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Figuring it out: Fairness or redistribution?

By Jeff

It has become apparent that when it comes to taxes, Sen. Obama’s goal isn’t determining which system will have the best balance between economic productivity and maximizing revenues to the government, but on how he can most effectively redistribute wealth. It was most recently apparent when Obama announced the “windfall profits” tax on oil companies because he felt that the oil companies had made “excess profits” and that it was somehow the governments role to redistribute that wealth to consumers (i.e. bribe them for votes).

An example during the last Clinton debate when he was posed a question as to why he would recommend increasing the capital gains tax when history shows that when the capital gains rate was lowered (Clinton and Bush II), the revenues went up. But when it was increased (Reagan), revenues went down. His answer was: “What I've said is that I would look at raising the capital-gains tax for purposes of fairness."

He’s not looking for a tax code that is maximally efficient. No, he’s focused on “fairness,” which is another word for “redistribution,” which is why his camp has marketed his economic plan by saying 85 percent of Americans would pay lower taxes under Obama’s plan than McCain’s, and why you have so many on the right calling him a Marxist.

(continued) I discussed his windfall bribe last week, and this week another one is getting press: A $1,400 bribe to 27 million senior citizens.

Here’s the quote from his Web site:

Eliminate Income Taxes for Seniors Making Less than $50,000: Barack Obama will eliminate all income taxation of seniors making less than $50,000 per year. This proposal will eliminate income taxes for 7 million seniors and provide these seniors with an average savings of $1,400 each year. Under the Obama plan, 27 million American seniors will also not need to file an income tax return.

Why seniors? Why should they not get taxed? Especially since senior citizens are one of the most liquid cohorts around? They aren’t bringing up children. They aren’t paying for college. A larger percentage of them are debt-free, and so their income goes to leisure (like lots of cats, Glenn Campbell records, and robot insurance). They have larger health care expenses, sure, but why not just increase Medicare? If he wanted to make some group tax-free, why not cancer patients’ families or the mentally handicapped or recent college graduates? Could it may be because that senior citizens typically have about 75 percent voter turnout?

His transparent bribes are really insulting. Instead of focusing on his overall policies and how he’s going to improve the country, he’s announcing these targeted bribes by voting segment. He’s also picking a group such that when someone explains the uselessness and insulting nature of these bribes, his supporters can lash out with ad hominem attacks (“McCain is anti senior citizen, pro-big oil company and anti lowest 85 percent of income earners!”) — a Democratic party staple, rather than defending the economic rationale of these proposals which have no intention of helping the economy at all. It’s a clever and unfortunately really effective tactic, but it’s really insulting.

But since I was on his Web site anyway, and since I don’t want this to appear like I’m just going to pick apart Obama for his pandering, here’s one thing on his Web site I love and agree with:

Simplify Tax Filings for Middle Class Americans: Obama will dramatically simplify tax filings so that millions of Americans will be able to do their taxes in less than five minutes. Obama will ensure that the IRS uses the information it already gets from banks and employers to give taxpayers the option of pre-filled tax forms to verify, sign and return. Experts estimate that the Obama proposal will save Americans up to 200 million total hours of work and aggravation and up to $2 billion in tax preparer fees.

There’s an entire industry enabled by the complexity of the system. Obama seems to be hoping to improve the situation by technology rather than also streamlining the tax code itself. Now, I challenge that he’s actually doing this, since he keeps pushing tax credits and changes to the graduated income tax which only make it more complex for people to do their taxes, but let’s say he is. Saving consumers $2 billion in tax preparations is the same as a $2 billion tax cut, and even better since the money wouldn’t be coming from the government, but by eliminating a needless industry. If he wants to really simplify the tax code and eliminate the wasteful industry (and ooooh get rid of sooooo many lobbyists in Washington), dare I hope that he starts talking about a national sales tax?

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