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Why Obama’s Tax Policy is Not Socialist
Posted by Scott on 18th October, 2008 | 26 commentsConservatives allege that Obama’s “we need to spread the wealth around” statement, his statements about “fairness”, and his proposed tax increase for those who earn more than “$250k” (though it’s really $600k, as you’ll see below), represent a socialist view that threatens our capitalist society.
Here’s a newsflash to those with that view: the more income a person earns, the more taxes they already pay - it’s called a tax bracket! Right now for ‘08, those who earn under $8k are in the 10% bracket, while those who earn $356k are in the 35% bracket. We’re already a “tax the wealthy” society. The fact that Obama wants to modify the bracket to shift a bit more burden to the wealthy is not an Earth shattering change for tax payers.
What’s more, according to a Washington Post analysis of the actual Obama and McCain tax plans, those who earn between $250k and $600k won’t even see a tax increase. It’s not until you earn $600k to $2.87M, that you’d see an increase. Make under $250k, and you’ll see a decrease of 1.8% to 5.5%.
Personally, I’d like to see the ultra-wealthy: those billionaires out there paying 15% capital gains taxes, pay a bit more. That’s not a socialist view, it’s a view that once you reach a certain point of accumulated wealth, you will not feel any difference between having $1.5B or $1.4B, for instance, but that $100M in tax revenue could save $5,000/year in taxes for 20,000 families. I don’t, however, think that those earning $250k, $1M etc, should bear that same burden as billionaires, because $250k-$1M is still in the realm of the small business owner who is creating jobs and powering our society.
Ideally, the tax system needs to be designed to minimize the financial “pain” and burden that each person has to endure to support the country, while also still incentivizing people to achieve success without penalizing them for having done so, and incentivizing investments as well. Regardless though, I don’t believe that Obama’s tax plan is significantly different than how our tax system already works.
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Saturday, October 18th, 2008 at 7:57 pm and is filed under Web Business. If you like this post why not subscribe to my full text RSS feed. You can leave a response, or trackback from your own site.
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I totally agree. And in the long run, everyone should benefit (I could be wrong, but it’s a risk we need to take). The middle class will have more money and more security and that should help businesses in the long run.
You are absolutely right sir.
I’m a guy who lives in a red state. I am always told that Obama was a socialist, but never understood how off of the definition of socialism I learned in High School. You sir have enlightened me. Thank you
Yes I agree with you. The billionaires should be the ones paying the extra money
Colin Powell announced his endorsement of Obama today, and he also made a statement validating my exact viewpoint, saying, “Taxes are necessary for the common good. There’s nothing wrong with examining what our tax structure is, or who should be paying more, who should be paying less, and for us to say that that makes you a socialist is an unfortunate characterization that isn’t accurate.”
Still voting for Ron Paul
too bad he isn’t running
I agree with you AL, it’s sad he is not running maybe I would have thought otherwise
In the UK we have just three brackets:
0-£6000 : No tax
£6000 - £40,000 : 20%
£40,000 + : 40%
So anything over £40K or $68K we pay 40% on it!
They keep talking here about introducing a higher band for the top earners, which I totally agree with. At the end of the day the guys who earn millions, have accountants working out how to avoid tax, so they could do with a higher tax.
Just my 2c
Your logic is screwy. You say the wealthy should pay more simply because they have more. That’s ridiculous on the grounds that it is the “middle class” simply saying, “I work hard, so I deserve more. Let’s take it from the guy who has a lot.”
You should learn to earn your wealth and keep your hands out of others’ pockets.
I would also add that Obama is a socialist in the sense that he wants the government to be responsible for REDISTRIBUTION of wealth. In case you’re not familiar with Marxist ideology, that’s the step after the proletariat revolution and one step prior to communism. The word “redistribution” is key here. Come on, call a spade a spade. If you guys want to elect a socialist, then say so. Let’s have an honest election and forget about this denial crap.
Why do you not call McCain a socialist for supporting $700B govt ownership in private banking? Why do you not accept that our existing tax structure, with its progressive brackets, already takes from the rich and gives to the poor? You think Obama is a socialist because he wants to modify our already progressive tax structure?
My logic isn’t flawed. Look at a person earning $30,000 and paying 15% or $4500 in taxes. That $4500, or $375/mo (leaving them with $2175/mo), is going to affect that person’s quality of life so much more, and cut into their basic necessities of life like food and shelter, than someone earning $1M and paying $400k in taxes or $33k/mo (and keeping $50,000/mo).
Now, the person taking home $50,000/mo may not be able to take as many lavish trips, or afford quite as big a house, as if they paid less taxes, but I assure you that they are not worrying about whether they will be able to afford to give their kids mac and cheese for dinner, or pay the electric bill. The middle class should not be taxed so heavily as to make life not worth living. There is room to tax the wealthy, especially the uber-wealthy earning $10M-$100M+/year, without greatly affecting their quality of life. There is a tipping point, of course. I think taxes should be based on both assets and income: the more a person has, the more they should pay in taxes - billionaires should not be paying only 15% in dividend taxes, they should pay more because they can afford to pay more. But the little guys, and by little I mean anyone earning $0 up to $1M/2M per year which includes small business owners, should not be bearing the brunt of the tax burden.
Ideally though, more taxes isn’t the answer: the answer is less spending and more efficient spending. Sure, it’s much easier to just take in more money than it is to carefully cut back programs and reduce inefficiencies but the latter must be done.
I wholeheartedly agree that more taxes is not the answer for the country.
Clearly this whole socialist issue touches a nerve with many Obama supporters. However, the fact remains that he is one.
I never said what McCain is. I’m not happy with him either. But when I look at the two, Obama is the one who proposes economic policies that are not in line with capitalist markets. If he wants to be honest about his political inclinations, I’ve got no problem with him running for office. But for him to run as your regular ol’ Democrat is a big cover-up.
As for our current tax system, it is not socialist. It is a welfare system. Socialism attempts to EVENLY DISTRIBUTE wealth. Welfare attempts to make government a charity to the needy. There’s a clear difference. Obama prefers the first option, according to his own words.
Obama said that he wants to spread the wealth around. He didn’t say equally. He didn’t say he wants every american to have the same $20,540.54 in assets, taking from the rich to ensure that every person now has that amount of savings. He is simply saying that the current progressive tax system needs adjusting to help the middle class by redistributing taxes to have less of a burden on the middle class and more on the wealthy. That’s not socialism my friend. That’s a modification on our existing progressive income tax system. He isn’t advocating that all wealthy people give away their assets to the poor, nor is he advocating a severe change in the tax % brackets that would come anywhere close to substantiating your opinion.
Your friend McCain, on the other hand, thought it was a grand idea to use $700B of public money to buy ownership in private banks and private assets, which is the very definition of socialism.
Socialism. n. 1. Any of various theories or systems of social organization in which the means of producing and distributing goods is owned collectively or by a centralized government that often plans and controls the economy.
I think there is always a problem to be in the middle of middle-class and wealthy people. Wealthy people are giving money for a president company so he can’t say them that for that the government will raise more money from them. Although he want to gather sympathies of people so he should do something with taxes.
In utopia government, wealthy people will pay more taxes, although in reality there aren’t any country where it is so.
I have nothing to say but agree with ya!
I see you decided not to post my response to your reply. Since I didn’t say anything insulting or profane, I’ll have to assume you don’t appreciate discussion of issues and would rather just collect your kudos from like-minded people.
You’re an excellent example of what is wrong with the political tactics of the 21st century. Varying opinions and discussions are what politics is all about. Failure to understand that really detracts from one’s position.
Sincerely,
Aaron
Bleh. This blog is not my full time job. I didn’t see your comment in the admin queue from 2 days ago.
“I don’t, however, think that those earning $250k, $1M etc, should bear that same burden as billionaires, because $250k-$1M is still in the realm of the small business owner who is creating jobs and powering our society.”
So, those earning over $1 million do nothing to power society? Because they aren’t “small business owners,” they somehow aren’t creating jobs? I don’t seem to follow the logic.
See my comments above. If you take 40% of a small business owner’s $1M salary, they will cut back on jobs, spending, etc, to make up for it. The % should be larger for those who will feel it less but small business owners are still in the realm of being hardest hit by big tax percentages.
But if you were take 40% of a large business owner’s salary, he also will cut back on jobs and spending.
I guess I dont understand whether the argument is for economic growth or “quality of life.” The assumption seems to be that redistribution of wealth is good because it both encourages economic growth and reduces inequality. Is this correct?
I’m not an economist. I’m a small business owner, with my unique perspective. My opinion is that the poor, middle class, and even $1M/year small business owners considered “rich” by many standards, have both quality of life issues (food/shelter/basic entertainment) and reinvestment/business expense issues that billionaires do not face. A person earning $100,000,000/year is probably pocketing most of their earnings, not reinvesting most of it, not worrying about where their next meal should come from. Therefore, they will “feel” less of an impact by paying a larger tax %, in my opinion, than someone earning $2,000/mo and paying $300 of that to the govt, or someone earning $80k/mo and paying $30k/mo of that to the govt under current tax law.
Wow this thread has gotten all serious!
So what is the feeling, who is going to win?
The polls suggest McCain is recovering ground and making it very close.
I cannot imagine how anyone would want McCain to be President, I’m not sure he is actually fit to be. He always comes across a bit simple to me.
The Republican attack on Obama has insisted on misinterpreting his stance as socialist … indeed, some of them have described him as Marxist.
The following quote gives the lie to these assertions:
This quote comes not from Karl Marx, but from Adam Smith in his classic statement of capitalist theory “The Wealth of Nations”.
Anyone still think Obama’s a Socialist?
What does it take to make you people understand the difference between a WELFARE and SOCIALIST state?
Fergus, Smith’s words point directly to the current system of taxation in the U.S. No one argues that it is an unfair system. They just argue how much is fair. But Obama’s words are: “redistribute wealth.” That is a SOCIALIST tenant. To deny that is sheer ignorance of the political philosophy that is so clearly there. And unless you can come up with a new explanation (which I doubt), you should spend a little more time understanding it.
As noted above, the current U.S. tax system is a welfare system in which the rich contribute a higher proportion to the government so that they can take care of the poor. It’s a winning proposition for all involved because no one is starving in the streets.
Redistribution of wealth equalizes money evenly to all. That takes away from the rich and gives to the poor to make everyone live on a similar financial plane.
Failure to understand the difference could result in real trouble. The American people are not being sold an honest bill of goods by the Obama camp. That’s all I’m saying.
exxagerations. to many people are exxagerating, throwing to many terms out there. Democracy & Capitalism will & should always reform.
@PAUL, I think you kind of get confused with politics and socialism.
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It sounds interesting but I am not sure that I agree with you completely.