Tuesday, August 19, 2008

Obama and Taxes

Ted Frank's post at Above the Law yesterday had a few words that struck home, when discussing Obama's recent reversals on tax policy...

The question is whether President Obama will have the same tax plan as Senator Obama, Primary-Election Obama, or General-Election Obama -- and whether Nancy Pelosi and Harry Reid are going to go along with General-Election Obama. A clue is the editorial's references to Bill Clinton. Old fogies like me remember that Clinton, like Obama, promised a middle-class tax cut in 1992, and then raised taxes on the middle class in 1993.

Obama can't even keep his promises during election season. He pledged in September 2007 to accept public financing in the general election, and then broke his pledge. He assured the MoveOn crowd in the primaries he opposed FISA reform, and then voted for it, tying supporters in pretzels. In November, he supported DC's gun ban; today he claims to support the Heller decision (though he would almost certainly appoint justices who would eviscerate that ruling). Campaigning for the Senate in Illinois, he called for an end to the Cuba embargo; speaking to Miami residents in 2007, he supported the embargo. He told an AIPAC audience that he supported an undivided Jerusalem, a position that lasted less than 24 hours. Is it any surprise that he told the Wall Street Journal that he has a new belief against tax increases?

Even the Obama economists who wrote the Wall Street Journal piece are flip-flopping. As
Greg Mankiw notes:

[Jason Furman and Austan Goolsbee] take a swipe at Senator McCain's proposal to replace the tax exclusion for employer-provided health insurance with a more flexible health insurance credit. When President Bush suggested a similar idea last year, Furman and coauthors called it "a step in the right direction," and many other commentators agreed. It is too bad that Team Obama is now dissing the proposal.
That Goolsbee co-wrote the piece is a delicious irony. You'll recall that Goolsbee was the economic advisor who told the Canadians not to believe anything nasty Obama said about NAFTA in the hotly-contested Ohio primary because it was just "political positioning" and had to disappear for a few months. (Obama gave five different explanations for what happened.) It's hard to see the Obama tax plan as anything other than "political positioning," making Obama's tax promises meaningless. I simply don't know where Obama really stands, and neither do you.
Frank is a McCain supporter, but that doesn't disqualify a key element in his analysis -- it's right. Obama's continued reversals on policy decisions are the mark of a normal politician, but his supporters have tried to sell him as something better than a normal politician. The danger in that is when the voters realize the would-be emporer has the same shoddy clothes as the other public officials.

I think William McGurn would beg to differ with Frank, but probably not in a way that would make Team Obama happy. At the Saddleback Church forum Saturday night (more on that later), Rick Warren asked Obama and McCain what level of income makes a person rich. In discussing Obama's answer, McGurn nails the principles behind Obama's fiscal policy...

Mr. Obama, by contrast, started out much more directly, suggesting that if you make $150,000 or less you may be poor or middle class. A family with an income above $250,000, he went on to say, is "doing well." And if you find yourself in that category, he's going to target you for a tax hike -- all in the name of creating "a sense of balance, and fairness in our tax code."

In fact, the idea of fairness is at the heart of his whole economic argument. And he goes back to it in almost every public appearance.

He talks about it as a general theme: "It is time for folks like me who make more than $250,000 to pay our fair share."

He invokes it as a solution for Social Security: "[W]e will save Social Security for future generations by asking the wealthiest Americans to pay their fair share."

He points to how it guides his energy policy: "The first part of my plan is to tax the windfall profits of oil companies and use some of that money to help you pay the rising price of gas."

And he stuck to it on capital gains, even after ABC's Charlie Gibson noted that the record shows increased taxes on capital gains -- which would affect 100 million Americans -- would likely lead to a decrease in government revenues: "Well, Charlie, what I've said is that I would look at raising the capital gains tax for purposes of fairness."

Translated into ordinary English, what that means is that it doesn't really matter whether a tax increase actually brings in more revenue. It's not about robbing from the rich to give to the poor. Robbing from the rich will do, especially if it's done in the name of fairness.
Now I know I can't vote for Obama.

In case people don't know this, I hate appeals to fairness when they're made by politicians. Every politician makes them (McCain does it far more than I like), but they're all fundamentally stupid. Particularly when it comes to fiscal issues. I can sit here and debate the issue very simply with Senator Obama -- why is it "more fair" for someone who earns more than $250,000 to pay a higher percentage of their income in taxes to the government than someone who earns $240,000? Or $230,000? Or $150,000? Or $50,000?

Why is it fair for some people to pay more money into Social Security to provide for America's seniors, when the system has always been touted as one where we pay money in and get benefits when we retire? As I read this Obama wants some people to pay extra money into the system, money they will never see in retirement. How is that fair?

The windfall profits tax is about the dumbest thing said during this election campaign, even dumber than McCain's gas tax holiday. At least the gas tax holiday put money in consumer's pockets. No matter what the tax is, businesses will and do find a way to pass the costs on to consumers. And I haven't even gotten to the issue of defining "windfall" profits, a term as difficult to define as "rich."

I've never understood the people who claim progressive income taxes create a fair tax code. All they do is create a massive transfer of wealth system, designed to re-allocate money from one group of people to the government, which then determines who gets it. I've debated the issue with people who can't admit that it's about that, who insist that because I am making more money, I'm receiving more in government services (a difficult if not insipid argument). I truly enjoy the argument that I owe the money back into the system for my success, because the system is partially responsible for my success (under this theory, I suppose recipients of government largesse are being paid back because the system was responsible for their failure -- it's intellectually consistent, I guess).

Obama wants to take even more wealth from people who work hard to earn it, to give it to the government -- the same government whose governing bodies are generating record-low approval ratings. The same government which appears close to spending billions of said money to prop up Fannie and Freddie.

If government were a business, they'd be forced to cut prices, not raise them, to make up for the fact that their customers are dissatisfied with the services they offer. Instead, we're going to get hit with a tax increase against the most productive members of our economy, to hand money to a government who seems capable of only spending it.


Post a Comment

<< Home