Fighting for the middle

Obama fends off Palin charge of 'socialist' tax plan - CNN.com

"That's the reason why we have governments, to help those who need help, who can't help themselves, and in a time of crisis, to step in and do what's necessary to preserve the lives and futures of innocent people. It wasn't Main Street America that caused this; it was Washington and Wall Street."

I always find it vaguely amusing when the right goes after the middle.  They have to say just enough to make their argument seem reasonable, but not so much that it offends the base. The worst part is that independents often fall for it.

So let's go over the above statement a little more carefully.  The reason Obama is a socialist and McCain is not, is that Obama wants to change the tax code so that the rich pay more in taxes and the poor pay less.  In some instances working families who don't pay federal income taxes will get a check.  I'd like to take a moment to point out that under McCain's health refund tax credit, working families that don't pay federal income tax would also get a check from the government. 

Anyway, he terms this socialism.  McCain, on the other hand, is not a socialist, becuase when he voted to turn over government money to shore up Wall Street, it was a crisis that was not the fault of the average tax payer.  So apparently it doesn't count as socialism if you're dealing with a crisis.

One has to wonder whether this means that the rapidly falling value of tax payer money, or inflation, or devaluing housing markets would qualify as a crisis.  In many ways the income that working families takes in has dropped dramatically due to the tax policies that McCain supports.

Personally I would call that a crisis outside the control of the average taxpayer.  But as usual, McCain is not interested in helping working families, except through shoring up businesses in the hopes that they will pay better salaries.  I haven't seen any evidence of this over the last eight years.  Increasing the wealth of the wealthy has not enriched everyone.

I might even be willing to accept the premise if we didn't have the last eight years as a demonstration of how badly these policies fail.  If, over the last eight years, the middle class had grown stronger and richer, prices had dropped, and insurance had become easier to get and less expensive, I would be voting McCain.

Unfortuntely, the opposite is true.  We know without a doubt that McCain's policies will not work, because they haven't worked.

Joe the plumber can kiss my a**

Nobody wants to pay taxes. In an ideal world we could all go about our business and keep the fruits of our labor. Go to work, work hard, keep our profits. Unfortunately, society doesn't work that way. Someone has to pay for the military, the schools, the roads, etc.

There are in my opinion only three ways to collect that money. The first is to collect from everybody based on spending in the form of a sales tax. It can't be avoided and the more you spend the more you pay.

If we exempt some of the basic necessities like groceries, then we can keep this from being a regressive tax on the poor. Unfortunately this plan is almost universally disliked by both parties.

That leaves us with taxing the wealthy to pay the bills or taxing the poor to pay the bills. One of them has to be done. Can't be avoided. a flat tax taxes the poor more harshly, a progressive tax taxes the rich more harshly. No way around it.

The worst part is that most people don't even understand how it works. Joe the Plumber for instance. He's been working hard as a plumber. Now he wants to buy his business. Good for you Joe. It's always good to see anyone doing well under Bush economics.

So his business makes between $250 thousand and $260 thousand annually. He's worried about the stifling taxes that Obama is going to level at his company's income. Problem is that under a progressive tax you only pay more on the amount above $250 thousand. So, let's say he makes $260,000. Under Obama he pays an extra 3% on $10,000. In the meantime he's getting a tax break on his health insurance, and his customers are getting a tax break so that they can better afford his services.

McCain, of course, wants to cut taxes. But only on the wealthy. So Joe would save a bit on the extra $10,000, but where do we get the money to pay for everything? Surely McCain isn't under the impression that we already take in enough money to pay the bills?

Doesn't matter. What's important to McCain is that the wealthy have more wealth. He believes in the trickle down economics of Reagan. Unfortunately it never seems to trickle down. Trickle down only works if the people at the top aren't keeping all the money.

Unfortunately Joe finds himself in the middle ground. If he buys the company he crosses into a line that makes him a different income class. He's part of a group that comprises less than 5% of the American populace. The line has to be drawn somewhere.

And let's be clear that this tax question is about the revenue of Joe's company. Presumably Joe will be taking a salary from the company and not draining it's revenue directly. So Joe actually stays in the lower tax bracket. There's a pretty good chance Joe himself will be getting a tax cut. That means lower tax responsibility for the business as well.

Don't forget that the company has to pay out a percentage of each employees income based on their tax rate. Lower tax rates mean lower tax rates for the company as well. Joe only loses if he's planning on keeping all the money, firing most of his workforce, and refusing health care coverage to the rest. And if that's the case, I can't feel too bad for him.

And finally, let's not forget that studies have demonstrated that the economic policies of democratic presidents have almost universally created stronger economies. Don't believe me? Read this