During Every Presidential election campaign:
- Some politicians deliberately exploit wide-spread ignorance of the income tax to deceive voters;
- Many politicians and media commentators who are good at talking, speak with an air of tax code knowledge and authority, but actually know little more than the least informed voters.
This three minute video of Barack Obama’s encounter with Joe, the plumber reveals that Senator Obama lavishly indulges in #1, and may be included in #2.
In this Obamanomics series of articles we’ll cover several deceptive comments by Senator Obama during his mostly one-way conversation with Joe, starting with this one:
What’s happened is we’ve cut taxes a lot for folks like me who make a lot more than $250. We haven’t given a break to folks who make less and as a consequence the average wage and income for just ordinary folks, the vast majority of Americans, has actually gone down over the last eight years.
Here Senator Obama revealed either that he has no idea what he’s talking about, or that he believed Joe and the TV audience he knew would see what was being recorded by the camera at his right shoulder were ignorant of the tax code and lacking in basic reasoning skills.
First, Through continuous, unchallenged repetition, the political-media establishment has been selling Obama’s claim that “wage and income of ordinary folks…has actually gone down over the last eight years.” But the valid evidence from the IRS and other sources contradicts him. More importantly, even if wages had declined it is impossible for tax cuts to have been the cause. There simply is no possible way that tax cuts could have caused anyone’s wages to decline. In fact, the opposite is possible, that Obama’s planned tax increases could cause wages to decline.
Second, Obama’s assertion that “we haven’t given a break to folks who make less” than $250,000 is preposterous.
More than 60% of federal expenditures are for direct financial aid to individuals and families all of whom earn substantially less than $250,000. These include Medicaid, Children’s health insurance, food stamps, rent subsidies, child care subsidies, Head Start, and cash grants.
Under the Bush tax cuts the child tax credit doubled to a maximum of $1,000 per child in the taxpayer’s household. This credit is “refundable” meaning that a taxpayer will receive up to $1,000 from the IRS for each child, even if the total exceeds the taxpayer’s entire tax obligation, even if the taxpayer’s obligation before the credit is $0. This credit is not offered to high income families.
The Earned Income Credit for low to moderate income families is another “refundable” credit that can and often does exceed the family’s entire tax obligation. The maximum Earned Income Credit was 40% of a family’s income in 2000. Now, it’s 45%. The maximum amount is just over $5,000.
These credits are a huge benefit to low income families. For example, a family with two children, earning $22,000, owes no income tax at all, but will receive, from the IRS, just over $7,000, in these two credits, at the expense of higher income tax payers.
The Bush tax cuts made four of the five progressive, tax bracket rates lower than they were during the Clinton Administration, resulting in a reduction for everyone who earns enough to owe federal taxes, after exemptions, deductions and credits.