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Monday, August 4, 2008

Obama's Tax Bomb (II)
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The economic programs and rhetoric of both major party presidential candidates leave much to be desired, but Barack Obama's tax ideas are truly alarming. For a good summary of what the tax code would look like if a President Obama got his way, see this chart from Stanford economist Michael Boskin:

Obama tax chart Boskin 2.gif

As you can see, after-tax returns on ordinary income could plummet 32% under the Obama plan, while after-tax returns on capital gains could drop almost 27%. These are not "marginal" tax tweaks but enormous changes to the American tax code, and thus to American competitiveness.

No candidate who cares about American jobs, real wage levels, or health care benefits can seriously propose such penalties on investment and entrepreneurship. Obamanomics would make the U.S. one of the least tax-competitive nations on the planet, pushing jobs overseas, reducing real wages, and making it ever more difficult for employers to provide decent health care, not to mention discouraging the marginal American entrepreneur or innovator from launching or growing a company (aka, employer, health care provider, tax payer) of the the future.

posted by Bret Swanson @ 10:56 AM | Global Innovation , Taxes

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Like most historical blunders and accomplishments, the Great Depression was largely the result of the decisions of individual leaders.

The government did three things in the early 1930's that turned the economic downturn of late 1929 into the Great Depression:

Monetary Policy - Contractionary - reduced the money supply and raised interest rates cutting off liquidity for which the markets were starving.

Economic Policy - Protectionist - Smoot-Hawley Tariff Act effectively cut imports and exports by half.

Fiscal Policy - Intrusive - Raised taxes to balance the budget thereby taking more productive capital out of the markets.

We are now in an economic downturn that most expect will turn into a recession (mild or otherwise).
Since the Federal Reserve runs monetary policy and has shown a willingness to pump liquidity into the markets, let us look at what the Presidential candidates' stances are on the other two issues.

Monetary Policy - Fed
Economic Policy - Open - Supports NAFTA and free trade
Fiscal Policy - Expansionary; cut taxes and spending to spur growth

Monetary Policy - Fed
Economic Policy - Protectionist; Spoke against NAFTA in primaries, now doesn't know
Fiscal Policy - Intrusive - On record as unequivocally supporting tax hikes

HOPE; for what, another depression? CHANGE; to what, equality where everyone is equally poor?

Now if McCain will get off the carbon tax idea, he might be an acceptable candidate.

Posted by: MiltonF Admirer at August 6, 2008 3:17 PM

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