Reality-Based Economics
By Pejman Yousefzadeh Posted in Barack Obama | Economic Ignorance | Economy — Comments (3) / Email this page » / Leave a comment »
Larry Lindsey takes the Obama Social Security tax plan to the woodshed. A taste:
Sen. Barack Obama has a bad idea for "extending the life of Social Security." He has proposed applying the Social Security tax to incomes above $250,000, in addition to the current tax on incomes up to $102,000. It's unfair, he explained, for middle-class earners to pay Social Security tax on "every dime they make" while the very rich pay on "only a very small percentage of their income."
Reporters cited the Obama statement without asking for the logic behind having someone making $100,000 pay on every dime and someone making $250,000 pay on just 41% of income, while someone making $10,000,000 would pay on 98.5% of income. There is no economic principle or theory of tax law that would endorse such a result.
Sen. Obama's logic is fairly obvious, although it hardly makes him an exemplar of the "new politics." The $100,000 to $250,000 group is a targeted voter demographic, and he really didn't want to sock them with a 12.4 percentage point hike in their tax rate. But, as Sen. Obama himself noted in his June 13 announcement, just 3% of workers make more than a quarter-million.
Neither Franklin Roosevelt, who started Social Security, nor the intervening three dozen Congresses thought they were imposing an "unfair" system on the middle class. There is a very good and principled reason why Social Security taxes are paid on just $102,000 of income: Benefits are calculated based on that same $102,000 of income.
Read it all.
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Reality-Based Economics 3 Comments (0 topical, 3 editorial, 0 hidden) Post a comment »
Next thing you know, Obama will say how much revenue will increased by taxing income at 100% for incomes over $500K. His answer won't be zero.
And McCain should adopt Fred Thompson's economic positions.
-- A true evolutionist would let endangered species die off. Anyone care to change sides?
-- Can't Feed 'em? Don't Breed 'em! --
When I gripe about the increase in the cap being so much more rapid than the inflation rate, you can sure tell if someone earns over it or not by their response. Those that earn above it are sympathetic, those that aren't go HUH?
I said the same thing last week as Mr. Lindsey.
Furthermore, if we are going to talk about fairness, how about paying payroll tax exclusively to go to someone else as anyone making over $250k will pay on anything them make over $250k.
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