Read His Lips - No New (Net) Taxes

Writing in today's WSJ, Obama's economic advisers tell us that the Obama tax plan includes tax cuts for the middle class, a tax "rollback" for the high-earners who had their taxes cut under Bush, and is on net a revenue-reducer:

Overall, Sen. Obama's middle-class tax cuts are larger than his partial rollbacks for families earning over $250,000, making the proposal as a whole a net tax cut and reducing revenues to less than 18.2% of GDP -- the level of taxes that prevailed under President Reagan.

Kind words for Reagan - troubling to Dems, none of whom read the Journal.  (But there might be something in the air - ironically, Krugman tips his hat to Reagan today as well, without naming him of course; see below).

The Scrivener wonders how Obama proposes to finance near-universal health care with a tax cut, since he seemed to lack the funds even when he was proposing tax hikes.

James Pethokoukis at USN&WR thinks Obama is a flip-flopper just playing politics. Smart politics, but where is the conviction, and why is this change rather than more of the same old Washington game?

My money?  Clinton lied about his middle class tax cut, and Obama is lying now.  Obama is offering tax cuts I can't believe in.

KRUGMAN ON REAGAN:  Krugman writes on the dangers facing the world:

And now comes “militarism and imperialism.” By itself, as I said, the war in Georgia isn’t that big a deal economically. But it does mark the end of the Pax Americana — the era in which the United States more or less maintained a monopoly on the use of military force. And that raises some real questions about the future of globalization.

Most obviously, Europe’s dependence on Russian energy, especially natural gas, now looks very dangerous — more dangerous, arguably, than its dependence on Middle Eastern oil. After all, Russia has already used gas as a weapon: in 2006, it cut off supplies to Ukraine amid a dispute over prices.

Like Ron said.

Comments

[hrtshpdbox]

FooBar writes (from other thread):
"I forgot the link for my cite a few comments up explaining that Obama proposes extending most of the rest of Bush's tax cuts for those making < $250K."
Were you serious? That's a link about not taxing senior citizens, and has nothing to do with the roll-back of the 9/11 cuts. I'm interested in seeing how Obama parses reinstituting the estate tax as "not taxing those making less than 250k". At pre-9/11 rates middle-income farmers, for instance, were forced to sell off large tracts of land that had been in their family for generations in order to pay the estate tax. Like any liberal's tax plans, the desire to get the rich winds up affecting everyone and slowing the economy.

[MayBee]

Michelle Obama has been complaining about the difficulties of paying off her student loans, and yet they have been in about the $250,000 income group for several years. Her rhetoric sure hasn't been that they have excess income.

Surely the Obamas understand that they couldn't have afforded to foot the bill for the rest of the country at that income level.
I don't see how his plan can possibly work.

[Foo Bar]

Were you serious? That's a link about not taxing senior citizens, and has nothing to do with the roll-back of the 9/11 cuts

??

Read all the way to the end of the article, Yes, most of the article is about the tax cut for seniors, but the last paragraph describes the rest of Obama's plan:

The proposed new tax break for seniors is one of about a dozen tax changes proposed by Obama, including raising rates on people making more than $250,000 a year; extending most of the rest of President Bush's tax cuts;

[Jim Glass]

The WSJ tax policy op-ed by Obama's people is rather interesting.

First, it pictures Obama as a Reagan-type tax cutter, invoking Reagan’s name twice (approvingly!), while emphasizing that Obama will cut taxes on net.

Secondly, Obama’s universal health care program now seems to have become free!

Krugman was unhappy about Obama’s unwillingness to raise enough taxes to pay for health care back when he thought Obama’s plan was raising $700 billion of new revenue over 10 years. That additional $700 billion was...

“not enough to pay for universal health care, which was supposed to be the overriding progressive priority in this election. Why doesn’t Mr. Obama propose raising more money?”

Now that Obama’s people are saying he actually will reduce revenue ... one can only imagine the joy in Krugville!

(Remember how Krugman told the Asia Times “We should be getting 28% of GDP in revenue”, ten points more than now — equal to a 90% increase in income taxes, which really would be something! — even without national health care.)

There's also a bit of irony from Obama’s people in the WSJ piece. After they solemnly state...

“Sen. Obama believes that responsible candidates must put forward specific ideas of how they would pay for their proposals.”

... they promptly attack McCain for doing just that — telling how he would pay for his health care plan.

“Sen. McCain’s plan does include one new proposal that would result in higher taxes on the middle class. As even Sen. McCain’s advisers have acknowledged, his health-care plan would impose a $3.6 trillion tax increase over 10 years on workers … Even after accounting for Sen. McCain’s proposed health-care tax credits, this plan would eventually leave tens of millions of middle-class families paying higher taxes.”

Meanwhile Obama’s universal health care plan is free — comeplete with a tax cut bonus! No unpopular tax cost to attack there.

Wasn’t somebody promising a “new” kind of politics?

This looks like Ted Kennedy "Promise 'em everything, but don't tell 'em the cost, and we can run unfunded entitlements up even beyond $53 trillion" Classic!

[bgates]

FB, how confident are you that Obama's tax plan will remain unchanged longer than his VP vetter, his pastor, his equivocation between Russia and Georgia, his stance on whether Iran is a threat or Jerusalem should remain undivided, his conviction that there is no 2nd Amendment right to handguns, his commitment to public campaign finance, or his opposition to NAFTA?

[Jane]

Either Obama is lying about his tax cuts (I'd bet money on that) or he is lying about all the things he plans to give away (I wouldn't bet money on that).

The accountants will be in heaven figuring out all the loopholes for Obama and his ilk and the rest of us will lapse into depression, in more ways than one.

[Thomas Collins]

Didn't FDR run on a balanced budget platform in 1932? Didn't GHW Bush invite us to "read his lips" on no new taxes? Barry O's tax program is what his advisors have told him he needs to get elected. If Barry O is elected and he has a solid Democrat majority in the House and a filibuster proof Senate, there will be more tax increases and new taxes and zillions for socialized medicine. Barry O is an economic socialist and a conciliatory internationalist who would subordinate US sovereignty to international institutions. We all know this, so who cares what he says? If Barry O becomes President, we all will have been warned.

[sbw]

Who pays the taxes in this country?

Not the bottom 50% - they pay 2.99% of the taxes.

It's the top 5% -- those making an AGI of more than $153,542 on average -- pay 60.14% of the taxes and the top 1% pay 40% of all the taxes.

It is a law based on experience -- If you tax something more, you get less of it. If you want to kill the golden goose, tax it more than you do already.

Tax the rich? You already do. Play class warfare more than you already do? People will go elsewhere ... just like they did in Great Britain.

When will people stop spouting clichés and think!

[hrtshpdbox]

Yes, most of the article is about the tax cut for seniors, but the last paragraph describes the rest of Obama's plan:

As far as I know one of the few primary promises Obama hasn't reneged on is his determination to reintroduce a full-force estate tax. It's a pernicious tax (taxing net value of the deceased's holdings which were already subject to tax while he/she was alive) and it certainly affacts people who make less than 250k per year. Raising the capital gains tax is no day at the beach either for the average citizen who might buy non-401k shares of the company they work for, for instance (particularly without indexing for inflation).

[buzz]

"the era in which the United States more or less maintained a monopoly on the use of military force." I'm sorry, when was this time,again?

[DebinNC]

Taxman

[Danube of Thought]

I believe his tax plan will last about as long as his opposition to retroactive immunity for the telcoms.

Gallup Daily Tracker: 44% each among registered voters.

[Jim Glass]

James Pethokoukis at USN&WR thinks Obama is a flip-flopper just playing politics. Smart politics, but where is the conviction
~~~~
Smart only to a point.

Too many brazen flip-flops like this could really hurt the guy.

The NY Daily News ran a big, most-of-the-page picture of Obama yesterday under a big headline: "Mr Flip Flop". It was about him wearing flip-flop sandals at the beach ... but you had to read the story to get that ... and that the idea even occurred to the editors shows he is getting near to somewhere he doesn't want to be.

Look at Obama on Social Security, as of the WSJ op-ed we can now add it to the list.

During the primaries SS faced a "crisis", Obama's word. We had to uncap the 12.4% payroll tax and stick it to the rich! ... well, then the tax became 2% to 4% ... and now it is to apply only "a decade or more from now", well after the end of Obama's presumptive second term.

And from the op-ed now either universal health care has gone overboard or paying for it has.

Today's Gallup daily poll has Obama and McCain tied at 44%! Obama should be winning by 15 points!! But he can't get above 45%.

Maybe there's a reason?

To build some credibility Obama may have to finally find one thing that he believes is worth paying a price for, and actually pay it.

Then we'll see what happens.

[MayBee]

Yeah, buzz, I noticed that too.

[Foo Bar]

As far as I know one of the few primary promises Obama hasn't reneged on is his determination to reintroduce a full-force estate tax

Reintroduce? Current law for 2008 has an exemption of $2 million and 45% rate. In 2009 the exemption rises to $3.5 million. The estate tax goes away in 2010, and then in 2011 it returns to a harsher form, i.e., $1 million exemption and a 55% rate.

Obama proposes freezing that estate tax at 2009 levels (i.e. a $3.5 million exemption and a 45% rate). So his proposal calls for a higher exemption than applies under current law in 2008 and a higher exemption and lower rate than would apply under current law in 2011 and onward.

[Foo Bar]

Raising the capital gains tax is no day at the beach either for the average citizen who might buy non-401k shares of the company they work for, for instance (particularly without indexing for inflation).

The average citizen doesn't make more than $200K, and Obama's plan only raises capital gains taxes for those making more than $200k ($250k for families).

[Porchlight]

This was interesting from the Gallup article:

On Thursday, the Obama and Hillary Clinton campaigns announced an agreement to put her name into nomination for president at the convention. Given that the race has been tight for the past few days, it is unlikely this announcement is related to any change in Obama's support.

Obama's Gallup lead was six points just two days ago, so I don't know what they mean by "tight for the last few days." Though I do think it is probably too early yet to see any fallout from the Clinton announcement.

[centralcal]

JLo at the Corner gets mail:

"An e-mail:

I just returned from a trip to Disney World. At the Magic Kingdom, I visited the Hall of Presidents, with which you are likely familiar. Originally created as a moving, talking statue of Abraham Lincoln for the 1964 World's Fair, the exhibit now contains statues of all 43 presidents. The presidents are introduced in chronological order. During the introductions, the crowd of several hundred people, which I suppose could be viewed as some type of sample of the nation's population plus foreign visitors (there were a lot of them at Disney this week), cheered and applauded some of the presidents. As you can imagine, Washington, Lincoln and Reagan were greeted warmly and FDR and JFK had their admirers. Only one president was booed — Bill Clinton. But here is the surprising thing based on what the media would have us believe: the president that received the loudest and most sustained applause and cheering was George W. Bush."

Plus did you know that W has raised $968Million (almost 1 billion) for the RNC since taking office?

Really unpopular fella, that W (at least according to all the polls)!!!!!

[Neo]

... it is no good when assistance comes to dead people.

That about says it all.

Is this the beginning of the end of NATO ?
And an IUD in the face of an EU army ?

[MayBee]

Does anybody know the thinking behind an individual making $200,000 vs a family making $250,000? Why are they being equated, tax-wise by Obama?

[Sara]

OT TAX FREE PUBLIC SERVICE ANNOUNCEMENT via Talk Left:

Are You Coming to Invesco for Obama's Speech? Here's The Rules

The list of items not allowed on-site is long, and includes but is not limited to:

• Outside food and beverage of any kind, including alcoholic beverages, coolers and bottled water
• Umbrellas (in case of inclement weather, the public is encouraged to bring raincoats or ponchos)
• Large bags, suitcases or backpacks
• Noisemakers, air horns, whistles, cowbells, horns, bull horns or other voice enhancement devices.
• Signs, banners, flags or any other items that would either obstruct the view of a patron or serve as a security risk
• Any and all unauthorized merchandise, including unapproved pamphlets, handouts, advertisements, etc.
• Knives of any size, razor blades or sharp and/or pointed objects like scissors, knitting needles, etc.
• Mace/pepper spray or aerosol containers
• Fireworks
• Weapons of any kind, including toy weapons, or any article that might be used as a weapon and/or compromise public safety as well as canes, chains, sticks of any length (non-medical use canes
• Screwdrivers or Leatherman brand or similar tools
• Dangerous or hazardous items or materials including chemical, biological, radiological, etc.
• Animals (except service dogs & guide dogs)
• Folding chairs
• Laser devices
• Tripods
• Bikes, inline skates, skateboards, scooters, shoes with wheels
• Illegal drugs and any other illegal substances
• Frisbees or inflated balls of any kind

NVESCO Field at Mile High policy for this event prohibits strollers or baby seats from being taken into the stands or left in section entrances.

The camera policy is as follows: Cameras with lenses less than 75mm and small hand-held video cameras are permitted, provided they do not obstruct the view of other attendees. Professional cameras or any other audio/video recording equipment are not allowed to be brought in to the stadium unless the user has the appropriate Convention press credential.

[Danube of Thought]

I don't know what to make of Gallup. They have been erratic and chracterized by drastic fluctuations since at least the 2000 race. I recall in one of the past two races that they showed in 18-point shift in a matter of days, followed by nearly as large a shift in the other direction.

It's certainly technically true that Obama's plan--at least his plan as it stands today--calls for a "lower [estate tax] rate than would apply under current law in 2011 and onward." But it's true only because under existing law the rates and exemptions would simply revert to the confiscatory levels that prevailed pre-Bush. This sort of argument is becoming all too depressingly familiar from the Obama camp--the man is truly slicker than boiled okra.

In any event, we already know that the man does not consider anything he says today to be binding on him tomorrow. Trust this fellow at your grave peril.

[RichatUF]

Sara-

No cowbell!!!!

[Foo Bar]

But it's true only because under existing law the rates and exemptions would simply revert to the confiscatory levels that prevailed pre-Bush

Obama proposes freezing the estate tax at a less "confiscatory" level than has ever held under Bush, as my first link shows. So it's not just that Obama's proposal is a less harsh estate tax than what was in place pre-Bush. It's also lower than it ever was under Bush.

[Ranger]

The average citizen doesn't make more than $200K, and Obama's plan only raises capital gains taxes for those making more than $200k ($250k for families).

Posted by: Foo Bar | August 15, 2008 at 03:30 PM

No, but the average person's pension plan or mutual fund does, and they are going to get hit with this tax increase too. Therefore, this is actualy a stealth tax on the future retirement wealth of middle class Americans. Why do you want to tax middle class Americans retirement accounts and reduce the wealth available to them in retirement?

[Sara]

Why do you want to tax middle class Americans retirement accounts and reduce the wealth available to them in retirement?

Because a financially weakened middle class is less able to prevent themselves from being sucked into becoming vassals of the State in order to survive, which is the ultimate goal of a communist/socialist agenda. When you need to look to the government to meet your most basic needs, then the government can control where you live, what you can eat, how much and by what means you travel, and even how long you live and the quality of that life you are living.

[DrJ]

Let's take the tax plan at face value. What is the spending plan? What will the deficit become?

[Rick Ballard]

Careful, DrJ, Cap'n Zero and the Unicorn Rangers are gonna take care of all that thinkin' type stuff.

Otherwise they would provide something that said "Proposed tax revenue" with sector breakouts followed by "Proposed budget" with sector breakouts.

[Rick Ballard]

Hey, the IRS already provides a template for that - "Proposed tax revenue" with sector breakouts - idea.

I wonder why Cap'n Zero doesn't use it?

[DrJ]

Right Rick. A simple budget is all I ask for. This country has maintained a pretty stable federal tax revenue as a percentage of GDP for quite some time. The problem is on the spending side, and I see Obama wanting to put not a single chicken in each pot, but a whole flock of 'em.

Maybe that should read a truckload of tofu, to honor the feelings of Vegan-americans.

No, I'm not in favor tax extortion to redistribute wealth. It just seems the leverage is more on the spending side. Given Mitt's healthcare experience in MA, I'd be really interested to see how they spin the medical cost thing.

[jimmyk]

Mankiw's blog has a nice chart about marginal tax rates under Obama's plan. I don't expect Foo Bar and his ilk, who think only in terms of income redistribution, to grasp the concept, but it's pretty damning.

[jimmyk]

So his proposal calls for a higher exemption than applies under current law in 2008 and a higher exemption and lower rate than would apply under current law in 2011 and onward.

I asked Foo Bar this in the previous thread and didn't get an answer, so I'll ask again: Why is the comparison to current law of any relevance. The comparison should be to what McCain is proposing. Those are our choices. No one expects current law to remain in place.

[DrJ]

I think both ought to be used as a comparison. The tax structure we have now is fixed, and a candidate's plan is anything but. So I would favor, at a minimum, a comparison with what we have now.

It does take more work then to compare one with the other, but I for one would do so.

[PeterUK]

We interrupt this thread for a news flash,A href="http://www.telegraph.co.uk/news/worldnews/europe/russia/2566005/Russia-threatens-nuclear-attack-on-Poland-over-US-missile-shield-deal.html">Russia threatens nuclear strike on Poland !

[PeterUK]

Sorry I'll read that again.
RUSSIA THREATENS NUCLEAR STRIKE ON POLAND !

[MayBee]

I agree with Dr. J.
Taxpayers do know what they are paying under the current tax structure, and that is how most people have planned and budgeted. The best comparison is to the known.

[Foo Bar]

Ranger:

No, but the average person's pension plan or mutual fund does, and they are going to get hit with this tax increase too.

This is false.

Contrary to the claim in this e-mail, raising tax rates on capital gains or dividends would not result in higher taxes on any investments held in Individual Retirement Accounts or in popular, tax-deferred "college funds" under section 529 of the Internal Revenue Code. The whole point of such tax-deferred plans is that dividends and capital gains are allowed to accumulate and compound tax-free, and neither Obama nor McCain proposes to change that. And as previously mentioned, any capital gains or dividend income from stocks, bonds or mutual funds owned outside of tax-deferred accounts would continue to be taxed at current rates except for couples making over $250,000, or singles making more than $200,000.

[Foo Bar]

I asked Foo Bar this in the previous thread and didn't get an answer, so I'll ask again: Why is the comparison to current law of any relevance.

It's relevant as a response to the (incorrect) claim that Obama proposes to raise taxes on most people (rather than only on the wealthy). If you want to figure out whether Obama proposes to raise taxes, you have to compare his proposal to current law.

[Rick Ballard]

"The problem is on the spending side,"

The first little kicker is on the revenue side. Using the BEA number of 14.031 trillion for the '07 GDP and the IRS tax collection number of 2.691 trillion as cited above, I come up with 19.2% being the current effective rate. Obama says 18.2% for his scheme so the shortfall, right now, would be $138 billion. Obama has to dig out of that hole before he can start the flimflam on spending.

[MayBee]

Rick- I've seen the link somewhere about the $$ Obama's camp is figuring they will save by ending the Iraq war. They base part of their budget on that.

[MayBee]

The Obama folks explained their plan a little more detail on the conference call. First, they said that they expect to save $90 billion ending the war in Iraq by the end of Obama’s fourth year in office, a “very conservative estimate,” Furman noted, less than half of what the CBO assumes the U.S. will spend that year on continuing operations in Iraq, Afghanistan and the War on Terror. This is a key point, as commentator Duvall notes, because Obama offsets much of his spending on ending the war.

Second, the great Ryan Donmoyer noted this morning that the Obama campaign had never said if an increase in Social Security payrolls taxes (Obama proposes a 4% increase evenly split between employer and employee after a donut hole between $90,000 and $250,000) would also result in an increase in benefits. After all, one of the great selling points to Republicans for this system is that every puts in and everyone takes out – the more the rich are taxed to subsidize the poor the more the GOP will accuse Dems of turning the program into welfare. Furman said they have made no decisions on benefits yet and would work with Congress on this issue.

From Jay Newton-Small at Swampland
LUN

[Rick Ballard]

MayBee,

We can't really tell what the shell and pea game consists of until they give us a source and base for the numbers. I jiggered IRS and BEA numbers together there just for a tiny bit of sport. BEA numbers aren't quite the same as IRS numbers.

Nor are Obama's dream numbers fit for discussion without a statement of source and base period. I'm not saying McCain's number are better because he does roughly the same thing.

I'll third your second of DrJ's proposal.

[MayBee]

And a little more from the same link:

But unlike Senator McCain, Barack Obama has a comprehensive economic plan that would be good for women. His Making Work Pay credit would give $500 per worker of tax relief to more than 70 million working women; more than 8 million working women would get a raise of up to $4,700 per year from his increase in the minimum wage; he strongly supports closing the wage gap so women no longer earn only 77 cents for every dollar a man earns; and his tax credits for health care would help provide quality, affordable health care to more than 20 million women who are currently uninsured.

The best way to help women who choose to work outside the home is to enact Obama’s proposed expansion of the child-care tax break, his generous EITC expansion, his plan to provide high-quality afterschool learning programs to an additional 2 million children, the 7 days of paid sick leave, and the significant tax incentives to reward 8.7 million women business owners for starting and growing the companies that create jobs and grow our economy.

The last eight years of Republican rule has been the real war on women. And John McCain would continue the same failed policies of Bush, America needs a change that puts women and families first.

[DrJ]

I come up with 19.2% being the current effective rate.

I'm not quibbling with the calculation, but I remember the current rate as being about what Obama's proposal is. Historically (at least recently) Fed taxes have been between 18% and 20% of GDP, and I think we are currently on the lower end of it.

I'll see if I can find the numbers. I would not go by my memory. :)

[kim]

Wasn't there the same whoop about Pershings what, thirty years ago? Not only is the globe cooling, but the Cold War has returned. Putin's turning putrid.
=======================

[RichatUF]

Maybee-

Figured as much. I thought it was a bit odd that Cpt'n Zero went quiet on how much money he spend on welfare and vote buying if he were to "end the war". $90 bilion is his fourth year still doesn't quite get to the missing $138 billion in his first though.

[Danube of Thought]

"It's also lower than it ever was under Bush."

Again, the kind of argument that rolls trippingly off the tongue of Obama, and is ample reason to distrust him. It is technically true that it will be lower than it "ever was" under Bush, but it will not be lower than it would have been under the Bush plan were Obama to leave it alone. More important, it will be infinitely higher than it would have been if Bush's cuts had been made permanent, which he has sought to accomplish throughout his term. It has been the Democrats in congress who have refused to make the cuts permanent; had they done so the death tax would have been eliminated altogether. But it will take wild horses to drag that fact out of the mouth of Obama.

We're harkening back to the days of Clintonian parsing here...

[MayBee]

Rick- the $1000 rebate/vote buy scheme comes from an advance on Exxon's windfall profits tax. So that's free, really. We don't even need to half end the war for that one.

It seems to me Obama is now proposing a Windfall Income Tax for citizens.

[DrJ]

We can't really tell what the shell and pea game consists of until they give us a source and base for the numbers.

This is always the problem, and it throws the discussion into projections and policy-wonk arenas. Not that that would stop anyone here.

The assumptions for Iraq cost decrease is interesting. I thought that whole expense currently was off-budget. Not that the spending does not exist, just that it "does not count." Do I remember that right?

[Rick Ballard]

"I would not go by my memory."

Mine is even more dangerous. Try this BEA site with attention to "Government Current Receipts and Expenditures" to include the detailed tables. I'm still scratching my head over what to include as "taxes" but 18.2% appears a bit low.

[Foo Bar]

We're harkening back to the days of Clintonian parsing here...

I'm certainly not arguing that Obama proposes to cut estate taxes as much as Bush would have liked to (i.e, to zero permanently). The poster "hrtshpdbox", in the first comment on the thread, brought up the estate tax and suggested it was an example of Obama wanting to raise taxes on those making under $250K. It's hard to call Obama's estate tax proposal a tax hike if he proposes to freeze it at a level lower than it ever was under Bush.

[Patrick R. Sullivan]

The six decade post WWII average for tax revenues/GDP is 18.2%. It usually swings between 17-19%, and whenever it gets outside that range pretty quickly reverts back. The exception being the dot.com boom years when there were 4 straight years over 19%.

2007 it was, iirc, 18.9%.

[Ranger]

Contrary to the claim in this e-mail, raising tax rates on capital gains or dividends would not result in higher taxes on any investments held in Individual Retirement Accounts or in popular, tax-deferred "college funds" under section 529 of the Internal Revenue Code. The whole point of such tax-deferred plans is that dividends and capital gains are allowed to accumulate and compound tax-free, and neither Obama nor McCain proposes to change that. And as previously mentioned, any capital gains or dividend income from stocks, bonds or mutual funds owned outside of tax-deferred accounts would continue to be taxed at current rates except for couples making over $250,000, or singles making more than $200,000.

Posted by: Foo Bar | August 15, 2008 at 06:21 PM

I did not limit my comment to "Individual Retirement Accounts or in popular, tax-deferred "college funds" under section 529 of the Internal Revenue Code." I was talking about all mutual funds and pensions funds, the insitutions that provided the investment mechanisims for almost all retirement plans. Pension funds must pay capital gains tax on any income they make, so do mutual funds. Those taxes are invisible to the individual pentioneer or investor because they are paid before the fund can make any distribution, but those taxes paid diminish the capital available to the fund for wealth creation. The tax is assessed on the individual pentioneer or investory in lower total value of the fund, and subsiquently lower levels of capital available for re-investment. That is why it is a stealth tax, because the end user pays it, and never sees it coming out of their pocket. Now, mutual funds have more flexability to deal with that because they can pay out a portion of their profits as dividends to their shareholders, who then have to pay the taxes. But they can't pay out all of it, or they would dramaticly reduce the capital they can actually use, and funds that pay out large dividends every year are labled "tax inefficient" and actually held in lower regard for "passing the taxes on to the shareholders" rather than absorbing the tax hit themselves. I would also point out that "tax differed" accounts are a small portion of anyones total retirement wealth because of the limits on how much can be invested per-year in such account.

You may think you are "sticking it to the rich" with this kind of capital gains tax increase, but you are actually sticking it to middle class Joe Unionmember and Jane Investor by redusing the ammount of wealth available to them to fund their retirement. You're just taking it out of their pocket without them ever realizing it.

[DrJ]

Argh.

I just had a post caught in the TypePad antispam filter. There were not links; just numbers and percentages. Any idea what triggered it?

[RichatUF]

For those interested, this is the proposal at his website. They seem to have gotten a lot of assumptions from the Tax Policy Center.

This is an interesting bit of phrasing..."Repealing a portion of the Bush tax cuts for families over $250,000 while continuing to leave their tax rates at or below where they were in the 1990s..."

[Rick Ballard]

18.8% in '07 via Brookings from an OMB spreadsheet.

[DrJ]

Thanks, Rick. One thing to keep in mind is that of that 18.8%, only 8% comes from individual taxes. The other 10% are other things (including a few percent of corporate taxes).

[MayBee]

Oh, and these are the kinds of word games I love:

Families making more than $250,000 will pay either the same or lower tax rates than they paid in
the 1990s.

I would love to pay the tax rate I paid in the 1990s! So would many of the families currently making $250,000, I would guess. I don't think he means precisely that, though.

[RichatUF]

DrJ-

The assumptions for Iraq cost decrease is interesting. I thought that whole expense currently was off-budget. Not that the spending does not exist, just that it "does not count." Do I remember that right?

Sort of. The funding has been done through supplementals to the defense budget, but it does go on budget. I banged on this drum a while back-half of the Iraq and Afghanistan spending is for salaries to soldiers.

At this point the costs of operations in Iraq would trend down anyway and the only way Obama would get any "savings" is to reduce the number of personnel in the military, not just move them out of Iraq, or to eliminate big ticket weapons systems.

[Danube of Thought]

Foo Bar, I was unaware of Hrshhrdpx's post, and thus did not understand the context in which you were making your assertion. Again, though, Obama would be far more forthcoming if he would acknowledge that Bush's plan would have resulted in the elimination of the estate tax if it were made permanent, and that he and the Democrats have been perennially unwilling to do that.

With that as background, it's not that hard for me to call Obama's plan a tax hike: the tax will be higher than it would have been if Bush's plan had continued through 2010, and far higher than it would have been but for Democratic obstruction. (You'll recall that Democrat-speak maintains that a program has been "cut" if its rate of increased spending for next year is reduced from, say, 11% to 7%. At least in that meta-language, this looks like a hike to me.)

In any event, in the course of the past six months I have learned not to believe anything this man says about what he is going to do, and at some point I think you will come to the same conclusion. I hope that point doesn't come too late.

[sbw]

Foo doesn't answer questions, he avoids them by asking different questions. Parry and thrust.

Time and again what I find with the Obamatics that Foo seems to admire, is that there is no there there -- no underlying economic principles are specified that have ever worked in practice.

[Danube of Thought]

Meantime: RickB, you know anything about the Gallup Daily Tracker historically? Anyone know?

One source of confusion to me is that Gallup's brand appears on I think three polls nowadays, one of the others being CNN/USA Today/ Gallup, and another simply being the Gallup Poll. It is not unusual for these to differ from one another, sometimes significantly. I believe it was the CNNetc. one that had the 18-point swing in 2000 or 2004. At that point they and others explained how their methodology allowed for that sort of thing, but I can't remember what the explanation was. I've been shaky about the Gallup name ever since.

[Danube of Thought]

What's far worse to me, SBW, is that I am now convinced that Obama feels he can talk his way out of anything, and the day after inauguration day he could scrap whatever his tax plan is at that time without batting an eye, and give some kind of explanation that he feels is plausible. It has already happened time and again, on important matters that everyone here is very familiar with.

[sbw]

Obama-matics is all "Give me money, which gives me power, and trust me to solve your problems."

And when it doesn't work in the first election, he'll ask for more before the next one.

[RichatUF]

A bit more from the Obama plan (remember this when it was first unvailed):

Obama will reform our tax system to greatly reduce its complexity, consolidating several credits and giving taxpayers the option of pre-filled tax forms to verify, sign and return.

Great idea, just let the IRS do your taxes for you.

[sbw]

I have no reason in history to trust Obama. Nothing he has suggested has ever worked in practice. And just because He says it, won't make this time any different.

Emerson -- "The louder he talked of his honour the faster we counted our spoons."

[RichatUF]

And a bit more, how he is going to pay for it all:

Obama’s spending cuts include responsibly ending the war in Iraq, limiting payments to high income farmers, cutting subsidies for private plans in Medicare, reforming student loans, cutting earmarks to at least the level they were in 1994, ending no-bid contracting, and phasing out unnecessary and duplicative programs. He will also support pay-as-you-go budget rules and a constitutionally acceptable line-item veto to cut pork-barrel spending.

[DrJ]

the day after inauguration day he could scrap whatever his tax plan is at that time without batting an eye, and give some kind of explanation that he feels is plausible.

Agreed. I think it would take the form of a conference with Pelosi and Reid, and that he just had to compromise to meet their very important goals, ones that he agreed with.

The spending side is where the damage will be done. Then the tax increases will follow to compensate, drying up the capital pool for growth.

A falling tide sinks all ships...

[Rick Ballard]

DoT,

I don't believe there is a 'historical' Gallup Daily Tracker. Gallup is doing one this year to compete with Ras and they are using a different smoothing algorithm as well as focusing on RVs (much cheaper) than LVs (much more accurate).

They show 21 days of results. The average Sunday spread for the current set is 5.33, the average Wednesday spread 2.33. There is no apparent trend (which is consistant with Ras).

The only thing that I have seen that is notable accross all polling is that both candidates are currently behind where either Bush or Kerry was in '04. Both are at -2% to '08. The Muddle is therefore much larger than in '04 and the uncertainty is somewhat larger.

I wouldn't call the Gallup results bad at this point - remember that the expected 1 in 20 outlier will disrupt a 3 day avearage pretty badly if it's way out of whack.

[Danube of Thought]

"...constitutionally acceptable line-item veto..."

That one got my antennae twitching right away. Think he'll fill in a few of the more obvious blanks? Don't hold your breath.

[bgates]

responsibly ending the war in Iraq
Oh, he does want to win it!
reforming student loans
Are his youthful enthusiasts aware of this?
phasing out unnecessary and duplicative programs
For instance, who needs the Pentagon once the Shirts of Color get underway?

[paul]

federal tax revenue has increased 44% since 2003.

gdp has increased 33% over the same period.

If the tax cuts of 2003 were sooo devastating, does Obama believe that tax revenues should have been higher during the same period?

It would be an open admission that he believes that govt needs to grow faster than our economy.

[Danube of Thought]

Thanks, Rick--I didn't think I'd ever seen a Gallup tracker before this year.

Nice numbers, PaulL.

Great-nephew just got commissioned as an Ensign today in Newport, R.I. He is now a gentleman by act of congress. I am headed for the Martini dispenser to celebrate and reflect. The act of congress on me expired a while back, I believe...

[DrJ]

Great-nephew just got commissioned as an Ensign today in Newport, R.I. He is now a gentleman by act of congress.

Heartiest congratulations to him!

[sbw]

Congrats to our new ensign.

I was working with a contractor today --a little problem and I mentioned something military in technique to resolve it. He said he understood, that he just got back from Iraq.

I said, "Thank you." He went on talking and I said, "No. I mean it. ... Thank you!"

[Pagar]

Congratulations to your great nephew, DOT.
I'm sure he'll be a credit to our nation. Just the fact that these young people are willing to undergo the training and prepare to defend our nation is commendable.
As opposed to the current Congress, which is certainly not commendable.

[Pole]

What percentage of the GDP will be going overseas in a tax?

[Pole]

Obama's Senior Working Group on National Security in trouble with Holbrooke and Karadzic and the Georgians do cleansing. No one wondering about their deals and CIA or maybe Plame? Maybe Albright and Holbrooke traded for Plame and her work? Like genetics and pahramcuticals? The poisonings and tortue sure got carried away. Ever thought it was like Lebanon or Saakashvili(FOX business partner) setting up the Russians? Holbrooke setting up Plame? Everyone moves up and makes more money like Lebanon/Syria and Israel and now Georgia and Poland? Russians don't have to pay to run them the US does.

So, are both Obama's brothers CIA contractors or just one? Why would everything Plame did come out at the trials as what was done to her? Is it really Bigfoot in Georgia or are they lying?

[DrJ]

So, Pole, you support drilling in the US for oil and expanding nuclear energy?

[sbw]

What percentage of the GDP will be going overseas in a tax?

As good a question as what percentage of GDP will simply evaporate. Slavery turned out to be a very uneconomical system. Without self-interest, people have little incentive to work efficiently.

Whether GDP escapes overseas or disappears is of no matter. It is a price that will be paid.

[JM Hanes]

Foo Bar:

Just jumped over here after reading the LA Times link you posted on the last thread. Given Obama's track record on refinments, I'm reserving judgment till I see what actually ends up in the official democratic platform. At the moment, however, it appears that the current centerpiece of Obama's tax plan being touted to the press is elimination of the income tax for seniors making $50K or less. Oddly enough, isn't that the voting demographic that has most consistently eluded Obama so far?

I'm certainly less troubled by whether McCain failed to make it clear that Obama was only promising higher taxes for "your family" if you make $250K or more, than by the fiscal snake oil Obama is selling on the funding front. I have yet to see anyone convincingly demonstrate that his stunning accumulation of new initiatives can be paid for with that old familiar promise of closing off "loopholes and tax shelters" to special interests/corporations and "asking" the rich "to give back a portion of the Bush tax custs to invest in health care and other key priorities" and while they're at it, to "pay a bit more" into Social Security. How would you rate the honesty of that equation? Ironically, you'll find that last revolutionary nugget in a sentence which begins: "We recognize that Social Security is not in crisis...." If we're sussing out comfort levels here, just how sanguine are you about defining any income over $250,000 per family as windfall profits?

[Joan]

Re Obama's economic plans: Have I missed any discussion of where the money is going to come from in his "wealth-distribution" that is to be sent abroad by our government for the benefit of poor people all over the world? Where is he going to grab this money from? This idea is a tax in and of itself, isn't it?

[JM Hanes]

Rich:

"Obama’s spending cuts include responsibly ending the war in Iraq, [an off budget windfall ripe for the picking!] limiting payments to high income farmers [with the exception of ethanol subsidies for the Chicago based AMD crowd]......" If our Constitutional Law Professor has come up with "a constitutionally acceptable line-item veto to cut pork-barrel spending" I'd sure like to see it, wouldn't you?

Rick:

I'm not sure if I'm seeing apples when you're talking oranges, but here's 6 months of daily tracking. You may have better luck, but the chart didn't materialize for me till I clicked the "Election 2008" link and then used my browser button to back up. I'm afraid I don't really see any encouraging trendlines. In fact, I don't really see any trendlines at all which seems depressingly remarkable.

[Uncle BigBad]

Don't forget the UN worldwide poverty tax, which I believe will come to .07% GDP. Obama was the Senate sponsor.

LUN

[JM Hanes]

MayBee:

"Windfall Income Tax"

As I progress up the thread, I see I'm behind, behind, behind!

[JM Hanes]

Lordy Uncle BigBad! World poverty completely slipped my mind. I suspect it could make short work of the "peace dividend" don't you? In my own defense, however, I was combing through the Dem Platform draft for income not expenses, as, alas, my time is not unlimited.

[Joan]

JM Hanes: Your time spent combing thru the Dem Daft Drafts is appreciated.

Perhaps FooBar can enlighten us as to where the money we'll ship to the UN for the peace dividend will come from, hmmm?

[bgates]

You missed a decimal point in the Let's Trust the Nice People at the UN to End Poverty plan. It's not .07%, it's 0.7%. One hundred billion dollars, per year. (33 dollars a day per poor person, less handling fees, dealer prep, flowers for the grave of Benon Savan's poor spinster aunt what fell down the elevator shaft, etc.)

[Patton]

Howard Dean has once again called the Republican party the 'white' Party, injecting race back into the campaign.

IS MCCAIN CAPABLE OF ENOUGH BACKBONE TO HIT HARD?

First thing this morning McCain should challenge Obama, that if he really isn't playing the race card, in this campaign, he should prove it by FIRING Dean immediately.

Obama will be stuck between supporting Dean racial politics and pissing of Dean nutroots supporters.

[Pagar]

Good Morning to All!

Excellent Idea, Patton, Obama should fire Dean for playing the race card and complete the transformation of the party by announcing he is resigning to spend more time with his grandmother.

[PeterUK]

It isn't necessary to go into details,if Obama were to instigate Universal Health Care,taxes will go up.

"The best way to help women who choose to work outside the home is to enact Obama’s proposed expansion of the child-care tax break, his generous EITC expansion, his plan to provide high-quality afterschool learning programs to an additional 2 million children, the 7 days of paid sick leave,"

Straight down the line socialism

" and the significant tax incentives to reward 8.7 million women business owners for starting and growing the companies that create jobs and grow our economy."

Straight down the line discrimination.

[Rick Ballard]

JMH,

Nice find on the Gallup six months data. There is no trend, other than that 4% (3.6% more precisely) increase in the Muddle. Bush/Kerry total response equaled 92.6% over the cycle through 8/15/04 while McCain/Obama have averaged 89% (using RCP data). The increase in "I dunno" from 7.4% to 11% is certainly significant but I haven't any decent explanation to offer as to cause, given that the drop applies to both sides.

Right now I'm wondering what would happen if RW climbed up on Whitey (the magic unicorn) behind Cap'n Zero as his VP pick.

[kim]

Well, Rick, McCain/Lieberman might beat them but McCain/Romney might not. Obama would have to be a fool to let the Clintons anywhere near his throne. Oh, wait. However, it's been Dean thrown in with the Chicago Way so far and they are like oil and water with the Clintons. Both these wings of the Democratic Party are toxic, but they are mutually explosive. I don't see it happening, Hill as Veep, but if it does it will be destructive.
===================================

[kim]

In other words, I still see Hillary taking the supers and the Convention. Obama doesn't know what has hit him. Bill, even in his dotage, is a formidable political tactician.
======================================

[kim]

They may be releasing Jake Tapper's 'What tapes?' to the supers as we speak. A Scary thought.
======================================

[kim]

I also won't be surprised to see shock and awe disinformation bombing runs to soften up targets in the run-up to the runway at Denver.

Gad, I can remember thinking the Repubs would have a brokered convention.
================================

[kim]

Bill is in the situation that McCain would be in if that Arkansas Governor had fallen over the primary finish line in a dead heat with him. It would be Huckleberry Fin Time.
=====================================

[kim]

Hah, Gail Collins calls PUMA the 'Ossetia branch of the Hillary camp', but she also calls PUMA: People United Means Action.
==================================

[centralcal]

Well, Kim, regarding that Huckleberry Fin Time, the Politico is reporting that he (Huck) expects to have a prime time slot at the convention, because he "came in second," don't you know.

[sbw]

Foo never explained when my money became his money.