Obama is wrong on taxes

[OldNewby 27]

REVIEW & OUTLOOK

Obama's Tax Evasion

April 18, 2008; Page A16

The parsons of the press corps are furious with Charlie Gibson and George Stephanopoulos of ABC News, which means the pair must have done a pretty good job moderating Wednesday's Democratic debate in Philadelphia. Barack Obama had an off-night, so his media choir wants to shoot the questioners.

We thought the debate was one of the best yet, precisely because it probed the evasive rhetoric we've heard from both Democratic candidates throughout the campaign. Nowhere was this more apparent than during the exchanges between Mr. Gibson and Mr. Obama over taxes.

Time and again, the rookie Senator has said he would not raise taxes on middle-class earners, whom he describes as people with annual income lower than between $200,000 and $250,000. On Wednesday night, he repeated the vow. "I not only have pledged not to raise their taxes," said the Senator, "I've been the first candidate in this race to specifically say I would cut their taxes."

But Mr. Obama has also said he's open to raising – indeed, nearly doubling to 28% – the current top capital gains tax rate of 15%, which would in fact be a tax hike on some 100 million Americans who own stock, including millions of people who fit Mr. Obama's definition of middle class.

Mr. Gibson dared to point out this inconsistency, which regularly goes unmentioned in Mr. Obama's fawning press coverage. But Mr. Gibson also probed a little deeper, asking the candidate why he wants to increase the capital gains tax when history shows that a higher rate brings in less revenue.

"Bill Clinton in 1997 signed legislation that dropped the capital gains tax to 20%," said Mr. Gibson. "And George Bush has taken it down to 15%. And in each instance, when the rate dropped, revenues from the tax increased. The government took in more money. And in the 1980s, when the tax was increased to 28%, the revenues went down. So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected?"

Mr. Obama answered by citing rich hedge fund managers. Raising the capital gains tax is necessary, he said, "to make sure . . . that our tax system is fair and that we are able to finance health care for Americans who currently don't have it and that we're able to invest in our infrastructure and invest in our schools. And you can't do that for free."

But Mr. Gibson had noted that higher rates yield less revenue. So the news anchor tried again: "But history shows that when you drop the capital gains tax, the revenues go up?" Mr. Obama responded that this "might happen or it might not. It depends on what's happening on Wall Street and how business is going." And then he went on a riff about John McCain and the housing market.

This is instructive. The facts about capital gains rates and revenues are well known to our readers, but we'll repeat them as a public service to the Obama campaign. As the nearby chart shows, when the tax rate has risen over the past half century, capital gains realizations have fallen and along with them tax revenue. The most recent such episode was in the early 1990s, when Mr. Obama was old enough to be paying attention. That's one reason Jack Kennedy proposed cutting the capital gains rate. And it's one reason Bill Clinton went along with a rate cut to 20% from 28% in 1997.

Either the young Illinois Senator is ignorant of this revenue data, or he doesn't really care because he's a true income redistributionist who prefers high tax rates as a matter of ideological dogma regardless of the revenue consequences. Neither one is a recommendation for President.

For her part, Hillary Clinton said that she, too, was open to hiking the capital gains tax rate, just not by as much as her rival. "I wouldn't raise it above the 20% if I raised it at all," she said. Of course, she too promised during Wednesday's debate not to raise "a single tax on middle-class Americans, people making less than $250,000 a year."

Both candidates would have voters believe that taxes on investment income only affect the rich. But that's not what Internal Revenue Service returns show. The reality is that the Clinton and Obama rate increases would hit millions of Americans who make well under $200,000. In 2005, 47% of all tax returns reporting capital gains were from households with incomes below $50,000, and 79% came from households with incomes below $100,000.

* * *

By the way, a higher capital gains tax rate isn't the only middle-class tax increase that Mr. Obama is proposing. He also wants to lift the cap on wages subject to the payroll tax. That cap was $97,500 in 2007 and is $102,000 this year. "Those are a heck of a lot of people between $97,000 and $200[,000] and $250,000," said Mr. Gibson. "If you raise the payroll taxes, that's going to raise taxes on them." Ignoring the no-tax pledge he had made five minutes earlier, Mr. Obama explained that such a tax increase was nevertheless necessary.

In other words he dodged the question, as he so often does with impunity. But thanks to Mr. Gibson's persistence, for 90 minutes Wednesday night Mr. Obama didn't get away with it. The voters learned a lot about Mr. Obama, who needs to learn a lot more about taxes and revenue.

link: http://online.wsj.com/article/SB1208475057...ew_and_outlooks

Charlie Gibson, that old rascally rightwing conservative… oh wait a minute, he's not.

[Auburn85 413]

rir, we've got you cornered.

we're showing you he's going to raise taxes on those making under $250k. Stay on track, the issue is taxes on capital gains.

Cutting taxes for the top 1% or the War in Iraq has nothing to do with this discussion of raising the capital gains tax on people making under $250k.

i'm well aware that obama wants to cut taxes and give more credits and exemptions, but he is stating he wants to raise the 15% capital gains tax. There are several people who make $250k and under who have their hard earned money in this 15% capital gains tax rate.

i won't call obama a liar, that wouldn't be fair, but he is being misleading.

[AURaptor 1,113]

Obama thinks he can convince enough folks that " a few hedge fund managers " shouldn't be making billions of dollars. What I find incredible is that he as much admitted that he didn't care if a lower cap gains tax rate would yield more $$ to the Fed Gov't, he STILL would raise the taxes because it wasn't fair that so few are making so much.

Translation: We'll screw the wealthy even if it ends up hurting everyone, just to make a point that we don't think it's fair that some make a lot more than others.

[otterinbham 0]

Oh, I'm sure he'll trot out a "Know Hope" banner somewhere.

That's the problem. Obama's campaign has been coasting on the feel-good stuff for long enough. Now that he's having to bring up specifics, we're not liking what we see.

[DKW 86 6,928]

Oh, I'm sure he'll trot out a "Know Hope" banner somewhere.

That's the problem. Obama's campaign has been coasting on the feel-good stuff for long enough. Now that he's having to bring up specifics, we're not liking what we see.

..Otter Johnson.....is right! (correct.)

I really am having fun this election. I really dont support any of these three clowns/clones. We truly have three basically clone candidates this time. It is really sad and funny at the same time. Some folks actually think having three candidates that parrot basically the same bad policies is a good thing.

Thanks Bush43 for putting true fiscal conservatism into a coma for several years.

[quietfan 233]

Frankly, I never understood why all income, regardless of source, shouldn't be counted the same. Wages, capital gains, interest income, gambling profits, criminal profits, inheritance, finding buried treasure in your back yard, whatever--use the same tax rate on all. How is money acquired from labor vs. money acquired from capital investments vs. money acquired through inheritance, etc., any different or deserving of different tax rates/codes/policies?

Hypothetically, imagine John Doe #1 who reports to work daily, draws a paycheck, and supports his wife and children living month to month on a salary of say $60,000 annually. Then John Doe #2, who has a small portfolio, doesn't work for wages, but brings in about $60,000 annually from capital gains on which he supports a family of the same size. Finally, there's John Doe #3 who inherits $60,000 cash when his rich aunt dies and decides use that windfall to take the year off sharing quality time with his wife and kids. Why should John #1's $60,000 be taxed any differently than John #2's $60,000 or John #3's $60K?

[Of course, in the case of huge windfalls, like inheriting a large company or factory for example, it might be necessary to provide some sort of extended time base or installment plan for tax payment to avoid having to break up/sell off the company just to come up with a huge tax payment in a single year.]

[Auburn85 413]

*bump*

with obama wanting to raise the 15% capital gains tax, he is raising taxes on people making under $250k