Posted 5/15/2008

OBAMA THE JOB KILLER

In this time of our nation's economic peril, we are studying three Presidential candidates who appear awfully flaky on economics. Unfortunately, the press is not overly helpful since it is far more skilled in politics than economics.

John McCain has admitted that economics is not his strong suit. Hillary Clinton has made no such admission, claiming she is ready to answer the phone at 3 A.M. While she meant national defense, her early morning functionality presumably applies to the White House phone jangling about a worldwide stock market crash as well.

But at this time in the campaign, the flakiest performer on the economy is clearly Barack Obama.

What has he done?

Certainly not his economic homework.

He shouts that he will raise the capital gains tax from 15 percent to 28 percent "in the name of fairness to the poor." He also wants to raise the tax on dividends to 37 percent – again to soak the rich. Finally, he says he will raise the $97,000 income cap on Social Security taxes.

At the same time, he promises not to raise taxes on anyone making less than $200,000.

With these economic claims, he has waltzed into the mother of all box canyons.

One hundred million people in this country own stocks and bonds. The overwhelming majority are in the middle class. So if he raises the capital gains and dividend taxes, he is raising taxes on the middle class. Certainly he is raising taxes on millions of people who make less than $200,000 a year. By doodling with Social Security taxes, Mr. Obama will be raising the direct taxes on people who make over $97,000 a year.

When people find out he is going to raise taxes on 52 percent of us, do you think he could win an election against a more practical Republican? Raising taxes on people, their incomes and investments in times like this is akin to declaring war on America.

His "tax the rich" speeches have another huge shortcoming.

In recorded history, every "soak the rich" tax scheme has ended up taxing the middle class. The rich hire tax attorneys and lawyers who get them off the hook, leaving the middle class holding the empty tote bag.

Early in our history, it was decided to tax the rich to pay for public education. The rich were defined as those who owned property. Now look at the situation. Property taxes still fund education, but it is the men and women in the middle who pay them.

A few years ago, a new tax scheme was created to provide "more fairness." It was called "the alternate minimum tax." At first it did tax the rich, but with the rise of inflation and the decline of the dollar, tens of millions middle class people were brought under the provisions of the new tax. Today the middle class is forced to pay the bulk of this onerous new tax.

And to make matters worse, the government forces us compute our income taxes twice. If we include the value of the added time, it turns out to be a double tax on the same money.

Mr. Obama is also ignorant of modern American economic history.

When people pay low taxes on capital gains and dividends, they tend to invest more. Low taxes mean higher returns on their money. The added investment creates new wealth, new prosperity, and more jobs. The last three major capital gains tax cuts since 1963 have produced a booming stock market, a fast-growing economy and accelerated job creation.

What will happen if Mr. Obama is elected and is successful at raising taxes?

One organization has calculated that even if he is able to raise capital gains taxes to only 20 percent while restoring the 37 percent dividends tax rate, catastrophic things will happen to the American economy.

The Gross Domestic Product would drop about $90 billion, making each family approximately $1,700 poorer. Worse yet, Obama's America would lose almost 700,000 jobs.

How would an Obama America help the poor if everyone else is pushed down on their heads?

Perhaps commentary like this will head him into a better economic perspective.

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