Obama's "Tax Cuts"

The big issue in the media nowadays regarding Obama's venerable tax plan is how the numbers behind his "tax cuts" don't add up. Right now almost one third of the American workforce pays no income taxes once they receive their standard deductions and refundable credits. Obama's tax plan will essentially expand refundable credits to the lower income earners and put about 40% of the workforce off the tax grid completely. I have my personal gripes with the public policy effect of having this much of the voting population with no equity in the federal budget (namely apathy in regards to where that money goes), but I'll limit this post to facts behind the numbers. Recently the McCain campaign has been abandoning the Bill Ayers story, which they should have been concentrating on months ago, and is now shifting to policy issues. They have been harping on Obama for his comments about "spreading the wealth" and his "tax cuts for 95% of America" statements.

When asked about how his administration does not have a socialist platform with a third of the workforce effectively receiving income tax refunds for income taxes they never paid, his campaign and The Tax Foundation responded by saying that the refundable credits would also help to offset the burden placed on them by "payroll taxes, corporate income tax, excise taxes, etc."

It's all very fancy verbiage that, to the uninformed voter, seems fair. But here's my take on the Obama campaign's burden-offsetting refundable credits:

Payroll Taxes: "Oh, but this is to also refund their payroll taxes!"

Ah, well in that case, it means their contributions to medicare and Social Security are also being refunded... this is 40% of the population with little to no basis in the system who will be drawing checks in the future based on a number they supposedly paid in in the present. Where's that money coming from in the future? They tax "the rich" for it, and deny "the rich" the privilege to withdraw it when their time comes. Problem solved.

Corporate income tax: I don't know what they're trying to get at here. These lower 40% of wage earners aren't "corporations," they're people, so I am assuming these guys are talking about the lower 40% who have equity stakes in S-corps, partnerships, etc. Now that I think I know what they're talking about, it still makes no sense considering S-corps and partnerships are flow-through entities anyway, and what that means is the income of the "corporation" or partnership is distributed to the "corporation's" shareholders, and taxed at the shareholders' marginal rate on the 1040 - which makes the "corporate tax" argument null and void, and not even worthy of being mentioned in the explanation because it has no effect on their income taxes. Any "corporate" income will have already determined whether they are in the marginal bracket to receive an "Obama tax cut" or not - but it does jazz it up a bit to make the future welfare recipients seem as if they are contributing to the system rather than parasitically sucking from it.

Excise taxes: Ah, so now they are getting their gas taxes refunded, which means 40% of the people aren't contributing to the funds to rebuild and maintain our roads and highways. They're getting their cigarette taxes refunded so now they aren't paying for their fair share of SCHIP (how much do you want to bet some of those lower 40% of earners have kids subsidized by SCHIP?) Plus, I thought excise taxes were meant to discourage despicable things such as smoking, shooting, and drinking... why do these people deserve to get that money refunded to them? After all, the DC liberals are the ones who enacted those taxes in the first place. Seems kind've counter-productive to me, but then again I'm not a fan of the federal government partaking in social engineering via taxes either, the DC liberals are; thus they have more 'splainin' to do for this kind of thing than me.

So these taxes listed by the Tax Foundation that are supposed to put us at ease with the fact that we are becoming a nation of redistributionist socialists are null and void in regards to determining the Obama "tax cuts."