{"id":16361,"date":"2008-07-25T22:22:23","date_gmt":"2008-07-26T02:22:23","guid":{"rendered":"http:\/\/www.thecarpetbaggerreport.com\/archives\/16327.html"},"modified":"2008-07-25T22:22:23","modified_gmt":"2008-07-26T02:22:23","slug":"republican-tax-scares","status":"publish","type":"post","link":"https:\/\/stevebenen.com\/thecarpetbaggerreport\/republican-tax-scares\/","title":{"rendered":"Republican Tax Scares"},"content":{"rendered":"

Guest post by Ron Chusid <\/a><\/p>\n

Republicans try to win elections by using fear. Fear of terrorism has been their major act for the past several years, and before that they used fear of Communism. If that\u2019s not enough, they\u2019ll scare voters by saying Democrats will take way their guns or bibles. Then there\u2019s their old routine of saying Democrats will take away all your money, which basically circles back to using fear of Communism. This year we\u2019ve already seen a number of erroneous comments from John McCain and other Republicans about Barack Obama\u2019s tax plans. Fortunately they are being debunked from a variety of sources.<\/p>\n

Yesterday The Entrepreneurial Agenda,<\/a> a blog at Inc.com, looked at accusations that Obama would harm small business by raising taxes. McCain\u2019s argument<\/a> is that, \u201cSmall businesses are the job engine of America, and I will make it easier for them to grow and create more jobs\u2026.If you are one of the 23 million small business owners in America who files as an individual rate payer, Senator Obama is going to raise your tax rates.\u201d The Agenda responds:<\/p>\n

Well, McCain is certainly, unequivocally wrong that Obama will raise taxes on 23 million small businesses. Let\u2019s begin by establishing the figures. According to Census Department (as reported by SBA), in 2005 there were some 26 million firms with 500 or fewer employees. (McCain\u2019s figures apparently come from 2002.) Of these, 20 million have no employees at all. Many of these are glorified hobbies, others are lucrative consulting gigs, but as the nonpartisan Factcheck.org points out in a thorough debunking<\/a>, \u201cMcCain is arguing that Obama\u2019s tax increase would \u2018destroy jobs,\u2019 but he\u2019s counting mostly firms that don\u2019t produce any.\u201d<\/p>\n

Obama has promised to repeal the Bush tax cuts on couples making more than $250,000 and individuals earning over $200,000 \u2014 basically, all of the top tax bracket and reaching halfway down the second-highest tax bracket. And how many small businesses would that affect? The Tax Policy Center calculates<\/a> the number of tax filers (\u201dunits,\u201d it calls them) in each bracket who reported some small business income or loss, and in 2007 that amounted to just 481,000 units \u2014 just 1.4 percent of all those who reported small business income. (The Tax Policy Calculates that 32 million tax units had small business income, which includes straight business or farm income, or income passed from partnerships or S-Corps.) And that number is undoubtedly high, because many filers in the second highest (33 percent) tax bracket earned less than Obama\u2019s proposed threshold. Others are professionals \u2014 lawyers or accountants, say \u2014 who\u2019ve organized their practices into partnerships. In any case, the vast majority \u2014 around 99 percent \u2014 of small businesses, however you define them, would not see their taxes increased under Barack Obama\u2019s scheme.<\/p>\n

A more interesting question is whether small businesses would actually see a bigger tax cut under Obama or McCain. Again, if the number-crunchers at the Tax Policy Center is to be trusted, then the laurels go to Obama, who\u2019s proposing a variety of additional tax cuts targeted toward low-income and working families. (Here<\/a> is the analysis, which includes very detailed descriptions of the candidates\u2019 proposals. More detailed, in fact, than the candidates\u2019 own position papers. Because the candidates haven\u2019t fully fleshed out their tax proposals publicly, the Center has talked informally with campaign advisers and made its own assumptions to fill in the blanks.) Anyone earning under $112,000 in 2009 \u2014 or 80 percent of the population \u2014 is more likely to see a higher after-tax income under Obama than under McCain.<\/p><\/blockquote>\n

The post refers to this post<\/a> at factcheck.org which debunks McCain\u2019s charges on taxes on small business. This isn\u2019t the only time that factcheck.org has debunked false claims on Obama\u2019s tax plans recently. They debunked a claim<\/a> that Obama \u201cvoted to raise income taxes on individuals who earn as little as $32,000 per year.\u201d They concluded that McCain\u2019s $32,000 figure is \u201cphony.\u201d That is only one of many false claims on Obama\u2019s record made by Republicans. Factcheck.org also debunked<\/a> a claim from the McCain campaign and the Republican National Committee that Obama voted for higher taxes 94 times.
\n
\nThe report of the Tax Policy Center provides other important information which I previously discussed here<\/a>. While us affluent wine drinking elitists who back Obama might wind up paying more in taxes under Obama than McCain, it is worthwhile to look at how much more this will be to determine if it is really worth compromising principles and voting Republican to save a few bucks. In my previous post, which provides more details and links for those who want to review the numbers, I quoted from Hilzoy<\/a> who noted:<\/p>\n

people below the top five percent (which starts at $237,040) do not lose after-tax income under Obama\u2019s plan, and people making $237,040-$619,561 lose all of $12 a year, on average. It\u2019s only in the top one percent that people take a sizable hit. But since so much of the Bush tax cuts went to them, that seems fair to me.<\/p><\/blockquote>\n

Rather than paying higher taxes under Obama the difference is that most affluent Obama supporters will see\u00a0 a smaller tax cut than they would receive from McCain while the more affluent will see a small tax increase which we can easily afford. It isn\u2019t until the top one tenth of one percent where there is a major difference. The top 0.1% receives an average tax cut of $269,364 from McCain while they would see an average tax increase of $701,885 under Obama. Again, this is largely a consequence of them receiving the largest benefits under Bush\u2019s plan.\u00a0 On the other end of the spectrum, McCain would give the lowest quintile an average tax cut of $19 while Obama would give them an average tax cut of $567.<\/p>\n

Obama described his own tax policies in a video I posted here<\/a>. In the video Obama makes it clear that those earning under $250,000 will not receive an increase in taxes\u2013not in their income tax, not in Social Security payroll taxes, and not in capital gains taxes. The vast majority will receive a tax cut.<\/p>\n

Another false claim being spread is seen in a recent column by David Brooks<\/a> which claims \u201cIf Obama\u2019s tax plans go through, those affluent donors could wind up giving over 50 percent of their income to the federal government.\u201d I responded in this post<\/a>, noting that even those affluent Obama donors making over $250,000 would still wind up paying at a tax rate well below 50%. The exact amount is not known as Obama has not stated an exact amount by which he would increase Social Security taxes on those making over $250,000.<\/p>\n

These numbers are all based upon the campaign statements of the candidates. It would be fair to question if things will really turn out as the candidates now claim. One sad fact of politics is that all politicians tend to promise more than they deliver, and the plans of none of the candidates add up, as I recently discussed here<\/a>. It would cost more than we are likely to raise in tax revenues to pay for everything Obama has promised. The same was true of Hillary Clinton.<\/p>\n

The flip side is the tax cuts promised by McCain are not covered by sufficient spending cuts and will result in an even larger increase in the deficit than the programs promised by the Democratic candidates. Earlier in the year\u00a0 I noted <\/a>that The Washington Post <\/a>found \u201cWhile both Democratic candidates would spend far more on new programs than Mr. McCain would, the Republican\u2019s proposals for new tax cuts dwarf the Democrats\u2019 plans.\u201d Once reality hits them after taking office, It is likely that the tax cuts promised by Obama might not be as large as currently claimed, but those promised by McCain will turn out to be much smaller, even before we need to figure out how to pay for all those wars he might want to start.<\/p>\n

Cross posted from Liberal Values<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Guest post by Ron Chusid Republicans try to win elections by using fear. Fear of terrorism has been their major act for the past several years, and before that they used fear of Communism. If that\u2019s not enough, they\u2019ll scare voters by saying Democrats will take way their guns or bibles. Then there\u2019s their old […]<\/p>\n","protected":false},"author":19,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[617],"tags":[],"class_list":["post-16361","post","type-post","status-publish","format-standard","hentry","category-general"],"_links":{"self":[{"href":"https:\/\/stevebenen.com\/thecarpetbaggerreport\/wp-json\/wp\/v2\/posts\/16361","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/stevebenen.com\/thecarpetbaggerreport\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stevebenen.com\/thecarpetbaggerreport\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stevebenen.com\/thecarpetbaggerreport\/wp-json\/wp\/v2\/users\/19"}],"replies":[{"embeddable":true,"href":"https:\/\/stevebenen.com\/thecarpetbaggerreport\/wp-json\/wp\/v2\/comments?post=16361"}],"version-history":[{"count":0,"href":"https:\/\/stevebenen.com\/thecarpetbaggerreport\/wp-json\/wp\/v2\/posts\/16361\/revisions"}],"wp:attachment":[{"href":"https:\/\/stevebenen.com\/thecarpetbaggerreport\/wp-json\/wp\/v2\/media?parent=16361"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stevebenen.com\/thecarpetbaggerreport\/wp-json\/wp\/v2\/categories?post=16361"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stevebenen.com\/thecarpetbaggerreport\/wp-json\/wp\/v2\/tags?post=16361"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}