Sunday, October 26, 2008

Is Obama a Socialist?

So I just got so dern worked up over what is going on out there is the politi-sphere that I had to make my a little stand. I blasted out the following e-mail to all manner of folk in my address book, and wanted to share it with my blog readers as well. There is a 90-97% chance you probably just got this e-mail, but in case not:

Friends and Family,

Please forgive me for sending you this- I try never to send e-mail forwards. I am sending this because its actually not a forward, it comes from yours truely. I believe this is a very important election and there is a lot of misinformation being passed around. Please read carefully and pass on to your friends/loved ones, maybe even your enemies! Jesus will give you a pony is you send it to 100 friends! Just kidding, but if you think this information makes sense, please do pass it along.

An open letter to anybody with an ear to hear before this incredibly important presidential election in 2008:

Before you buy the line that Barack Obama is a socialist, consider the following:

Taxing the rich more than the middle class or the poor isn't a new concept in American taxation.

It is call Progressive Income Tax, and it had been around in America since the 16th Amendment was originally ratified in 1913. At that time, any income under $3000 ($66,297.88 in today's dollars) for a single person or $4000 for a married couple ($88,397.17) would not be taxed. Taxes on the super wealthy were up to 7 time more than those of moderate to high incomes.

So when Joe the Plumber says "it's un-American for people who work harder to pay more taxes" that statement is just about as valid as his plumbing license...

Well, just because America has embraced an evil-socialist tax model doesn't mean we can't go back to a more "Free Market" friendly tax model, does it?

The problem with that theory is this: free markets need the infrastructures and legal framework that government provides in order to operate.

Consider how the free market in America would run without the Interstate Highway System. Without easy, consistently maintained transportation routes, shipping costs would be sky-high for getting goods across the country. Items in stores would be more expensive, and people would buy less. Consumers would travel shorter distances and visit less attractions, and ultimately spend less money. The economy would be drastically smaller today had Dwight D. Eisenhower, a Republican, not massively intervened in the free markets with the Federal Aid Highway Act of 1956.

Actually, it was Adam Smith, the Father of Free Market theory himself who wrote back in 1776 in The Wealth of Nations:

"The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. A tax upon house-rents, therefore, would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be anything very unreasonable. It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion."

Indeed it is built into the foundation of free market economics that the rich should bear a heavier burden than the poor in order for a market to thrive.

An important point: Income Tax rates are at an extremely low rate since their introduction in 1913. Usually rates are dramatically increased to pay for the costs of war. Consider the following:

Top Tier Tax Rate 1918 (World War 1): 78%
Top Tier Tax Rate 1945 (World War 2): 94%!!!
Top Tier Tax Rate 1969 (Viet Nam War): 77%
Top Tier Tax Rate 2003-2008 (Iraq War): 35%

Wonder why we face a $10,000,000,000,000 national debt?

Most financial planners actually expect tax rates to increase, that is why they suggest investment in a Roth IRA to shelter against future income tax hikes.

Barack Obama, the so-called socialist, is only proposing to repeal the Bush Tax Cuts, which now appear to be fiscally irresponsible. That would simply restore the top rate from Bill Clinton's balanced budget back to 39.6%.

Ironically, Regan and Bush, the great tax cutters, actually increased the tax burden high income earners:

" The Tax Foundation states that the tax cuts signed by U.S. Presidents Ronald Reagan and George W. Bush, contrary to popular belief, actually made the U.S. tax code more progressive, not less. In 1980, before Reagan's tax cuts, the richest 1% paid 19.05% of all federal income taxes, and by 1988, after Reagan's tax cuts, their share had increased to 27.58%. Likewise, in 2001, before Bush's tax cuts, the richest 1% paid 33.89% of all federal income taxes, and by 2006, after Bush's tax cuts, their share had increased to 39.89%. "

So when somebody calls Barack Obama a "socialist" on the basis that he wants to reset the upper tax rate from 35% back to 39.6%, I take great exception. I get angry actually, because it a great distortion of the truth. Obama actually proposes to use supply side economic theory on a different sector of the economy, the middle class, by cutting rates for 95% of the population and 98% of all small businesses including eliminating capital gains tax on small business investments.

You know what really make me mad? John McCain isn't going to do away with the progressive income tax. He isn't going to do anything different. He is simply proposing to keep the current rates in place. Those rates haven't effectively stimulated the economy, while driving our country rapidly towards bankruptcy.

I am not an economist, and I am not a socialist. I am concerned for the welfare of America, and I can't stand to see one of its most promising leaders attacked with "words that have the form of truth, but not the substance thereof. " This is too important an election to vote with your gut, and not do some homework.

I invite you to prove me wrong. Do some research yourself:

Bush Administration's US Treasury Web Site:

Wikipedia on Progressive Tax:

Wikipedia on Income Tax in the USA:

Barack Obama's Tax Proposals

John McCain's Tax Proposals

Inflation Calculator:

Please vote smart, and definitely vote.

God help America in our hour of need!

- Chris Reilly


fcb4 said...

Bravo...Bravo...nice to see someone doing homework and not just forwarding a demeaning cartoon to make their political point.

Pete said...

My brain is hungry!!! Give me eat!!!! More Bloggness is needed!