Thursday, October 30, 2008

Social Security at Risk with Obama and his Tax starts at 25,000

Charles R. Smith Obama’s Scheme: Tax the Poor, Pay the Rich
Tuesday, October 21, 2008 1:57 PM
By: Charles R. Smith Article Font Size

If you think you are going to get a tax cut from Sen. Obama, think again. The fact is, Obama’s plan will actually increase taxes on the vast majority of Americans.

Obama promises that no one making less than $250,000 a year will see an increase in their taxes. Yet, according to The Wall Street Journal, Obama has a stealth tax — called credits — hidden in his plan.

These credits basically would have the effect of raising taxes on average income couples making between $25,000 and $40,000 a year.

In fact, some families in this range could see an increase in their taxes of up to 40 percent.

The credit scheme also discourages people from earning more. Since the credits are tied to income, the more you make, the less credits you can earn. Thus, people will see their real income go down even though they are earning more from raises or over-time. Since you take home less at the higher pay scale — the incentive is to not work overtime or seek a better paying job.

Worse still, millions of Americans who pay no taxes are also entitled to these credits. Obama has labeled the stealth credits “refundable." Thus, people who are paying no taxes at all will still receive a check from the government.

According to the Tax Foundation, under Obama’s tax scheme 63 million Americans, or 44 percent of all tax filers, would have no income tax liability. Most of those 63 million would also get a check from the IRS.

The Heritage Foundation’s Center for Data Analysis estimates that by 2011, under the Obama scheme, an additional 10 million would pay no taxes while cashing checks from the IRS.

According to the Tax Policy Center, the cost of these “tax credits” to the real tax payers would quickly rise over the next 10 years by $647 billion to over $1 trillion.

Add on top of this Obama’s government backed healthcare plan that is estimated to top $1 trillion, and you have over $2 trillion worth of government backed welfare programs. Clearly, no increase in taxes on the “rich” will be able to make up for this huge outlay of cash benefits to the non-working.

So where is this $1 trillion going to come from? The answer may shock and surprise you.

Here's another part of Obama’s stealth tax plan: The so-called credits will actually threaten Social Security. Americans paying no taxes would get an income tax credit up to $500 based on what they are paying into Social Security.

Since people are going to get a tax refund based on what they pay into Social Security, then the scheme is not about income tax relief but cutting payroll taxes. The same payroll taxes that fund Social Security.

The Obama scheme means billions of dollars in lost revenue for Social Security. In short, the solvency of Social Security system will come quickly to a head because of this lost revenue, threatening the lives of millions of senior citizens within months.

Austan Goolsbee, the University of Chicago economic professor who serves as one of Sen. Obama’s top advisers, noted this little problem during a recent appearance on Fox News.

“You can’t just cut the payroll tax because that’s what funds Social Security,” Mr. Goolsbee admitted to Fox’s Shepard Smith. “So if you tried to do that, you would undermine the Social Security Trust Fund.”

If that form of political suicide is not enough to end Obama’s career then consider this: Obama’s tax increase would hit the bottom line of small businesses.

Obama claims that no business making less than $250,000 would be hit by more taxes but this is a bald faced lie. The fact is that 85 percent of small business owners are taxed at the personal income tax rate, any moderately successful business with an income above as little as $165,000 a year will face higher taxes.

The businesses that do make more than $250,000 a year will be slammed big time, even harder than major corporations. The Obama scheme requires many small business owners to pay as much as a 4-percentage-point payroll tax surcharge on net income above $250,000.

The result is the federal marginal small business tax rate jumps up to nearly 45 percent for the little guys, while big business would continue to pay the 35 percent corporate tax rate.

Joe the plumber would get hit if he expanded his business and hired other plumbers. According to the National Federation of Independent Business, 50 percent of businesses with 20 to 249 workers would pay the extra tax. In short, the Obama scheme is an incentive to hire fewer workers.

The most successful small- and medium-sized businesses that create most of the new jobs in our dynamic society will be slammed by Obama’s tax hikes. If you hire another worker — you will get slammed harder.

Obama’s stealth tax/credit scheme is actually a plan to redistribute the wealth and is nothing more than a giant welfare program. Obama’s tax scheme will cut jobs, threaten Social Security and hit the lowest income wage earners like a ton of bricks.

I find it ironic that the base of voters who support Obama that also make between $25,000 and $40,000 a year are totally unaware of the cruel fate they are signing onto by supporting the freshman senator. Obama’s scheme is Robin Hood in reverse — tax the poor to pay the rich.

According to Obama, “When you spread the wealth around, it’s good for everybody.”

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