Understanding The Tax Cuts
Obama and his team have done a wonderful job of misleading the public by camouflaging tax increases with tax credits but the likelihood that he might win the election and put them into practice is already causing money to flow out of the U.S. and it’s already affecting the markets in a negative way.
The idea that 95% of Americans will get a $500-per-worker tax credit is 100% not true, simply because it can’t be.
A full forty percent of American income earners pay no federal income tax at all so how could they be given a ‘$500 tax credit” ?
The aforesaid ‘tax credits’ are ‘refundable’ meaning that checks would have to be written at an estimated cost of $1.3 trillion over the next ten years.
Obama and his team argues that although this 40% of the workforce pay no income taxes they do pay payroll taxes, which is true.
The planned credits do not involve cuts in payroll taxes however but are income tax credits designed to redistribute money and to spread ‘wealth’.
Several other refundable tax credits are also planned and would be given to those earning only a moderate income, the intention being to help those people with child care, education, housing, welfare, retirement, health care and other social purposes.
These tax credits would be phased out as you earn more which means in effect that they create a disincentive to work.
Why work harder and earn more if you’ll lose your tax credits?At the other end of the scale, the intention is to raise taxes for the top two income brackets by 20% and to phase out their personal exemptions and all their itemized deductions.
To help finance his proposed health insurance Obama is proposing a 33% increase in the tax rates on capital gains and dividends and an increase of 16% to 32% in the top payroll tax rate plus a reinstatement of the death tax with a 45% top rate and a new payroll tax estimated at 7%.
Just to really stick it to the businesses that create employment, Obama’s plan would see an increase in corporate taxes of 25%, even though American businesses already face the second-highest marginal tax rates in the industrialized world.
Many economists are now saying that the threat that these new tax proposals pose is already causing money to flow out of the U.S. to Europe and to other countries such as China and India and to a lesser extent to Japan, so just imagine what will happen if Obama’s proposals are actually put into practice!
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