Four Lies

Senator Obama’s Four Tax Increases forPeople Earning Under $250,000 …

And for Those Earning as Little as $25,000 a Year

By Ned Barnett

Note - this article has been published in edited form in American Thinker (http://www.americanthinker.com) on October 27, 2008. Thanks to editor Thomas Lifson for permission to reprint that article here.

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 to make 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. This is detailed in the charts (below).

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 was 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 (http://www.barackobama.com/issues/pdf/FactSheetSeniors.pdf) 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 was 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. 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 two boys 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 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 ca 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.

“President” Obama’s Hidden Tax Increase

How Allowing the Bush Tax Cuts to Lapse Will Raise Taxes for

Everybody who Pays Federal Income Taxes

Tax Rates – and the Obama Increase - $50,000/year Taxable Income

	2000 Tax Tables	2003 Tax Tables	2004 Tax Tables	2010 Tax Tables – (Bush Tax Cuts have Expired)	Increase with Obama Tax Increase*
Taxable Income	$50,000	$50,000	$50,000	$50,000	$50,000
Tax: Single	$10,581	$9,304	$9,231	$10,581	$1,350
Tax: Married – Filing Joint	$8,293	$6,796	$6,781	$8,293	$1,512
Tax: Married – Filing Separate	$11,143	$9,304	$9,231	$11,143	$1,912
Tax: Head of Household	$9,424	$8,189	$8,094	$9,424	$1,330

Tax Rates – and the Obama Increase - $75,000/year Taxable Income

	2000 Tax Tables	2003 Tax Tables	2004 Tax Tables	2010 Tax Tables – (Bush Tax Cuts have Expired)	Increase with Obama Tax Increase*
Taxable Income	$75,000	$75,000	$75,000	$75,000	$75,000
Tax: Single	$17,923	$15,739	$15,620	$17,923	$2,303
Tax: Married – Filing Joint	$15,293	$12,364	$12,219	$15,293	$3,074
Tax: Married – Filing Separate	$18,803	$16,083	$15,972	$18,803	$2,831
Tax: Head of Household	$16,424	$14,439	$14,344	$16,424	$2,080

Tax Rates – and the Obama Increase - $100,000/year Taxable Income

	2000 Tax Tables	2003 Tax Tables	2004 Tax Tables	2010 Tax Tables – (Bush Tax Cuts have Expired)	Increase with Obama Tax Increase*
Taxable Income	$100,000	$100,000	$100,000	$100,000	$100,000
Tax: Single	$25,673	$22,739	$22,620	$25,673	$3,053
Tax: Married – Filing Joint	$22,293	$18,614	$18,469	$22,293	$3,824
Tax: Married – Filing Separate	$27,515	$23,715	$23,504	$27,515	$4,011
Tax: Head of Household	$23,699	$20,741	$20,594	$23,699	$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 -

Is the election over (four weeks out)? History says "Hell No"

By Ned Barnett (c) 2008

A lot of spinners are contending that the election is now over - we can all go home, because Obama has it in the bag. And, while some polls show Obama ahead by single digits (but outside the margin for error), Zogby has the election within a single point.

Zogby's right. History (going back to '68) tells us that this election is not over - it will be finally "decided" no sooner than the last weekend before the election.

You can always tell when somebody has drunk deeply from the Kool Aid when he pronounces this election is over, and does so four weeks before the ballots are cast. The last time a US Presidential Election did NOT come right down to the wire was ’84 with Reagan (if somebody cared to argue how not-close the Clinton/Dole election in '96 was four years before the election, I won’t argue, but it was a lot closer than most like to recall, and that even in ’96, Clinton didn’t get a simple majority).

In recent times, ultra-close elections include

· Humphrey/Nixon ’68 (Humphrey was in the lead across the board right up to the last week – he peaked too early and Nixon won by a whisker)

· Ford/Carter ’76 - it was right down to the wire, and while not as close as '68, Carter won by a razor-thin margin ... the election might have turned on Ford's "Poland" gaffe in a pre-election debate

· Carter/Reagan/Anderson ’80 (it was single-digit until just about two weeks before the election, when the “misery index” - "are you better off now than you were in '76" question began to resonate with the populace)

· Bush/Dukakis ’88 (the Duke was 17 points ahead on Labor Day and he was still leading in some polls mid-October)

· Bush/Clinton/Perot ’92 – Clinton won with 43 percent of the vote

· Clinton/Dole/Perot ’96 – Clinton won with 48 percent of the vote, and he was only one blunder away from losing (of course, he didn’t blunder until a couple years later, with Monica)

· Bush/Gore ’00 – this was decided a month after the election by the Supreme Court – and the media only finally satisfied themselves that Bush really did win Florida a year later after the “non-partisan” media Election Fact-check commission tried five different ways to calculate the votes so Gore could have won, and failed in all five tries and finally gave up

· Bush/Kerry ’04 – not as close as ’00, but still right down to the wire, right down to the final days

With this history, and with the election polls in what is essentially a dead heat (in the last two weeks, first McCain was ahead by single digits outside the margin for error, then Obama was ahead by single digits outside the margin for error, now Obama is ahead – in one major poll – by just one point, well within the margin for error) – the election is far closer (at four weeks out) than Carter/Reagan was in ’80 or Bush/Dukakis was in ’88, and closer than any of Clinton’s or Bush-43’s elections at this point.

In short, unless you drink the Kool Aid, this race is too close to call – each candidate is just one big blunder away from giving his opponent a decisive-seeming lead (which could erode if terrorists attack, or if Wall Street takes another 1,500-point plunge, or if something embarrassing and personal came out about either candidate). Almost any scandal or "gaffe" could overturn the margin of victory, for either candidate, right up to the last weekend before the campaign.

This election could go either way, but the only thing we can be certain of is that nobody who says the election is over knows what l he’s talking about. Either he’s ignoring the news or he’s ignoring Presidential election history.