama's plan than under McCain's.

81 percent? Or 95 percent? Whether it's the figure you're putting out or Obama's, does this only include those Americans who actually pay income taxes, or does it mean lowering taxes for those paying taxes and extra rebates for the roughly 30-40% of Americans who don't pay income taxes at all? Source oof the 40% figure)

And for further reading: Real clear politics

The statistics speak for themselves. Only 62 percent of Americans pay federal income tax, meaning that 38 percent get a 100 percent refund of any taxes withheld. So Mr. Obama's 95 percent that will receive money from the government includes roughly 33 percent of Americans who pay no income tax. One-third of Americans pay no income taxes yet would receive a government check of perhaps $1,000 or more.

That is pure income redistribution. Some pundits argue that this is Keynesian demand-side economics. It is not. Having the government take money from business entities or affluent individuals and giving it to those who pay no federal income taxes is not Keynesian. It's Marxist.

Here's a more recent non-partisan analysis on Obama's tax plan and it's effect on the lower and middle class if the other two are "too partisan": http://www.taxfoundation.org/blog/show/23501.html

From where I stand 250K seems like a lot (over 4 times what I make), and it would only be a marginal tax increase.

And those businesses affected by Obama's tax plan would find less incentives to create new jobs, improve production quality, and could lead to more outsourcing of jobs for cheap labor, because their expenses would go up. $250,000 is alot to you and me, but to a business of any size that's not very much after worker salaries, equipment and production costs are taken into account.

 

[WildCat]

You're assuming that any business owner who loses some of his salary (to taxes or whatever) will simply raise prices. That is not how the market works. In most cases, he will simply make less money. Businesses don't fail because of oppressive taxes, or else they would all fail. Businesses fail because they are out-competed.

Holy crap, you're actually arguing that you can increase costs on a business and that this has no effect on their ability to compete or remain viable! I really cannot fathom the tortured logic that goes in to this line of thought.

A WSJ commentator: http://online.wsj.com/video/obama-m...xes/136E003B-626E-4419-9618-3B805DC9469A.html

I present you gdnp as an example of a person who will be impacted by taxes on the upper income bracket, but who still agrees with them.

Not all Americans are stupid, nor are they all motivated by money alone.

I'm talking about corporate taxes, not personal taxes.

 

[Upchurch]

Isn't the tax on income? It is not a tax on business expenses. If a small business owner is making a quarter mil per year, in income, He's in no danger of going out of business even if you doubled his taxes. He might not be able to afford that new Lexus.

I'm not exactly sure what you are saying, but as a small business owner, I can tell you that the money the business makes and the money I make are not the same thing.

Even though I own the business (well, part of it), I still draw a salary. It's that salary that I pay income taxes on. As far as that goes, I get more of a tax break under Obama's plan than I do under McCain's. Even if it were possible to give myself a $250k salary or more, I never would because I would have to pay more taxes on it.

Likewise, the goal is to never let the business make much of a profit either. If we have tons of money coming it, we jack up our expenses in the form of new equipment, software, etc. At the end of the year, the goal for tax purposes is for the business to be a wash.

The only small business owners who are hurt by income taxes are the small business owners who don't know what they are doing. Is it taking advantage of the system? A little. But the bank is a lousy place to keep money.

 

[Eskarina]

Germany (and most countries in Europe) have higher personal taxes, but very low taxes on businesses. In fact, the US has some of the highest business tax rates in the world and this hurts us as far as competing with foreign companies. I'd trade higher personal taxes if it meant lower business taxes, but in general Americans are too stupid to realize that any tax on a business gets passed on to them, the consumer, or they pay for it through lower wages. In fact, many Americans want higher taxes on businesses, and then are shocked when those businesses move overseas.

eta: And guess which candidate wants to raise taxes on businesses?

Business taxes are just one factor for the decision to move overseas. Another, much bigger one (IMO) are the wages. If people in India or China are willing to do the same job for half the money or a fifth or a tenth the company has to pay in the US or Germany or wherever, that is a pretty big incentive. Add to that subsidies, less regulations, lower prices for ressources, lower business taxes et voilà... globalisation.

But that is beside the point, really, as the subject here is small businesses, and I don't see your local friendly grocerer or hairdresser or pharmacist packing up their bags and moving to India. And from what I understand they won't suffer from higher taxes.

 

[JoeTheJuggler]

There's something I don't get. If you are making 250,000 bucks per year, in my book, that makes you a fat cat. I really don't care how you make it.

Amen!

 

[Tricky]

Holy crap, you're actually arguing that you can increase costs on a business and that this has no effect on their ability to compete or remain viable! I really cannot fathom the tortured logic that goes in to this line of thought.

I was talking about income taxes, not corporate taxes. I thought that was clear from my post. That is the only place where it is clear that taxes will increase in the upper brackets under Obama.

As Upchurch, an actual small-business owner comments, it is quite likely that the Obama tax plan is friendlier to small businesses than the McCain plan.

I'm skeptical about the rhetoric of how Democrats are going to ruin small businesses. I have never seen that to be the case.

 

[corplinx]

Jim Lehrer pointed to the economic situation in the debate. Tax revenues will be down, 300 billion or so will go to loans for bailing out finance companies. He asked what the candidates would do to pay for their spending proposals.

It was a startling moment of clarity. Obama dodged the question and instead used the opportunity to make more promises about what he would deliver in terms of new spending. McCain actually gave a few exampes of what he would cut including ethanol subsidies. This is why McCain can't win.

People don't want to hear pragmatic tough decisions. They want to hear "you'll get a Bluray player!". To Joe Sixpack, the toughest political decision he can handle is you saying "hey, ill tax rich people!".

 

[Grizzly Bear]

I think the Great Depression is a nice precedent for this one, aren't we afterall experiencing similar problems today, leading to this desire to redistribute income?

The Great Depression ultimately led to government intervention for the "forgotten man", those viewed as suffering. This intervention although morally heroic came with costs that ultimately outlasted its benefit. Probably the biggest question I have is not whether the war with Japan or Germany ended it. It's why the depression lasted until the war.

I believe this article put it best:

"The fact that the Depression dragged on for years convinced generations of economists and policy-makers that capitalism could not be trusted to recover from depressions and that significant government intervention was required to achieve good outcomes," Cole said. "Ironically, our work shows that the recovery would have been very rapid had the government not intervened."

Does the rhetoric and current economic slump ring any bells?

 

[joobz]

McCain actually gave a few exampes of what he would cut including ethanol subsidies.

OMG! You mean McCain's going to effectively raise taxes on corporations to make up lost revenue???

Oh dear lord. That's crazy. Doesn't he know that only Democrats are so dumb as to want to actually increase the taxes that corporations pay?


But you are right. Obama was dodging those tough choices. Like when he said he was going to close the loopholes that allow for tax havens. That was clearly a dodge.

 

[Tricky]

I think the Great Depression is a nice precedent for this one, aren't we afterall experiencing similar problems today, leading to this desire to redistribute income?

The Great Depression ultimately led to government intervention for the "forgotten man", those viewed as suffering. This intervention although morally heroic came with costs that ultimately outlasted its benefit. Probably the biggest question I have is not whether the war with Japan or Germany ended it. It's why the depression lasted until the war.

I believe this article put it best:

Does the rhetoric and current economic slump ring any bells?

I'm a bit skeptical of "what if" models of the past. More often than not, they take far too few factors into account. This is why no economist is capable of making precise and reliable predictions.

Would the depression have ended faster without government intervention? Possibly, though not certainly. One thing is fairly certain though. A great deal of our country's infrastructure was built during the depression years by government influx of cash. These kinds of long-lasting "benefits" are rarely considered when bean counters tally their spreadsheets.

 

[Skeptic Guy]

I didn't think Obama was proposing a "tax increase" but rather discontinuing Bush's tax cuts. It's not really increasing taxes but rather recognizing that given the economic situation and the costs of the war, the government needs the revenue stream.

 

[shuize]

But you are right. Obama was dodging those tough choices. Like when he said he was going to close the loopholes that allow for tax havens. That was clearly a dodge.

Ha. The "close-the-loophole" argument is about as old as sin. If you actually think it's going to happen, I have a nice bailout to sell you. Much better for a candidate to name specific programs he'll cut ... then there's a chance, albeit small, that voters might actually remember the promise and hold the candidate to his word.

 

[Tony]

The goal is to finance the government, not "get even" with "the rich".

Well, you have to remember. With conservatives and the right, it's all about class-warfare. Its acceptable to punish those who make less with taxes since they're not as successful as the rich. They deserve taxes because they are failures in life and business.

 

[aerosolben]

Obama is not hitting the fat cats, he is hitting small business. Not a good idea, not good at all.

While small businesses are undoubtedly included in those tax categories, I doubt our conventional impression of "small business" conveys the entirety of the category.

Further, note that its two-thirds of the income, indicating that the proportion of households deriving income from that category that would hit the tax line is probably substantially less.

 

[Puppycow]

And since the 1970's the tax burden on the super-rich have been rising even faster than the other groups.

Oh those poor put-upon super-rich. However will they manage?

Anyway, what exactly do you mean? Their marginal tax rate has gone down. If they're paying more taxes it's because they're making a lot more money than they used to.

The gap between the rich and the poor to middle-class is rapidly increasing. Which would explain why the super-rich pay a larger share of the total tax base than in the past.

I'll repeat what I said before: Obama's proposed tax rate is less than it was under Reagan and the same as in the 90's. The 90's was a great decade for economic growth, so it was not that bad for the economy.