Below is my column for this weekend's edition of Fort Collins Now. It focuses on the Presidential race, but it applies to all levels of office.
This election hinges on some very basic questions: Higher taxes or lower taxes? More government or less government? When times are tough, who should decide how to spend the money you earn?
What the column makes clear is that for all of the rhetoric, the numbers don't lie: Barack Obama and the Democrats are calling for higher taxes, the kind of taxes that kill job creation, threaten retirement savings and, in some cases, are painfully regressive - taking more money, job security and opportunity from those who can least afford it.
Here's Friday's column:
My Closing Argument (temporary title)
by Andrew Boucher
I had a shocking conversation
with a well-informed voter the other day.
She asked about Barack Obama’s “tax cut for 95 percent of Americans.” I laughed, noting that it was going to be
quite a trick to give a “tax cut” to the roughly 40 percent of Americans who
don’t pay federal income taxes.
“What?” She asked.
It stopped me dead in my
tracks. “After deductions, about 40
percent of Americans don’t end up owing income taxes,” I explained. “Barack Obama’s idea of a ‘tax cut’ for them
is to send them a ‘refundable tax credit.’
In other words, he’s going to cut everyone a government check.” (“Spread the wealth around,” indeed.)
We’re days away from a
national election, and no one in the media has even bothered to explain Barack
Obama’s “tax cut.” No one has broken
down just what Barack Obama is proposing and what it will mean for you, your
family budget, your retirement savings, and your job security.
Obama’s tax plan includes
four main components: Higher marginal rates; higher estate taxes; higher corporate
taxes; and higher taxes on investments.
Let’s go through them, one-by-one.
Start with the now-famous
“Joe the Plumber” tax which would raise taxes on income over $250,000. (Is it $250,000? Obama’s new ad now clearly says
$200,000. Just this week, Joe Biden said
it was $150,000. So who really knows? It seems to be dropping daily.) According to the Wall Street Journal, the
combined Obama tax plan would “add up to about a 10-percentage-point hike in
marginal tax rates for those making more than $250,000 a year, including
millions of small businesses that pay taxes at individual rates.”
And there’s the problem. The “Joe the Plumber” tax raises taxes on
small businesses, crushing entrepreneurial job creation at the most basic
level. Most small businesses are LLC’s
or S-Corporations. Every net dollar they
earn is taxed as “income” for the owner.
Even if a small business owner decides to take a small salary each year
and leave money in his or her business for future investment or payroll, all of
that money is taxed as “personal income”.
Moreover, many small businesses live from contract to contract. They might receive a large check at the end
of a year and then set that money aside to make sure they can make payroll for
upcoming lean months. Obama’s plan
raises taxes on that money, perversely calling it “income”. In the real world, that money is often next
month’s paycheck or next year’s job security for employees.
Barack Obama is also calling
for higher estate taxes: More “tax the rich” class warfare, more real-world pain
for working Americans. The current estate
tax rate is scheduled to sunset over the next few years. Barack Obama will set it at 45 percent. For Bill Gates and Warren Buffet, that might
not be that big a deal, but what about a family farm or small business? Many are worth enough to trigger the estate tax
but only produce a modest income for the owners. Those farms or businesses are taxed at the
“value” of the company, not for the revenue they produce. All too often, the only way the next
generation can cover their estate tax bill is to sell off the farm or
business. Most “Mom and Pop” small
businesses don’t survive to the next generation. The estate tax destroys them.
But what if you don’t own a
small family business, don’t work for a small family business or don’t shop at
small family businesses? Well, do your
parents own their home? If they passed
away, would you be able to write a check to cover the estate taxes on the value
of that home, or would you have to put it on the market in order to pay the government? On December 31, 2010, the estate tax is
scheduled to expire. Barack Obama wants
to set it to 45 percent for the highest marginal rates. Part of the American Dream is that our
children will live better than we do, that we’ll be able to create something
and pass it on. Barack Obama’s tax plan makes
that dream unattainable for many Americans.
Barack Obama will raise taxes
on “big oil.” Who do you think actually
pays for those taxes on “big oil”? We
do, of course. Everyone pays, regardless
of whether or not we can afford it. We
pay higher prices at the gas pump and higher prices for our groceries. (It
takes gas to run farm equipment and the trucks that get the groceries to the
supermarket.) Barack Obama’s higher
taxes on “big oil” will hurt lower-income Americans the most. While they might make for a nice sound bite,
taxes on “big oil” are among the most regressive and punitive taxes. Remember those 40 percent who don’t owe
federal income taxes? Ironically, Barack
Obama’s plan means they take less money home at the end of the week.
Finally, a question: How’s
your 401k these days? Your pension? Stocks have plummeted as investors have
pulled their money out of the market.
Yet just as the market is crashing, Barack Obama is planning to raise
taxes on capital gains and dividends, further discouraging investment and
cutting an even larger chunk of money out of the stock market. Were you planning on retiring anytime
soon? Under an Obama administration, you
might be working a few extra years.
We’ve seen this type of “tax
the rich” mentality before. In 1989,
President George H.W. Bush and the Democrat-controlled Congress passed a ten
percent “luxury tax” on yachts priced at more than $100,000, thinking that the
“rich” would easily be able to afford the surcharge. What happened? Just two years after the new tax went into
effect, the New York Times reported that “In the last two years, about 100
builders of luxury boats -- recreational craft costing more than $100,000 --
cut their operations severely and laid off thousands of workers.”
Thousands of workers lost
their jobs: Machinists, tradesmen, carpenters, laborers, designers. The “tax the rich” mentality – especially
higher taxes on business – sends lower and middle income workers to the
unemployment office. Higher estate taxes
destroy the ability to pass small businesses, family farms or homes on to the
next generation. Higher taxes on “big
oil” lead to regressive cost increases at the gas pump and the grocery checkout
lane. Higher taxes on investments leads
to reduced values for retirement accounts, 401k’s and pensions.
That is what Barack Obama is
proposing. That is his change for
America. Look at it this way: Maybe you
can use your government check – oops, I mean “refundable tax credit” – to pay for
it all. You might even want to spend it
on some new resume paper. You’re going
to need it.
