Obama's Tax Policy

[husker rob]

America has voted and Obama will be the next President. For those that are unable to figure out what his tax policy is and how it might effect you here is a simple explination to help you out

 

EXPLAINING OBAMA'S TAXING SYSTEM WITH BEER

 

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100.

 

If they paid their bill the way we pay our taxes, it would go something like this:

 

The first four men (the poorest) would pay nothing.

The fifth would pay $1.

The sixth would pay $3.

The seventh would pay $7.

The eighth would pay $12.

The ninth would pay $18.

The tenth man (the richest) would pay $59.

 

So, that's what they decided to do.

 

The ten men drank in the bar every day and seemed quite happy with the

arrangement, until one day, the owner threw them a curve. 'Since you are all

such good customers,' he said, 'I'm going to reduce the cost of your daily

beers by $20.

 

Drinks for the ten now cost just $ 80.'

 

The group still wanted to pay their bill the way we pay our taxes so the

first four men were unaffected.

 

They would still drink for free. But what about the other six men - the

paying customers? How could they divide the $20 windfall so that everyone

would get his 'fair share?' They realized that $20 divided by six is $3.33.

 

But if they subtracted that from everybody's share, then the fifth man and

the sixth man would each end up being paid to drink his beer. So, the bar

owner suggested that it would be fair to reduce each man's bill by roughly

the same amount, and he proceeded to work out the amounts each should

pay.

 

And so:

 

The fifth man, like the first four, now paid nothing (100% savings).

The sixth now paid $2 instead of $3 (33%savings).

The seventh now pay $5 instead of $7 (28%savings).

The eighth now paid $9 instead of $12 (25% savings).

The ninth now paid $14 instead of $18 (22% savings).

The tenth now paid $49 instead of $59 (16% savings).

 

Each of the six was better off than before and the first four continued

to drink for free, but once outside the restaurant, the men began to

compare their savings. "I only got a dollar out of the $20," declared the sixth

man.

 

He pointed to the tenth man, "but he got $10!" "Yeah, that's right,"exclaimed

the fifth man. "I only saved a dollar, too. It's unfair that he got TEN

times more than I!"

 

"That's true!!" shouted the seventh man. "Why should he get $10 back

when I got only two? The wealthy get all the breaks!"

 

"Wait a minute," yelled the first four men in unison. "We didn't get

anything at all. The system exploits the poor!"

 

The nine men surrounded the tenth and beat him up.

 

The next night the tenth man didn't show up for drinks, so the nine sat

down and had beers without him. But when it came time to pay the bill, they

discovered something very important....they didn't have enough money

between all of them for even half of the bill!

 

And that, boys and girls, journalists and college professors, is how our

tax system works. The people who pay the highest taxes get the most benefit

from a tax reduction. Tax them too much, attack them for being wealthy, and

they just may not show up anymore. In fact, they might start drinking

overseas where the atmosphere is somewhat friendlier.

 

David R. Kamerschen, Ph.D.

Professor of Economics

University of Georgia

 

For those who understand, no explanation is needed.

For those who do not understand, no explanation is possible!

[BIGREDFAN_in_OMAHA]

Trickle down doesn't work. It isn't an issue of taxing them "too much". It will be returning their taxes to the pre-Bush levels.

[sarge87]

Obama's way wont work either if the rich start dumping their money into tax deferments and trusts further constricting capital.

[AR Husker Fan]

While funny, it should be noted that not only was the piece not written by the alleged author, but that he's posted a denial on his web site.

 

LINK

[strigori]

the idea that people will move out of the country to avoid a percentage or two difference in taxes is absurd.

 

It is interesting to note though, that as income goes up, so does tax fraud.

[husker rob]

the idea that people will move out of the country to avoid a percentage or two difference in taxes is absurd.

 

It is interesting to note though, that as income goes up, so does tax fraud.

i think that the 10th beer drinker is a refrence to corperate america, and the more you tax businesses, the more likely it will be that the move those businesses (and jobs) overseas to countrys that have lower tax rates

[BIGREDFAN_in_OMAHA]

the idea that people will move out of the country to avoid a percentage or two difference in taxes is absurd.

 

It is interesting to note though, that as income goes up, so does tax fraud.

i think that the 10th beer drinker is a refrence to corperate america, and the more you tax businesses, the more likely it will be that the move those businesses (and jobs) overseas to countrys that have lower tax rates

That is happening anyhow. Obama proposes tax breaks for each new American job that those countries generate.

[HUSKER 37]

That tears it..

I'm asking Santa for a Home Brewing kit.

[NUpolo8]

Trickle down doesn't work. It isn't an issue of taxing them "too much". It will be returning their taxes to the pre-Bush levels.

 

 

Except that happens automatically in 2010 when the tax cuts expire. That will bring the tax levels back to the levels seen in the Clinton administration. Talk is of a tax increase before that. There is also talk of a small business tax increase. So, the "people" can have their tax break, but with all the other tax increases, they might not have a job.

 

Furthermore, trickle down DOES work. If you get fired becuase your company is struggling, their losses trickled down to effect you. The opposite is also true.

 

Not saying McCain was the right choice, but Obama's tax plan flat out will not work and several economists a whole lot smarter than me agree. I predict a very centrist presidential campaign by Obama that will severely piss his consitituency off because he did not make good on his radical "change" promises and a 1 term presidency.

[strigori]

Trickle down doesn't work. It isn't an issue of taxing them "too much". It will be returning their taxes to the pre-Bush levels.

 

 

Except that happens automatically in 2010 when the tax cuts expire. That will bring the tax levels back to the levels seen in the Clinton administration. Talk is of a tax increase before that. There is also talk of a small business tax increase. So, the "people" can have their tax break, but with all the other tax increases, they might not have a job.

 

Furthermore, trickle down DOES work. If you get fired becuase your company is struggling, their losses trickled down to effect you. The opposite is also true.

 

Not saying McCain was the right choice, but Obama's tax plan flat out will not work and several economists a whole lot smarter than me agree. I predict a very centrist presidential campaign by Obama that will severely piss his consitituency off because he did not make good on his radical "change" promises and a 1 term presidency.

No, time again and again proves trickle down does not work. Here is what the theories are.

 

Trickle down - Give as much money as possible to big business and the very wealthy, and they will put the money back into their companies. Sounds great. Only once you introduce the element of greed and corruption it all goes out the window. All these tax cuts do is put more money into the hands on a very small portion of people who, by and large, just put it in the stock markets, or buy a second house, or a new boat.

 

The dems plan works better. By shifting the tax cuts to the middle and lower classes, the money is put into more hands, in smaller amounts. These people then take the little extra they have, and spend it in their local economies. The people who got the tax cuts win,and so do the businesses as more people can buy goods and services. Thus creating jobs, and strengthening the economy.

[husker rob]

but when you tax businesses more (the US already has the 2nd highest corperate taxes in the world) you make it more expensive for those companies to operate. then what does the business do?

 

believe it or not, companies are not in business to lose money, so they are going to have to find ways to make a profit. how do they do that?

 

1. raise prices to offset the new taxes that they have to pay

 

2. down size and start working more effeciently (jobs lost)

 

or

 

3. move company to another country where taxes are lower and production costs are lower. (more jobs lost)

 

I know that Obama has said that he will fine companies that move jobs overseas, but tell me how does the US tax a company in China?

 

ViseGrip used to be made in Nebraska, but now the company that owned the ViseGrip name, sold it to another company in China, and the production is now in China.

[strigori]

The Visegrip thing is different than what he wants to fine. The whole thing was sold, not just movement of part of the operations. Take GM, or Ford. They are still headquartered in the US, but they make a huge portion of the cars in Canada and Mexico, then import them to the US. Or Intel. they are US based, and make damn near every chip in Indonesia, then ship it back.

 

And the corperate tax rate is smoke and mirrors. After all the tax breaks and write offs they make, many of the largest companies pay next to nothing in taxes. Everyone posting on this board payed a higher percentage of tax on their income than Wal-Mart did.

 

Companies down size when they are at their peaks just as much as any other time. Some exec wants to boost his bonus or stock option, so off jobs go.

[Eric the Red]

the idea that people will move out of the country to avoid a percentage or two difference in taxes is absurd.

 

It is interesting to note though, that as income goes up, so does tax fraud.

i think that the 10th beer drinker is a refrence to corperate america, and the more you tax businesses, the more likely it will be that the move those businesses (and jobs) overseas to countrys that have lower tax rates

 

 

How Patriotic is that though? Why do we accept this? Why wont these American companies pay American workers? The more money Americans have in their hands the more crap and stuff they can buy.

[BIGREDFAN_in_OMAHA]

the idea that people will move out of the country to avoid a percentage or two difference in taxes is absurd.

 

It is interesting to note though, that as income goes up, so does tax fraud.

i think that the 10th beer drinker is a refrence to corperate america, and the more you tax businesses, the more likely it will be that the move those businesses (and jobs) overseas to countrys that have lower tax rates

 

 

How Patriotic is that though? Why do we accept this? Why wont these American companies pay American workers? The more money Americans have in their hands the more crap and stuff they can buy.

Good question.

[AR Husker Fan]

The Visegrip thing is different than what he wants to fine. The whole thing was sold, not just movement of part of the operations. Take GM, or Ford. They are still headquartered in the US, but they make a huge portion of the cars in Canada and Mexico, then import them to the US. Or Intel. they are US based, and make damn near every chip in Indonesia, then ship it back.

 

And the corperate tax rate is smoke and mirrors. After all the tax breaks and write offs they make, many of the largest companies pay next to nothing in taxes. Everyone posting on this board payed a higher percentage of tax on their income than Wal-Mart did.

 

Companies down size when they are at their peaks just as much as any other time. Some exec wants to boost his bonus or stock option, so off jobs go.

Correct. You'd be hard pressed to find a single company that sent jobs overseas - never mind completely relocated its business - due to taxes. For most, it is the lower cost of wages, the lower cost of construction or production, and so forth.

 

To date, "trickle-down" has failed to produce a single economic boom period. It has always come in times in which taxes were reduced on the middle-class, who then spend that discretionary income, thus cause more production in all sectors. For those who don't remember, think of the recession during Nixon's tenure, Regan's tenure, Bush Sr.'s tenure, and Junior's tenure. In all cases, the common factor was a combination of tax cuts for the wealthy and the upper class, and either tax increases or token tax cuts for the middle class.

 

As was noted by strigori, when you give breaks to corporations or the wealthy, those monies are simply "banked" - their discretionary income is already sufficinetly high that the extra mony doesn't prompt spending; they can already spend without it. However, for the middle class, it's a different story - many live from paycheck to paycheck, and put off making discretionary purchases absent some kind of tax break.