Source: The American Enterprise Institute (8/8/08), reprinted in the Wall Street Journal, 10/13/08
"Obama will give 95% of American working families a tax cut, even though 40% of Americans today don't pay income taxes ...How can he 'cut' zero?...A 'refundable tax credit'... involves the federal government taking money from those who do pay taxes, and writing checks to those who don't. Yes, yes, in the real world this is known as 'welfare'..."
For Obama, a tax "cut" means "tens of billions of dollars in government handouts that are disguised by the phrase 'tax credit.'"
Obama's 6 "refundable tax credits" = you receive these checks even if you owe no taxes.
Count 'em, 6 of 'em: one each for '"make work pay", college tuition, mortgage interest, "savings", child care and expanding the earned-income tax credit.
Look closely at that chart above. Two-income families with two children--"a college freshman and a 12-year-old receiving after-school care", making between $25,000 and $45,000 a year will see their marginal tax rates (the rate on the next dollar of income earned) rise 10% to 18% under Obama's promises, from the current 21% to between 31% and 39%. This means that, as they earn more income, their tax rate will spike more than it would under current law. This is "Because Mr. Obama's tax credits are phased out as incomes rise," or as Obama would say, as workers and families more closely resemble the "favored rich."
And such families making between $45,000 and $100,000 in adjusted gross income would see their marginal tax rates under Obama's plan decrease only 6% to 9%. Once they hit $100,000 in AGI, their marginal tax rates would skyrocket well above current law, to between $32% and 45%.
It also appears that instead of 40% of Americans not paying taxes and getting IRS money back, Obama will have 44% not paying taxes while reaping free money, and by 2011, 10 million more nontaxpayers getting free money above that:
The Tax Foundation estimates that under the Obama plan 63 million Americans, or 44% of all tax filers, would have no income tax liability and most of those would get a check from the IRS each year. The Heritage Foundation's Center for Data Analysis estimates that by 2011, under the Obama plan, an additional 10 million filers would pay zero taxes while cashing checks from the IRS.
One last time: Who pays for non-taxpayers to get those free checks from the IRS? Anyone who is a TAXPAYER:
"[The IRS checks] are an income transfer -- a federal check -- from taxpayers to nontaxpayers. Once upon a time we called this 'welfare,' or in George McGovern's 1972 campaign a 'Demogrant.'"
And the total yearly cost of these refundable "tax credits" will start at $647 billion and rise over 10 years to $1.054 trillion, says the Tax Policy Center.
To compare then: Obama's tax-credit welfare state = 4 x the.cost.of."actual cash welfare."
By renaming these payments "tax cuts" or "tax credits," Obama "also redefines them away as a tax share of GDP. Presto, the federal tax burden looks much smaller than it really is."
Obama has renamed it "a tax cut."
What was Obama saying about putting lipstick on a pig recently?
This should scare the wits out of every American (including those who could get a tax payment). We've seen moves to re-distribute wealth but this is redistribution of income, a socialistic policy that always destroys productivity (and then jobs, income, etc).
WAKE UP, MCCAIN! Why has this gone unanswered?!