Barack Obama is big on promises. He promises to take care of Americans from cradle to grave by taxing the rich and giving all their “excess” money to people who think they don’t have enough. He proposes spending an additional $10 billion on education, $150 billion on alternative energy, $60 billion on infrastructure, and $65 billion to expand healthcare coverage, and that’s only a partial list.
Obama hasn’t presented any reasonable plans for how to finance these ideas. Let’s examine some of his proposals and see what effect they would have. As part of his “Tax Fairness for the Middle Class” plan, he wants to increase the capital gains tax rate from 15 percent to 25 percent. Democrats love to declare that raising the capital gains tax rate is a way to “sock it to the rich”, but it would actually affect Americans at all income levels. The Wall Street Journal reported that in 2005, more than 75 percent of all tax returns reporting capital gains came from households with incomes under $100,000.
In addition, historical evidence shows that cutting the capital gains tax rate raises government revenues and sparks economic growth, but when the tax rate increases, investors hold onto their assets to avoid paying higher taxes. In a high tax situation, venture capital dries up, new companies are not formed, and fewer jobs are created. Ironically, this hurts poor and minority communities that need capital to create new businesses and the jobs they bring.
Obama would also let most of the Bush Administration income tax cuts expire, allowing the top individual income tax rate to return to 39.6 percent. Does it really make sense to raise income taxes when the economy is as slow as it is today? The amount of wages subject to the federal payroll tax is currently capped at $102,000. Obama wants to remove this cap, so that all wages are taxable.
What about taxing oil companies’ “windfall profits”? Both Obama and John McCain have been promoting this idea recently in an effort to gain support from voters who are outraged by high gas prices. But raising taxes on oil companies doesn’t make sense. If we need more oil production, we should encourage oil companies to do more exploration, invest in more drilling equipment and hire more people. If they are unable to do that because taxes have been raised, they will produce less oil, not more. That’s basic economics.
It also brings up the question of which industry is next. Maybe software giants like Microsoft make more money than the average U.S. company – let’s tax them more to make things equal. Where does this end? With the government virtually eliminating our competitive, capitalistic society and imposing their will on all businesses and people.
Universal health care is another proposal that Obama would like us to adopt. If a government run system is so great, why do Canadians routinely travel to the U.S. and pay to get medical care instead of waiting for months to get “free” care at home? Yes, the health care system needs reform, but if you think the government will be able to solve its problems, go down to your local Department of Motor Vehicles or Social Security office and take a look at how the government runs things. When its paperwork involving your car, delays, long lines and bureaucracy is aggravating enough, but what if it was paperwork involving a life or death situation for someone you love? Would you trust the government paper pushers to do it right and do it quickly?
The most dangerous aspect of Obama’s programs is that they encourage more entitlements for everyone. We are breeding a nation of people who go to the mailbox every week looking for the government check they are “entitled” to, and they are always at the administration’s throats demanding more and more money.
This country’s greatness was built on a political system that encouraged each individual to strive to improve the situation for himself and his family, and rewarded him for his efforts. If we destroy that system, we will drive ourselves quickly toward Third World status. That’s the path we will be following if we buy into Obama’s promises.