Is Obama Planning a Surprise Tax Hike?

Jesse

Good post Jesse, but you missed the AMT. With the Alternative Minimum Tax, the deductions available to those working people making good money are phased out, until the deductions available to those making over about $300k are virtually eliminated. Lower income working Americans get all kinds of good deductions - Head of Household, childcare credit, etc. etc.

Those making $$ off capital gains, as opposed to income, do pay a lower tax rate. Plus they don't pay social security. But for money to be available to fund American business, cap gains taxes have to be low. Otherwise, money goes somewhere else, like Ireland. If you don't understand this concept, capital gains represents a profit from applying capital. If nobody will loan anybody money to say, start a business, because they have to pay too much in taxes on the return on that capital, they will do other things with their money. Then there's no money floating around to be invested in businesses.

A lot of people here don't seem to understand that businesses raise money by selling an ownership stake to somebody who's willing to risk their cash to make more cash. Some of these businesses are publicly-traded companies, which issue stock which is sold (and the company takes the money and builds a new factory or something). Some of these businesses are private, and the person with money might take an ownership stake of some kind - and get paid back either with profits or when the company gets sold or goes public.

I find it fascinating how few people in this country understand how the economy works. They think there is only one, static pie, and if somebody has more, then somebody else has less. That's just false. The pie keeps getting bigger and bigger for everybody - but it won't keep getting bigger unless everybody works. If everybody won't work to make the pie bigger, yes the pie pieces get smaller, but exactly the opposite of the way the liberal whiners think. The big pieces get smaller, and nobody is better off.

If you want an example of how to run a country and succeed, take a look at Texas. We don't have a state income tax, but our state is solvent. We're one of the only states NOT in a recession. Why? We don't blow money on stupid stuff, and our taxes are low. We're friendly to business, even "dirty, nasty" business. We take out the rest of the country's trash, I guess, but at least we're hiring.

Julie Chandler of TX @ Nov 13, 2008 12:50:10 PM