Tax Plans Contrasted
Nov 3rd, 2008 | 5 responses
Both candidates’ tax plans have merit. But one of these plans (Obama’s) makes more sense in light of current economic conditions.
McCain’s plan focuses on increasing investment in business. This is highly desirable at times when business is expanding and needs tax savings both to buy new equipment and to hire more help. This is obviously not what businesses plan to do today, however, as we enter what looks like a long and deep recession.
Obama’s tax plan puts more money into the hands of low and moderate wage earners. This extra money would almost certainly be spent on goods and services,
These days businesses need customers who can spend a lot more than they need tax relief. Indeed, if you don’t have enough customers you won’t have to worry about taxes. You don’t pay any tax on losses. And you pay less tax on less income in a down period.
The relationship of taxes to the general health of the economy is clear. If the tax issue is important to you, Obama’s tax plan in these perilous times is the better way to go.
5 Responses to “Tax Plans Contrasted”
Obama’s tax plan puts more money into the hands of low and moderate wage earners. This extra money would almost certainly be spent on lottery tickets and domestic beer in 40 oz. bottles.
Yes, PWT, the amount of money in one's bank account is a direct reflection of the individual's morality and work ethic.
but…progressive income tax rates are socialism!!
[sigh] If you want more vote-buying through handouts in the form of tax “rebates,” while increasing taxes on others, the last thing this economy needs, by all means go for Obama's plan. Where Obama's plan may be arguably better than McCain's is in its coherence and understandability (at least to some of us, though likely not all Obama voters).
(** NOTE ** Rudi, if you want a preview of part of Roger Bootle's later book, related to fighting an economic slump and forestalling deflation, please read on — the latest article he wrote to the Telegraph is at a link provided below; you can get a sneak glimpse at what he sees now, and conclude on your own if you agree or disagree. Note he is criticized by many free-market and moralist types in the comments.)
“This extra money would almost certainly be spent on goods and services[.]
These days businesses need customers who can spend a lot more than they need tax relief.”
Aside from the moral upset among those of us raised better, about encountering the 1930s-onward refrain about wanting easy money (ideally, inflationary, printed at will — the true opiate of the masses) and demanding people spend, spend, spend (see parenthetical remarks above), and who pays versus who benefits from Obama's plan (those who spend the most won't increase such spending when they get hit with tax increases), bear this in mind.
* Banks given bailout funds are not engaging in new lending, but sitting on the money.
* Obama fans aren't _all_ fools, self-absorbed, children who want uninterrupted consumption. Some are practical (as are many who are conservative but have tired of the Republicans and will vote for Obama this year). WHO SAYS THEY WILL BE ALMOST CERTAIN TO SPEND THE MONEY? A lot of people will likely pay down debt, or save, or decrease expenses even more because, say, they fear for their future, their job, et cetera.
Obama's promises to spend more money by the federal government (he uses the typical liberal lie, “investment,” to obscure this or to make the children Feel Good) actually have a better economic rationale, as do tax reductions (not handouts, but real tax reductions).
http://www.telegraph.co.uk/finance/comment/roge…
And don't forget — as Bootle wrote in his book but didn't state here — that while the basic approach or case for Keynesian action under certain circumstances is arguably merited, it doesn't guarantee anything. All the actions taken by Japan, including tremendous public works projects, didn't prevent deflation, the “thrift paradox” (explained by Bootle, individual actions versus collective effects, in the Telegraph) or the “liquidity trap.”
Public works — another lesson we need to learn early, rather than later.
http://newslet.iss.u-tokyo.ac.jp/ssj17/ssj17.pdf
Psst — here's a map of public works for ya:
http://upload.wikimedia.org/wikipedia/en/0/03/C…