Warlord23
10-29-2008, 02:09 PM
Criticizing Obama's tax plans has been a recent focus for the McCain campaign, Fox News and Republican supporters in general.
This criticism broadly comes in 2 broad varieties;
Variety 1: The ones who don't understand the issue at all (or pretend not to) and regurgitate some of McCain and Palin's catch phrases like "spread the wealth" or "socialism". For these people, no argument can convince them because they aren't rational. They don't even understand that Obama is actually cutting taxes for the middle class while raising it for big business. Such people can safely ignore the rest of this post (whottt, BRHornet: this is you)
Variety 2: Those who understand the issue, and have the following objections:
a) Raising business taxes leads to job cuts and economic slowdown
b) Penalizing big business and high-income Americans while cutting taxes for low-income households is equivalent to redistribution
c) Government needs to limit itself in taxation and expenditure, and leave the private sector to manage wealth creation/distribution.
My post is to address these points.
A little bit of history. In February 1993, President Clinton proposed a tax plan aimed at cutting the budget deficit and national debt that had ballooned under Reagan and Bush. Clinton proposed to raise tax on the wealthiest 2% of Americans, raising the marginal tax rate from 31% to 36%. He also imposed an energy tax on all Americans. Further, wealthy taxpayers' full salaries would be subject to the Medicare tax, not just the first $135,000. Clinton's plan however ensured little to no tax increases on low-income families. He followed this up with a series of proposed spending cuts to reel in the deficit.
Predictably, Republicans in Congress were united in uproar at the plan, opposing it aggressively. After a lot of lobbying, the House passed the bill 218 to 216, while it took Gore's tie-breaking vote to break the deadlock in the Senate.
End result: In 1998, the USA ended up with a budget surplus - the first time since 1969. In 2000, the US economy broke the record for the longest uninterrupted economic growth (ten years).
Private Sector growth: The Clinton administration set a record for the most jobs created by any administration (22.5 million) of which 20.7 million were in the private sector.
Prosperity: Median incomes increased by about 14% over a 6 year period. Inflation dropped to its lowest since Kennedy, and unemployment was at a 30-year low.
Of course, all the above was undone and destroyed by 8 years of Bush.
Cut to 2008. Obama proposes a tax increase on the wealthiest Americans and a tax cut for the middle class. Republican supporters, displaying an incredibly short memory, oppose it on principle without realizing that Clinton revitalized the economy and controlled the budget with very similar measures. Obama's plan differs from Clinton in 2 ways:
a) His spending plan is more extravagant than Clinton's.
b) While Clinton unabashedly lowered trade barries, Obama wants to curtail job losses due to unrestricted outsourcing.
Then again, Obama is inheriting a worse economic condition than Clinton did. Clinton's first priority was fiscal discipline; Obama's first priority is revitalizing a subdued economy and reforming an archaic healthcare system.
However, their tax plans are very similar. And this is the point that has been overlooked by a lot talking heads in the media when they launch into a rant on socialism and spreading the wealth. And history simply does not support this claim.
This criticism broadly comes in 2 broad varieties;
Variety 1: The ones who don't understand the issue at all (or pretend not to) and regurgitate some of McCain and Palin's catch phrases like "spread the wealth" or "socialism". For these people, no argument can convince them because they aren't rational. They don't even understand that Obama is actually cutting taxes for the middle class while raising it for big business. Such people can safely ignore the rest of this post (whottt, BRHornet: this is you)
Variety 2: Those who understand the issue, and have the following objections:
a) Raising business taxes leads to job cuts and economic slowdown
b) Penalizing big business and high-income Americans while cutting taxes for low-income households is equivalent to redistribution
c) Government needs to limit itself in taxation and expenditure, and leave the private sector to manage wealth creation/distribution.
My post is to address these points.
A little bit of history. In February 1993, President Clinton proposed a tax plan aimed at cutting the budget deficit and national debt that had ballooned under Reagan and Bush. Clinton proposed to raise tax on the wealthiest 2% of Americans, raising the marginal tax rate from 31% to 36%. He also imposed an energy tax on all Americans. Further, wealthy taxpayers' full salaries would be subject to the Medicare tax, not just the first $135,000. Clinton's plan however ensured little to no tax increases on low-income families. He followed this up with a series of proposed spending cuts to reel in the deficit.
Predictably, Republicans in Congress were united in uproar at the plan, opposing it aggressively. After a lot of lobbying, the House passed the bill 218 to 216, while it took Gore's tie-breaking vote to break the deadlock in the Senate.
End result: In 1998, the USA ended up with a budget surplus - the first time since 1969. In 2000, the US economy broke the record for the longest uninterrupted economic growth (ten years).
Private Sector growth: The Clinton administration set a record for the most jobs created by any administration (22.5 million) of which 20.7 million were in the private sector.
Prosperity: Median incomes increased by about 14% over a 6 year period. Inflation dropped to its lowest since Kennedy, and unemployment was at a 30-year low.
Of course, all the above was undone and destroyed by 8 years of Bush.
Cut to 2008. Obama proposes a tax increase on the wealthiest Americans and a tax cut for the middle class. Republican supporters, displaying an incredibly short memory, oppose it on principle without realizing that Clinton revitalized the economy and controlled the budget with very similar measures. Obama's plan differs from Clinton in 2 ways:
a) His spending plan is more extravagant than Clinton's.
b) While Clinton unabashedly lowered trade barries, Obama wants to curtail job losses due to unrestricted outsourcing.
Then again, Obama is inheriting a worse economic condition than Clinton did. Clinton's first priority was fiscal discipline; Obama's first priority is revitalizing a subdued economy and reforming an archaic healthcare system.
However, their tax plans are very similar. And this is the point that has been overlooked by a lot talking heads in the media when they launch into a rant on socialism and spreading the wealth. And history simply does not support this claim.