-----Original Message-----
From: Bob F ]
Posted At: Friday, October 31, 2008 12:15 PM
Posted To: alt.home.repair
Conversation: Senator Obama's Four Tax Increases for People Earning
Under $250k
Subject: Senator Obama's Four Tax Increases for People Earning Under
$250k
FWIW.
http://alchemytoday.com/obamataxcut/
----------------------------------------
********Please read the article.
Chicken today....feathers tomorrow.
[While I found this article interesting, I should note that 401K
investments (cashed in) I believe are not taxed as capital gains, but at
regular income rates. Either way however, the tax rate will increase as
the 2001/2003 Bush tax cuts expire. It answers the question about where
the money Obama needs for his campaign promises will come from.]
October 27, 2008
Senator Obama's Four Tax Increases for People Earning Under $250k
By Ned Barnett
I confess. Senator Obama's two tax promises: to limit tax increases to
only those making over $250,000 a year, and to not raise taxes on 95% of
"working Americans," intrigued me. As a hard-working small business
owner, over the past ten years I've earned from $50,000 to $100,000 per
year. If Senator Obama is shooting straight with us, under his
presidency I could look forward to paying no additional Federal taxes --
I might even get a break -- and as I struggle to support a family and
pay for two boys in college, a reliable tax freeze is nearly as welcome
as further tax cuts.
However, Senator Obama's dual claims seemed implausible, especially when
it came to my Federal income taxes. Those implausible promises made me
look at what I'd been paying before President Bush's 2001 and 2003 tax
cuts, as well as what I paid after those tax cuts became law. I chose
the 2000 tax tables as my baseline -- they reflect the tax rates that
Senator Obama will restore by letting the "Bush Tax Cuts" lapse. I
wanted to see what that meant from my tax bill.
I've worked as the state level media and strategy director on three
Presidential election campaigns -- I know how "promises" work -- so I
analyzed Senator Obama's promises by looking for loopholes.
The first loophole was easy to find: Senator Obama doesn't "count"
allowing the Bush tax cuts to lapse as a tax increase. Unless the cuts
are re-enacted, rates will automatically return to the 2000 level.
Senator Obama claims that letting a tax cut lapse -- allowing the rates
to return to a higher levels -- is not actually a "tax increase." It's
just the lapsing of a tax cut.
See the difference?
Neither do I.
When those cuts lapse, my taxes are going up -- a lot -- but by parsing
words, Senator Obama justifies his claim that he won't actively raise
taxes on 95 percent of working Americans, even while he's passively
allowing tax rates to go up for 100% of Americans who actually pay
Federal income taxes.
Making this personal, my Federal Income Tax will increase by $3,824 when
those tax cuts lapse. That not-insignificant sum would cover a couple
of house payments or help my two boys through another month or two of
college.
No matter what Senator Obama calls it, requiring us to pay more taxes
amounts to a tax increase. This got me wondering what other Americans
will have to pay when the tax cuts lapse.
For a married family, filing jointly and earning $75,000 a year, this
increase will be $3,074. For those making just $50,000, this increase
will be $1,512. Despite Senator Obama's claim, even struggling American
families making just $25,000 a year will see a tax increase -- they'll
pay $715 more in 2010 than they did in 2007. Across the board, when the
tax cuts lapse, working Americans will see significant increases in
their taxes, even if their household income is as low as $25,000. See
the tables at the end of this article.
Check this for yourself. Go to
http://www.irs.gov/formspubs/ and pull
up the 1040 instructions for 2000 and 2007 and go to the tax tables.
Based on your 2007 income, check your taxes rates for 2000 and 2007, and
apply them to your taxable income for 2007. In 2000 -- Senator Obama's
benchmark year -- you would have paid significantly more taxes for the
income you earned in 2007. The Bush Tax Cuts, which Senator Obama has
said he will allow to lapse, saved you money, and without those cuts,
your taxes will go back up to the 2000 level. Senator Obama doesn't
call it a "tax increase," but your taxes under "President" Obama will
increase -- significantly.
Senator Obama is willfully deceiving you and me when he says that no one
making under $250,000 will see an increase in their taxes. If I were
keeping score, I'd call that Tax Lie #1.
The next loophole involves the payroll tax that you pay to support the
Social Security system. Currently, there is an inflation-adjusted cap,
and according to the non-profit Tax Foundation, in 2006 -- the most
recent year for which tax data is available -- only the first $94,700 of
an unmarried individual's earnings were subject to the 12.4 percent
payroll tax. However, Senator Obama has proposed lifting that cap,
adding an additional 12.4 percent tax on every dollar earned above that
cap -- and in spite of his promise, impacting all those who earn between
$94,700 and $249,999.
By doing this, he plans to raise an additional $1 trillion dollars
(another $662.50 out of my pocket -- and how much out of yours?) to help
fund Social Security. Half of this tax would be paid by employees and
half by employers -- but employers will either cut the payroll or pass
along this tax to their customers through higher prices. Either way,
some individual will pay the price for the employer's share of the tax
increase.
However, when challenged to explain how he could eliminate the cap AND
not raise taxes on Americans earning under $250,000, Senator Obama
suggested on his website that he "might" create a "donut" -- an
exemption from this payroll tax for wages between $94,700 and $250,000.
But that donut would mean he couldn't raise anywhere near that $1
trillion dollars for Social Security. When this was pointed out,
Senator Obama's "donut plan" was quietly removed from his website.
This "explanation" sounds like another one of those loopholes. If I were
keeping score, I'd call this Tax Lie #2.
Senator Obama has also said that he will raise capital gains taxes from
15 percent to 20 percent. He says he's aiming at "fat cats" who make
above $250,000. However, while only 1 percent of Americans make a
quarter-million dollars, roughly 50 percent of all Americans have
capital investments -- through IRAs, 401Ks, in pension plans and in
personal portfolios. Most of that half of all Americans will feel this
rise in their capital gains taxes.
Under "President" Obama, if you sell off a $100,000 investment --
perhaps to help put your children through college -- instead of paying
$15,000 in capital gains taxes today, you'll pay $20,000 under Obama's
plan. That's a full one-third more, and it applies no matter how much
you earn.
No question -- for about 50 percent of all Americans, this is Tax Lie
#3.
Finally, Senator Obama has promised to raise taxes on businesses -- and
to raise taxes a lot on oil companies. I still remember Econ-101 -- and
I own a small business. From both theory and practice, I know what
businesses do when taxes are raised. Corporations don't "pay" taxes --
they collect taxes from customers and pass them along to the government.
When you buy a hot dog from a 7/11, you can see the clerk add the sales
tax, but when a corporation's own taxes go up, you don't see it -- its
automatic -- but they do the same thing. They build this tax into their
product's price. Senator Obama knows this. He knows that even people
who earn less than $250,000 will pay higher prices -- those pass-through
taxes -- when corporate taxes go up.
No question: this is Tax Lie #4.
There's not a politician alive who hasn't be caught telling some minor
truth-bender. However, when it comes to raising taxes, there are no
small lies. When George H.W. Bush's "Read my lips -- no new taxes"
proved false, he lost the support of his base -- and ultimately lost his
re-election bid.
This year, however, we don't have to wait for the proof: Senator Obama
has already promised to raise taxes, and we can believe him. However,
while making that promise, he's also lied, in at least four significant
ways, about who will pay those taxes. If Senator Obama becomes
President Obama, when the tax man comes calling, we will all pay the
price. And that's the truth.
Tax Rates - and the Obama Increase - $50,000/year Taxable Income
Tax: Single
2000 Tax Tables $10,581
2003 Tax Tables $ 9,304
2004 Tax Tables $ 9,231
2010 Tax Tables $10,581
Increase with Obama Tax Increase* $1,350
Tax: Married - Filing Joint
2000 Tax Tables $8,293
2003 Tax Tables $6,796
2004 Tax Tables $6,781
2010 Tax Tables $8,293
Increase with Obama Tax Increase* $1,512
Tax: Married - Filing Separate
2000 Tax Tables $11,143
2003 Tax Tables $9,304
2004 Tax Tables $9,231
2010 Tax Tables $11,143
Increase with Obama Tax Increase* $1,912
Tax: Head of Household
2000 Tax Tables $9,424
2003 Tax Tables $8,189
2004 Tax Tables $8,094
2010 Tax Tables $9,424
Increase with Obama Tax Increase* $1,330
Tax Rates - and the Obama Increase - $75,000/year Taxable Income
Tax: Single
2000 Tax Tables $17,923
2003 Tax Tables $15,739
2004 Tax Tables $15,620
2010 Tax Tables $17,923
Increase with Obama Tax Increase* $2,303
Tax: Married - Filing Joint
2000 Tax Tables $15,293
2003 Tax Tables $12,364
2004 Tax Tables $12,219
2010 Tax Tables $15,293
Increase with Obama Tax Increase* $3,074
Tax: Married - Filing Separate
2000 Tax Tables $18,803
2003 Tax Tables $16,083
2004 Tax Tables $15,972
2010 Tax Tables $18,803
Increase with Obama Tax Increase* $2,831
Tax: Head of Household
2000 Tax Tables $16,424
2003 Tax Tables $14,439
2004 Tax Tables $14,344
2010 Tax Tables $16,424
Increase with Obama Tax Increase* $2,080
Tax Rates - and the Obama Increase - $100,000/year Taxable Income
Tax: Single
2000 Tax Tables $25,673
2003 Tax Tables $22,739
2004 Tax Tables $22,620
2010 Tax Tables $25,673
Increase with Obama Tax Increase* $3,053
Tax: Married - Filing Joint
2000 Tax Tables $22,293
2003 Tax Tables $18,614
2004 Tax Tables $18,469
2010 Tax Tables $22,293
Increase with Obama Tax Increase* $3,824
Tax: Married - Filing Separate
2000 Tax Tables $27,515
2003 Tax Tables $23,715
2004 Tax Tables $23,504
2010 Tax Tables $27,515
Increase with Obama Tax Increase* $4,011
Tax: Head of Household
2000 Tax Tables $23,699
2003 Tax Tables $20,741
2004 Tax Tables $20,594
2010 Tax Tables $23,699
Increase with Obama Tax Increase* $3,015
* When "President" Obama allows President Bush's tax cuts of 2001 and
2003 to expire, this will amount to a de facto tax increase