Yesterday it was learned that one large piece of President-elect Obama’s effort to save the economy will be a tax cut of $300 billion targeted to lower- and moderate-income Americans, with the credit pegged at $500 per individual and $1,000 per couple. In effect, it’s deja vu all over again as this Wall Street Journal article by Jonathan Weisman and Naftali Bendavid points out – “(t)his part of (Obama’s) plan,” they write, ” is similar to a bipartisan initiative launched in early 2008, which sent out checks worth $131 billion.” Still, the WSJ article claims that the effect of Obama’s proposed tax cuts will be larger than in the first two years of either Bush tax cut.
But will he be able to rope in those on the far left in Congress behind him without sweetening this proposal with punitive provisions? Seems to me that liberals like Barney Frank were dead set against tax cuts when a Republican was proposing them this time last year. From the New York Times and writer David M. Herszenhorn, January 15, 2008:
That sort of talk (about extending the Bush tax cuts) drew a furious reaction from Representative Barney Frank of Massachusetts, the chairman of the Financial Services Committee, who like other Democrats is calling for a temporary stimulus plan, directed at middle-class Americans.
“There is nothing countercyclical about extending tax cuts,” Mr. Frank said in a telephone interview from Massachusetts. “That’s simply trying to use the bad economy as a platform for their ideological goals.”
Now that the shoe may be on the other foot, it’s going to be interesting to see just how fast leftwingers like Barney Frank roll over and embrace whatever Barack Obama puts together.
Once again, I have to object to the idea that only certain people deserve tax cuts simply because they haven’t amassed the skills or maximized their talents as much as others who make more money because of their hard work and efforts. The beauty of the Bush tax cuts that Congressman Frank abhorred was that everyone who paid taxes got a break because rates were lowered for all, and it served to somewhat flatten the tax scale. Thirteen years ago Steve Forbes ran for President on the premise of a flat tax, and, if we’re to be saddled with an income tax rather than a consumption tax for the foreseeable future, that idea remains appealing.
As always with any Presidential proposal, the devil is in the details. (Yeah, I can hardly wait for the first Obama State of the Union address. If you thought President Bush’s laundry lists were nauseating, you ain’t seen nothin’ yet.) The WSJ story even notes that the top limit of the tax credit is in flux, so the limits can be adjusted downward at will. Since many of those in the $200,000 and up bracket are being hit worst by the slow economic times because they run small businesses, that upper limit could get much lower.
In fact, the $200k cap may have to be dropped in order to come up with the revenue required for other portions of Obamanomics – not to be confused with Reaganomics, but perhaps closer to the new Wendy’s ad campaign of “3conomics”. Perhaps we’ll all get tofuburgers for 99 cents as part of our tax break, since hamburgers are too fattening with our obesity epidemic and soybean growers don’t get the market break corn growers do because of ethanol mandates.
Instead of what seems to be an annual goosing of the economy based on tax refunds – note all of the retailers who pitch their wares in the late winter and early spring as great ways to spend your “windfall” of a large tax refund (read: interest-free loan to the government from your pocket), perhaps a culture of frugality is what we need to adopt. Hopefully “once bitten, twice shy” is a lesson learned by America’s youth when it comes to financial dealings.
Unfortunately, the Obama Administration won’t lead by example in this case because too many special interests would like to see otherwise. It remains to be seen the price this tax “refund” actually incurs after they extract their pound of flesh for passage through Congress.
I guess you Republicans are still hurting from the loss in November and so desperate to bring down the Obama Administration that you will stop at nothing, even if it means making a fool of your party by going against one of your main principles (lower taxes) and complaining about Obama when he suggests cutting taxes.
I know you are like a lost puppy right now, but seriously? Obama wants to cut taxes and Righty Blog Monoblogue chastizes him for it? We all know what you would say if he wanted to raise taxes so where do you stand? Wait, I know. Like most Reps you want him to screw the middle class and cut taxes for the rich, even though that is a tax bracket you probably don’t fall into. But I’m sure that doesn’t mean you “haven’t amassed the skills or maximized [your] talents as much as others who make more money because of their hard work and efforts.” Or does it?
And then there’s this:
“Perhaps we’ll all get tofuburgers for 99 cents as part of our tax break, since hamburgers are too fattening with our obesity epidemic”
Sarcasm noted. Are you seriously trying to make fun of people who eat healthy? I really hope you aren’t that uninformed because that was one ignorant thing to say.
TS
I’m all in favor of tax cuts of any kind (except the welfare payments that masquerade as refundable tax credits for people who don’t actually pay any income tax), but this kind of tax cut to stimulate the economy is pretty dumb. If you want to stimulate the economy you don’t just hand out money (either through tax cuts or checks from the government). It seems in vogue to do this, as Bush championed this idea and now Obama embraces it. The popularity of it has more to do with pure politics than stimulus, though. Who doesn’t like getting a tax cut or a government check?
If Obama really wants to help the economy through tax cuts, he should make the Bush tax cuts permanent (removing uncertainty for businesses and individuals is important for long-term planning), cut corporate income tax rates (which are among the highest in the world), cut marginal tax rates and capital gains tax rates (to spur economic activity). Cutting taxes on production and wealth creation will help spur (gasp!) production and wealth creation. But I guess it’s easier to just give everyone a check and claim you did something.
Whatever. Thanks to our little tax deduction that showed up on Thanksgiving, my family is in line to clean up pretty well under the Obama plan. I may put it in a savings account for our new kid. She’ll need the money when she turns 30 or so and she has to pay much higher taxes to fund all this reckless spending being pushed by Obama (and, before him, Presient Bush).