The WSJ.com “Forum” accepted an abbreviated Homa Files post.
Subject is the Obama tax plan, of course.
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The Obama Tax Plan
homak’s reply
In their op-ed outline of Obama’s tax plan, Furman & Goolsbee make a valiant effort to focus attention on the capillaries instead of the jugular.
The most fundamental issue, if the Obama plan is enacted, is that a minority of voting age citizens will be paying 100% of all Federal income taxes. A majority will not be paying any Federal income taxes at all.
Currently, according to IRS data, 41% don’t pay any income taxes. Obama’s web site claims that 10 million more will be taken off the tax rolls via his $500 and $1,000 tax credits; another 7 million are seniors currently paying some income taxes who come off the rolls. Those 17 million additions push the number to 49%.
And, the Obama campaign projections are probably low — very low.
Based on the 2006 IRS data, approximately 22 million adults were represented on tax returns for married couples filing jointly that reported AGI less than $27,500 and paid some income taxes. Doing the tax credit math, they come off the tax rolls and push the percentage up to 51%.
Further, there are about 4.7 million childless individuals who earn less than $13,750 and currently pay some income taxes. They come off the rolls and push the number to 55% — a comfortable majority.
(For a complete analysis, see https://kenhoma.wordpress.com/2008/07/31/under-obama-tax-payers-will-be-a-minority/)
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Based on the hard numbers, Obama’s plan will create a new majority — a powerful voting block of non-tax payers.
For those in the emerging majority that won’t pay any Federal income taxes – or may even be getting government checks for tax credits due – the deal is almost too good to be true. To them, Obama’s plan must make perfect sense. Obama can probably count on their vigorous and perpetual support.
But those in the new tax paying minority, there’s cause for concern. What if the new majority decides that more government services are needed, or that a mere $100 billion, or so, of income redistribution isn’t enough to balance the scales? There will be no way to stop the train.
The Tax Foundation — a nonpartisan tax research group – has repeatedly warned that “While some may applaud the fact that millions of low- and middle-income families pay no income taxes, there is a threat to the fabric of our democracy when so many Americans are not only disconnected from the costs of government but are net consumers of government benefits. The conditions are ripe for social conflict if these voters begin to demand more government benefits because they know others will bear the costs.”
(See http://www.taxfoundation.org/research/show/1111.html)
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