Obama supports Bush tax cuts, to a point

Let’s get the proposal clear: He is proposing to keep the current tax rates in place for those who make under $250,000 for only one year (i.e. until after the election).

What Joe says. My take is simple; first of all, we’re on the wrong side of the Laffer curve, as tax cuts in general have been achieving more, not less, revenue for the government. So Obama’s plan to soak the rich will not necessarily gain more revenue–except for lawyers and investment advisors who specialize in tax avoidance.

What it will do, though, is transfer property from the very prosperous to the pet programs of whoever is running the White House. Think “Solyndra” or the litany of other solar companies that have gone Chapter 7 or Chapter 11 after getting subsidies from the Obama administration. Now do you think that Warren Buffett could have done any worse? I don’t think so.

Taxes are not for the purpose of “fairness”. They are for the purpose of funding the government. It is not up to the government to decide how much money people should have, so Obama’s whole premise is wrongheaded and calculated only to cause division and to be political.

The first problem we have is spending. President Obama has no plan to reduce spending, short term or long term, to the point where we are living within our means. Once such a plan is in place, and takes a serious approach toward real reductions in spending and long-term obligations, particularly with respect to entitlements, then he can talk about raising taxes. To that end, any increase in tax revenues should be through a tax system overhaul which greatly simplifies the tax system, lowering rates, eliminating most deductions and tax credits to ensure neutrality and to stop the practice of government choosing winners and losers. The economic advantages of simplifying the tax system, and making it more certain and sustainable, will offset the economic detriment of increasing overall tax revenue. Greater certainty about our future would also greatly help to end the recession.

Now, short of the above pie in the sky, which will never happen under Obama, if I were the Republicans I would agree to Obama’s proposal, with the proviso that the abominable Alternative Minimum Tax system be immediately eliminated. Taxpayers who would fall under the higher rates would gladly trade that to get rid of AMT and avoid the necessity of doing your taxes twice every year.

The President threatens veto of any across the board extension of the tax cuts. So there you go, that’s how it plays out.

If Obama is re-elected, tighten your belt because the tax increase takes effect across the board because of a stand-off with Congress.

If Romney wins, he’ll have to make day one about reinstating the tax cuts across the board. Obamacare repeal will slip to day two.

Actually, the scenario I have heard, assuming the Republicans take the Senate, is that they would pass both the Obamacare repeal and the tax cut extension during the period between January 5 or so, when the new Congress sits, and January 20, so that they are ready to be signed when Romney is inaugurated.

Not that I believe that, but such is the proposed plan.

This is why we should have a flat tax for the richest and poorest among us. Everyone needs skin in the game, regardless of your income. No deductions, not credits, no favortism. And no more borrowing.

US GDP = $14.59 Trillion
Federal Spending = $3.9 Trillion
Tax rate = roughly 25% across the board including S.S.

Make $40,000? You keep $30,000 before state/local taxes.
Make $80,000? You keep $60,000before state/local taxes.

Same rate, regardless of income. Work? 25%. Retired? 25% Welfare? 25%.

Only this will get spending under control.