Taxes are Certain

Excerpts of a 2001 interview Barack Obama did with Chicago public radio, in which he advocated "redistributive change" are airing on Fox News and online as an overwhelmingly negative socialist “redistribution of wealth” point of view. McCain and Palin are quoting (sometimes incorrectly) a portion of this interview in reference with his tax plan. Doubtful the media would expose the whole truth without spin. So, with that, some background: the context was a discussion of the Supreme Court, constitutional law and the civil rights movement. The interview on Chicago's WBEZ had nothing to do with taxes.

An excerpt:

"If you look at the victories and failures of the civil rights movement and its litigation strategy in the court. I think where it succeeded was to invest formal rights in previously dispossessed peoples, so that now I would have the right to vote. I would now be able to sit at the lunch counter and order as long as I could pay for it I’d be okay. But, the Supreme Court never ventured into the issues of redistribution of wealth, and of more basic issues such as political and economic justice in the society."

Obama's point - and what he called a tragedy - was that legal victories in the Civil Rights led too many people to rely on the courts to change society for the better.

But first and for the heck of it, let’s review the facts of both McCain and Obama’s tax proposals:

If you have income of more than $200,000 as a single person or $250,000 as a married couple, you will pay lower taxes under McCain's plan. McCain intends to keep the Bush tax cuts in place for higher incomes, while Obama wants to roll them back to Clinton administration levels. Largely because his tax proposals would leave tax breaks for the wealthy in place, McCain's plan would cost the U.S. Treasury more than Obama's, the Tax Policy Center found.

Obama's tax credits represent a tax cut to most workers who make less than $200,000. Obama's plan offers a $500 tax credit to people who work as a way of offsetting payroll taxes. This is the policy proposal that allows Obama to make accurate statements such as that he gives 95 percent of workers a tax cut. The credit is refundable, which means that if you don't owe any taxes you will get a check from the government. Obama also said he would repeal the Bush tax cuts for the wealthiest 1 percent of Americans. Obama proposes to let the top rate revert to 39% as planned. However, he is cutting taxes for people in lower tax brackets, as statistics show that they have actually seen their real income decline under Bush.

Barack Obama is undoubtedly liberal, and his background is in political community organizing in poor communities throughout Chicago. Redistribution of wealth has been a primary item on the left progressive/liberal agenda, and has been accepted, to some extent, by all but the most libertarian Republicans as well. Is it supposed to be a great revelation that Obama would like to see wealth more "fairly" distributed than it is currently? Most Republicans think that it’s not the government's job to redistribute wealth. But, is no one recognizing the wealth “redistribution” in programs and plans that boast the “right to health care”, or “ensuring that more Americans have the means to go to college,” or “making the rich pay their fair share of taxes” and so on?

Let’s rewind to the previous administrations for some perspective:

Over a century ago, Teddy Roosevelt broke up the monopolies, such as Standard Oil. He distrusted wealthy businessmen and dissolved forty monopolistic corporations and was against corrupt, illegal practices. He was the first U.S. president to call for universal health care and national health insurance. Did not Teddy Roosevelt “redistribute the wealth”?

President Franklin D. Roosevelt signed the Social Security Act into law on August 14th, 1935. Social Security was the centerpiece of his New Deal Program and included benefits for the elderly, the retired and the unemployed. Did not Franklin D. Roosevelt “redistribute the wealth”?

From the mid-60s, the tax rate for people in the highest bracket (the wealthiest people) was 70%. In 1982, under Ronald Reagan, the highest tax bracket was 50%. In 1986, the Tax Reform Act lowered the top tax rate on individual income to 28%, the lowest it had been since 1916. In 1993, under Clinton, the highest tax bracket for the wealthiest people was set at 39%. I think we can safely argue that wealthy people continued to prosper greatly under the Reagan and Clinton administrations.

In the 90’s, President Clinton presided over the longest period of peace-time economic expansion in American history, which included a balanced budget and a federal surplus. Clinton reduced spending while increasing income taxes on the wealthy and corporations in 1993. Under Clinton's leadership, almost 6 million new job were created in the first two years of his Administration -- an average of 250,000 new jobs every month. In 1994, the economy had the lowest combination of unemployment and inflation in 25 years. As part of the 1993 Economic Plan, President Clinton cut taxes on 5 million low-income families and made tax cuts available to 90 percent of small businesses, while raising taxes on just 1.2 percent of the wealthiest taxpayers. Sound familiar? Because of Clinton’s policies, we all contributed just a little bit more. We then all shared in the economic benefits of a balanced budget and world peace (peace treaty between Israel and Jordan, passed North American Free Trade Agreement (NAFTA).etc.).

In 2001 under George Bush, the top rate was reduced gradually to a final number of 35%. However, the law that made this change also included a provision that the change would be rescinded in 2011 unless Congress acts; in other words, the top rate will go back to 39%.

Many of the news stories that are dissecting the phrase “redistributing the wealth” are not reporting the entire truth of his plan (or now linking it to an interview that had nothing to do with taxes) or are using their own definitions. His plan is not to take from the rich and give to the poor, which is what McCain's campaign is implying (and very irresponsibly outright saying). It is to reverse the Bush tax cuts and let the top rate revert back to 39% as planned, in part so the government will have the funds to provide services that really only government can provide. We need government to maintain roads/bridges, (bridge callapse in Minneapolis), environmental disasters (Katrina), Health care (currently ranked #37 in the world), police, Social Security, etc.

I think Obama explains it best, so I’ll leave you with this:

“I want to eliminate the Bush tax cuts.…He (McCain) not only wants to continue some of the Bush tax cuts for the wealthiest Americans and corporations, he actually wants to extend them, and he hasn't told us really how he's going to pay for them. It is irresponsible. And the irony is he said it was irresponsible. When George Bush initiated these tax cuts in 2001, McCain said, "This is shameful." He said that it offended his conscience, he said, for us to give tax breaks to the wealthy, particularly at a time of war. If you look at my approach to taxation, what have I said? I said I would cut taxes for people making $75,000 a year or less. I'd cut taxes for seniors who are making $50,000 a year or less. It is true that I would roll back the Bush tax cuts on the wealthiest Americans back to the level they were under Bill Clinton, when I don't remember rich people feeling oppressed.” - Obama