B. Hussein Obama has let loose a little more of his economic plans for America, and they are not good. Deborah Solomon over at the Wall Street Journal takes a good look into this story:
|Sen. Obama outlined a plan Thursday to raise tax rates on capital gains and dividend income from 15% to 20% for individuals and families making more than $200,000 and $250,000, respectively. He also detailed a plan to levy payroll taxes on earnings above $250,000 at a rate between 2% and 4%, though that increase wouldn’t occur for at least a decade. Right now, payroll taxes, used to fund retirement benefits, are levied on income up to $102,000.
Jason Furman, Sen. Obama’s economic-policy director, said the plan would cut taxes to less than 18.2% of gross domestic product. “That’s lower than the level of taxes when Ronald Reagan was president,” he said.
But it is still a tax increase. And as the U.S. learned in 1932 and 1936, raising anyone’s taxes during an economic downturn is the absolute worst thing that government could do. Back in the 1930’s it caused the Great Depression to last years longer than it should have. Today, B. Hussein Obama’s economic policy could very well trigger a second Great Depression.
|“The U.S. economy is in a weak state. We’ve got a credit crunch, high oil prices…this is not the time to be raising anybody’s taxes,” said John Taylor, a Stanford University economist who is advising Sen. Obama’s rival, Republican Sen. John McCain.
“When the investment tax rate is higher it affects behavior because we see a retrenchment of companies paying dividends,” said Bruce Josten, executive vice president of government affairs at the U.S. Chamber of Commerce.
Dividends and capital gains lure investors to participate in the stock market, and their investment provides capital for companies to use to expand their business. A reduction in that capital could hurt business and the U.S. economy, Mr. Josten said. He said the business community also is concerned that Sen. Obama’s broader tax plan would remove more individuals from the income-tax rolls, a situation that could lead to future tax increases on wealthier Americans.
But it goes deeper:
|The Securities Industry and Financial Markets Association, a trade group, criticized the proposed investment-income tax increases as dangerous. “The next occupant of the Oval Office is going to face some tough choices on fiscal policy, but raising taxes on capital gains and dividends will only further endanger an already-weakening economy and punish the more than half of all American households that are invested in the stock market,” said Travis Larson, a spokesman for the group.
Less investment = less capital. Less capital = fewer jobs. Fewer jobs = lower tax revenues. Lower tax revenues = Dems calling for higher taxes on those who do have incomes. Then we are right back to less investment.
It’s a pity the Dems are completely unable to understand this Socialistic economic cycle.
You can access the complete article on-line here:
Obama Details Raising Taxes On Gains, Dividends
The Wall Street Journal
August 15, 2008