question from a HS student who doesn't 'get' economics or tax-talk.

[parabolabear]

watching obama's rally in OH right now, heard him talking and emphasizing his tax plan.

is it literally possible that my parents "will not see their taxes go up one cent" under an obama administration (mom makes 45-50k/year, dad something like 65k...i'm guesstimating)? can someone explain to me how? i guess i mean, will going through the budget "line by line" and asking people who make $250k+ to return to 90s-era tax levels be enough?

thank you for any explanation you can give me! i almost feel bad only asking about this now - i can't vote this election year but i've had something of a blind faith in what obama's said about taxes/the economy and now i'd like to know exactly how it would work.

[ananda]

1. What Obama says.

Obama says that no one making less than 250k
will see a tax increase.

Those making over 250k will.

Will this be enough to get us out of the
economic hole?

That's a good question. It depends on whether
Obama can get us out of the ME and whether he
will put people in charge who will steward
finances and the budget in a way that moves us
back towards the surpluses we once had.

[parabolabear]

4. thank you!

i didn't think about how much it depends on who he puts in his cabinet...got me some reading to do in the next 48 hours.

[Uben]

2. Yes it is possible...for next year at least.

I would say it is probable! Their combined income about matches mine, and according to the tables, my taxes should actually drop!
They should also enjoy a tax cut! AInt America wonderful? (well, wait a couple of days before you answer that)

[BlueJazz]

3. I'll just give you One of the Answers. It will start returning the Money that the rich have been ..

...taking from the poor for years.
The Rich usually answer by saying: "We have made the money...we should get to keep it"

You've made your money by providing some sort of service to the lower classes..(Poor and middle class)..
Since the above is true.. WE ..the poor and middle class make the rules.
You WILL do as we say.
If you don't like it..tough...Quit and do something else because there's a hundred other people willing to take your place.

[SharonRB]

5. Check this out

http://taxcut.barackobama.com/

Your parents can figure out their savings under Obama's tax plan with this calculator.

[parabolabear]

11. saving $1000 under obama vs $200 under mccain, plus

a possible credit for my college expenses. love it.

[SharonRB]

30. Spread it around to anyone you know who is still on the fence.

[patrice]

Why take our word for it?

http://www.barackobama.com/issues/fiscal/

[parabolabear]

8. ive read it, i just thought maybe there was something i wasn't

understanding or hearing. it seems so simple - stop wasteful spending on ineffective programs and special-interest companies and undo tax cuts for the wealthy. no, really...that seems way too simple and obvious!

i say that in a good way, of course.

[patrice]

12. You're kidding, of course; there's nothing simple about something like Paygo.

[parabolabear]

22. i mean that those ideas - to cut out wasteful spending, close up loopholes, readjusting tax cuts -

seem like basic ideas that anyone might come up with, were they looking for ways to save money. wasn't referring to an idea such as pay as you go!

[parabolabear]

25. this will be a shitty analogy probably, but...

in our high school student government we had to do (something like) this recently.

things needed to be repaired in the school (bathrooms, stairwells, other things that every student utilized) so the first idea we came up with was to lessen the budget of some of the groups/clubs that didn't need as much money (ie the one that reads childrens books to the community vs. the ones that put out publications/hold big community events). it just seemed like the right thing to do when put in that position. again, this is probably a weird analogy, but i hope it came out right.

i supposed i meant to communicate my skepticism that these ideas, which to my friends and i seem obvious, would save enough money for an obama administration to not raise taxes on any family making less than $250k...but as another poster said, if the gov't can't raise enough money, they could/would borrow.

[patrice]

35. I expect there to be a transition phase in which some borrowing supports the process until

enough changes are made to make it stand on its own. Said borrowing will probably go forward along with the other borrowing we are doing for other "wealth re-distribution" programs like the so-called Wall Street bailout package(s).

[patrice]

15. Improved accountability =/= "simple"

[patrice]

16. Transparent earmarks =/= "simple"

[patrice]

18. Identifying obsolete government programs =/= "simple"

[patrice]

19. Identifying tax haven abuses =/= "simple"

[patrice]

21. closing loopholes =/= "simple"

[BamaTideFan83]

6. Spending cuts.

By the time Obama makes the federal government a highly efficient operation, the budget will balance itself. Why don't people just have some trust?

[patrice]

10. Why? Because ANY government, left to itself, will get it Wrong.

Whether we are active or not, What happens after 1/20/2009 will be our responsibility, not just Obama's.

[ecstatic]

7. Obama has a tax calculator on his site. TaxCut.BarackObama.com

http://TaxCut.BarackObama.com

Will it be enough? We'll see. But one thing we do know is that John McShame's plan of doing NOTHING different than Bush (and actually giving the wealthiest Americans another tax cut) certainly won't work.

[Every Man A King]

9. So you think Obama is lying?

If the government can't raise enough money... it just borrows it. It would be nothing new.

[parabolabear]

14. understood.

i do not think he's lying, i just wanted a more comprehensive understanding - possibly from adults/people who know more about taxes than i do - of the idea that no family who makes under $250k will see their taxes go up at all. i guess my initial reaction was, "holy crap, that must be an incredible amount of people in this country," and i began to wonder is it's possible. more comprehensive understanding accomplished.

i attribute part of it to the fact that i live with a rethug dad who calls me comrade when i talk about obama and is in love with the phrase "but where will the money come from?" bah!

[WallStreetNobody]

13. Will it be enough for what?

Enough to balance the budget? Neither candidate is going to be able to balance the budget any time soon, and everyone on all sides recognizes that. McCain is essentially continuing the Bush tax cuts which were extremely stupid when going to war and virtually all of the benefits of it went to the top 5%, actually most to the top 2%. Obama's plan would shift some of the burden back to that top 2%. One of the important things to remember is that even the $250k benchmark isn't too accurate in terms of the burden. If you're making say $300k per year your tax bill will probably be the same as it is under McCain's plan. The real difference comes in for those making millions who currently pay an effective tax rate per IRS data of only about 22% - this is the same as someone making $50k when you factor in payroll taxes. It is ridiculous. Most of my colleagues make well over $250k and most support Obama, that tells you something about McCain's ridiculous "punishing success" argument. Obama's plan calls for tax revenue coming in through other places as well, a small increase in capital gains taxes for the wealthiest people, getting rid of many ridiculous corporate tax breaks. Keep in mind when Repugs argue that America's corporate tax rate is one of the highest in the world it is complete bullshit. First of all most companies don't pay taxes even when profitable because they're reinvesting net income versus distributing it, second the EFFECTIVE tax rate for US corps is the 2nd lowest in the developed world. ExxonMobil likes to throw out press releases about how they pay tens of billions in taxes, it is bullshit. That is their deferred tax liability which they never pay because its written down each year with subsequent capital investment. Their actual effective US tax rate last year was about 6.5%. Less than someone making minimum wage pays in payroll taxes.

By the way, you want to know an easy way to raise an extra $150 billion without effecting jack shit? A lot of developed countries do this, impose a stamp tax for stock sales of just 0.25%. Yup, on a $50 share of stock you pay just 12.5 CENTS when you sell it. Even if you sell a million dollars of stock in a year its only $2500. But because of the number of transactions it would raise about $150 billion - the same size as the stimulus package. Repugs will of course argue that it would "kill incentive" to invest which is utter horseshit. I work in the capital markets for a living, no one is going to stop investing because of a 0.25% tax on sales.

[parabolabear]

17. you just blew my mind with this:

"ExxonMobil likes to throw out press releases about how they pay tens of billions in taxes, it is bullshit. That is their deferred tax liability which they never pay because its written down each year with subsequent capital investment. Their actual effective US tax rate last year was about 6.5%. Less than someone making minimum wage pays in payroll taxes."

and this:
"By the way, you want to know an easy way to raise an extra $150 billion without effecting jack shit? A lot of developed countries do this, impose a stamp tax for stock sales of just 0.25%."
WHY do we not do this? has it been proposed and shot down, or just not proposed yet? what other countries do this?

thank you for that response...i'll read it again to get it all, but wow - thanks!

[WallStreetNobody]

23. Yeah the corporate tax argument is nonsense

I work in the financial markets for a living, I spend night and day picking apart companies to analyze their credit worthiness and whether they're worth investing in. Tax liabilities for American companies are not large by any measure, that is ACTUAL taxes paid - not the accounting treatment of the supposed liability.

And on that stamp tax for stock sales, there are SOOO many little things like this that can raise so much money and frankly not effect anything - but its because they fall on the richest people they never get implemented. Do you think Repukes would care at all about implementing a 0.25% tax on middle class people? Never. But tell them you'll implement a 0.25% tax on rich people and they go crazy. I'm not saying rich people don't pay taxes, they do pay a lot, but they still pay less in relation to their total share of income than everyone else. And that disparity grows more and more when you throw in regressive taxes like payroll, sales, etc.

Developed countries that do this include most European countries, as well as Japan and Hong Kong (not a country but you know) -- and a lot of the fast emerging countries like China and India, I believe Australia does as well. It has been proposed at times in the US and never got anywhere because Repukes just scream bloody murder.

[parabolabear]

27. interesting. do you think anything like that stamp tax for stock sales would pass under

an obama admin? can't believe i've never heard of any of these ideas before...never mentioned in school or on tv. on second though, i absolutely can believe it.

also, do you actually work on Wall St? if you do, you should come volunteer at the obama hq on Broadway :)

[WallStreetNobody]

31. I think there's a chance it can get passed but not a great chance

the fact is Congress is always "scared" to do anything that might effect the markets - even if it most likely wouldn't. It is highly likely that the day such a tax is announced the market will go down and that will become the story, even though it won't have any effect over the medium or long term.

I would love to be volunteering for Obama right now with you guys but I'm in Asia for business for an extended period of time - at least another 6 months. My firm is based in NYC and I'll be back there after this stint in Asia. I really wish I was there right now, the only help besides donations I was able to do was help make sure other American expats here voted absentee. Most American expats are Obama supporters, by a huge margin - something like 70%+. I'm in Singapore right now which has a lot of American expats and a good Democrats organization that helped with the Vote from Obroad efford.

[The Hope Mobile]

20. check out www.obamataxcut.com

Ours go down by a significant amount and we are in the same ballpark.

[napi21]

24. Absoluetly! It's likely they will received a small decrease!

Over the last 8 years, Shrub & the Pub controlled Congress has managed to give HUGH tax breaks to the very wealthy, while giving very little relief to the lower & middle class earners. I think you would need to research tax laws going back a lot farther than just the 90's to recognize exactly what the impact of all the tax cuts over the last 30-40 years mean to our Country. Back when JFK was elected, the very wealthy paid 90%...YES that's 90% on their adjusted gross income! JFK reduced that rate to 50%, although he also eliminated a lot of the loopholes those wealthy people took too, their actual amount paid did go down. The Pubs have been adding back loopholes and reducing rates ever since, to the degree where the upper 1% have managed to accumulate much more wealth than ANYONE could realistically spend!

Today, Mike Bloomburg was interviewed on one of the Sunday AM Political Shows. He was asked his opinion on Obama's taxing the rich more, and I was a bit surprised at his response.He said the US Progressive tax system was establiched almost a century ago. It doesn't prevent anyone from getting wealthy, but it, coupled with the Estate Tax, prevents families from forming dynasties! When the interviewer asked him if his daughters were OK with that, he said, he never asked them, but he wanted his daughters to receive some of his money, but he also wanted them to become successsful in their own right.

Obama's plan will help eliminate all those insane $20 & $30 MILLION salaries & bonuses that so many corp. executives have been granted over the last 6-8 years, and put that additional $$ not only into the treasury, but back into the companies to encourage them to reduce prices to the avg/ consumer.

I believe you can go to one of Obama's web sites and find a tax calculator that will show you in a few key strokes, the approximate amt. of your parents tax cut.

[DeeDeeNY]

26. This will help

http://nationalpriorities.org/costofwar_home

[parabolabear]

28. ......

Taxpayers in New York City, New York will pay $3.9 billion for tax cuts for the richest 10% in FY 2009.

For the same amount of money, the following could have been provided:
59,325 Music and Arts Teachers for One Year


oh god.

[Motown_Johnny]

29. the simple answer is....

McCain still believes in what Ronald Reagan started. They think that if you help the rich people get even richer they will employ more people and keep our economy growing.

Obama believes that approach is wrong. If you help the middle class pay their bills and save for their retirement. as well as afford some small luxuries, then the economy will be healthy and strong.


So if you are very rich and don't care about our economy as a whole then McCain is your man.

If your parents don't make a quarter million dollars a year and/or care about this country then Obama is your man.

[DeeDeeNY]

32. You may say you don't get economics

but it sounds to me like you have a better grasp of it than McCain.

[Zynx]

33. Because the amount of income earned by those who make $250,000 and over is huge.

They earn an extremely disproportionate share of the income in this country. Raising taxes on just the top one percent can offset a similar cut in rates for twenty times as many people because of how income is skewed.

[patrice]

34. It occured to me this morning that perhaps this will help you see how/why this will work

http://www.lcurve.org/