From the Chicaco Sun Times...
Quote:
How would Barack Obama pay for the $800 billion that John McCain claimed in the first presidential debate Sept. 26 in Oxford, Miss., that his Democratic opponent would spend if he were elected president? Obama replied, by "closing tax loopholes."
Obama was no more specific in the debate, and tax experts doubt that structural changes without increasing taxes can raise anything close to that amount of money.
My office asked the Obama campaign for the details, and it responded with a 19-page single-spaced paper on the candidate's "tax plans."
In fact, there was precious little about tax policy in the paper, which amounted to a repeat of Democratic campaign oratory that can be heard in 30-second speeches before both houses of Congress daily on C-SPAN.
Obama has made clear that he would try to roll back President Bush's tax cuts, but that does not come under the definition of a "loophole." A loophole consists of a conniving tax attorney discovering a weakness in the Internal Revenue Code or such a weakness intentionally legislated by Congress under the instigation of crafty lobbyists. The only specific tax legislation contained in his paper would raise the capital gains rate for most shareholders, restore taxation on dividend income to pre-Bush standards and restore the full estate tax.
These were not loopholes but presidential proposals enacted by Congress. The Obama paper paints a picture of lobbyists running wild on Capitol Hill but neglects to assess the impact on the economy during the current financial crisis of taking a serious strike against the stockholding public.
Obama's dividends and capital gains proposals appear to be a major attempt at redistribution of income rather than a serious attempt to pay for the spending that he has proposed.
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This reminds me of when Charlie Gibson asked Obama about raising the capital gains tax....
Quote:
GIBSON: All right. You have, however, said you would favor an increase in the capital gains tax. As a matter of fact, you said on CNBC, and I quote, "I certainly would not go above what existed under Bill Clinton," which was 28 percent. It's now 15 percent. That's almost a doubling, if you went to 28 percent.
But actually, Bill Clinton, in 1997, signed legislation that dropped the capital gains tax to 20 percent.
OBAMA: Right.
GIBSON: And George Bush has taken it down to 15 percent.
OBAMA: Right.
GIBSON: And in each instance, when the rate dropped, revenues from the tax increased; the government took in more money. And in the 1980s, when the tax was increased to 28 percent, the revenues went down.
So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected?
OBAMA: Well, Charlie, what I've said is that I would look at raising the capital gains tax for purposes of fairness.
We saw an article today which showed that the top 50 hedge fund managers made $29 billion last year -- $29 billion for 50 individuals. And part of what has happened is that those who are able to work the stock market and amass huge fortunes on capital gains are paying a lower tax rate than their secretaries. That's not fair.
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So he agrees that raising the capital gains tax would bring in less revenue over all, and hurt investors, but says he'd do it anyway? For "fairness"? Seems like for purposes of spite.
If it wouldn't get more revenue, what's the point? It's not going to raise the secretaries salary. So his government would have less revenue, the investor who is helping the economy go would have less capital to do so, and this poor destitute secretary (working for one of the top 50 hedge fund managers in the country, gosh she must be making 5.25 an hour) would still be where she was. I'm not sure what's pragmatic or prudent about that.