There is so much more to Barack Obama’s tax plan than the soundbite version that everyone who makes less than a quarter million will get a tax break. First of all, the plan will give money to people who do not pay taxes. It also will increase Social Security withholdings for those who make over $100,000. And, according to this article, it will decrease the percentage of people who pay taxes. Under his plan, a majority of Americans (3 out of 5) will not pay taxes but have the political power to take more and more money from those who do. This would be a fulfillment of Plato’s nightmare, the reason, he said, that democracies will not work for long (see “The Republic,” Book VIII).
Sen. Obama is promising $500 and $1,000 gift-wrapped packets of money in the form of refundable tax credits. These will shift the tax demographics to the tipping point where half of all voters will receive a cash windfall from Washington and an overwhelming majority will gain from tax hikes and more government spending.
In 2006, the latest year for which we have Census data, 220 million Americans were eligible to vote and 89 million — 40% — paid no income taxes. According to the Tax Policy Center (a joint venture of the Brookings Institution and the Urban Institute), this will jump to 49% when Mr. Obama’s cash credits remove 18 million more voters from the tax rolls. What’s more, there are an additional 24 million taxpayers (11% of the electorate) who will pay a minimal amount of income taxes — less than 5% of their income and less than $1,000 annually.
In all, three out of every five voters will pay little or nothing in income taxes under Mr. Obama’s plans and gain when taxes rise on the 40% that already pays 95% of income tax revenues.
The plunder that the Democrats plan to extract from the “very rich” — the 5% that earn more than $250,000 and who already pay 60% of the federal income tax bill — will never stretch to cover the expansive programs Mr. Obama promises.
What next? A core group of Obama enthusiasts — those educated professionals who applaud the “fairness” of their candidate’s tax plans — will soon see their $100,000-$150,000 incomes targeted. As entitlements expand and a self-interested majority votes, the higher tax brackets will kick in at lower levels down the ladder, all the way to households with a $75,000 income.
Yes, it would be great not to pay taxes. But do you see the danger if only 40% of Americans are taxpayers?
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