During his Fox News interview with Bill O’Reilly, Sen. Barack Obama responded to one question where the statistics contradicted his position by saying that “there are lies, damned lies, and statistics.” He then went on to say that 95 percent of Americans would get a tax break under his economic plan. That’s ironic, because his comment on “damned lies and statistics” is the perfect commentary on his own plan. Taken with Sen. Joe Biden’s novel definition of patriotism, Team Obama is making an argument that Americans have never bought.
The statistics speak for themselves. Only 62 percent of Americans pay federal income tax, meaning that 38 percent get a 100 percent refund of any taxes withheld. So Mr. Obama’s 95 percent that will receive money from the government includes roughly 33 percent of Americans who pay no income tax. One-third of Americans pay no income taxes yet would receive a government check of perhaps $1,000 or more.
That is pure income redistribution. Some pundits argue that this is Keynesian demand-side economics. It is not. Having the government take money from business entities or affluent individuals and giving it to those who pay no federal income taxes is not Keynesian. It’s Marxist.
American voters don’t buy Team Obama’s arguments. A recent Gallup poll shows that 53 percent of Americans believe that Mr. Obama would raise their taxes. A recent Zogby poll shows a majority of Americans understand that raising taxes will hurt the economy.
Energy prices have pounded the U.S. economy. The recent woes on Wall Street have further shaken our weakened economy. Certain pillars of our economy, such as productivity gains and American ingenuity, continue to be powerful economic assets. But the current debt situation, spending trends, the cost of combating global terrorism, along with the energy crisis, leaves our economy in a truly precarious position.
Most credible economists warn that raising taxes during an economic downturn only makes the situation worse. Given our current economic situation, Mr. Obama’s tax plan is the equivalent of pouring gasoline on a fire.
Then we come to the Team Obama fantasy that the Obama plan would cut taxes for most Americans. Yes, Mr. Obama says he will cut rates for lower-income Americans, but will more than offset that by raising taxes on dividends, capital gains, higher incomes, corporations, estates, and payrolls. But most Americans own stock, either directly or through their IRA, 401k or union pensions. Dividend and capital gains taxes will take money from all those. Those Americans on Main Street who own a house or have other investments will be punished by a capital gains tax increase.
Businesses and corporations do not pay taxes; we do. Businesses don’t have huge piles of money sitting in the closet that they simply turn over to government when taxes increase. For every dollar that you increase taxes on a business, they simply increase their prices by a dollar. Who then pays the tax? We do. We do, when the product that we bought last week for $20 suddenly costs $21.
Mr. Obama’s plan for universal health care and increased spending on just about everything costs hundreds of billions of dollars. To keep his promises to provide those things while eliminating the deficit and giving checks to lower-income families, he will have to raise taxes by hundreds of billions of dollars. But if lower-income Americans receive a check for $1,000 under the Obama plan yet have to pay $2,000 more when buying food and clothes, they are worse off.
Affluent Americans have not had a tax holiday during the Bush administration. Most analysts agree that the affluent pay more under Mr. Bush. In 2000, the top 1 percent of earners paid less than one-third of all income tax; now they pay 40 percent. The affluent already carry more of the burden.
The ancient Roman philosopher Pliny the Elder once said, “In wine there is truth.” It means that people tell you what they really think once they have a couple of drinks.
I don’t think Mr. Biden was drinking on the campaign trail last week, but it was a rare moment of complete candor when he told ABC News that people who are well-off have a patriotic duty to pay higher taxes. That perfectly states the liberal Democratic philosophy that those who do the right things in their personal life to make more money have an obligation not only to pay more taxes (which they do even under a flat tax because 17 percent of higher-income is more than 17 percent of lower-income), but that they should pay an ever-higher additional percentage on top of that. Liberal Democrats consider it patriotic to pay more taxes, and have a consistent record of voting to help nurture our patriotism for us.
That reveals what is really going on here. The statistics don’t lie. Team Obama’s plan is not economically prudent, and it’s not a patriotic tonic for what ails our economy.
Ken Blackwell is a senior fellow at the Family Research Council and FRC Action.