Monday, October 06, 2008

Only Businesses Can Pull Our Economy Out Of The Current Funk - Not Government

Only John McCain's policies will help business invest and hire and therefore pull the economy out of the current slow down.

Investments in equipment creates jobs, hiring workers creates jobs. The government can't create jobs.

In addition lower taxes will put more money in the hands of individuals and they can choose to spend or save. The government inherently makes poor decisions and individuals and markets make better decisions.

Obama Biden's tax policies will hurt the economy. From the Tax Foundation:

A little later in the debate, Joe Biden made this statement:

The middle class under John McCain's tax proposal, 100 million families, middle class families, households to be precise, they got not a single change, they got not a single break in taxes. No one making less than $250,000 under Barack Obama's plan will see one single penny of their tax raised whether it's their capital gains tax, their income tax, investment tax, any tax. And 95 percent of the people in the United States of America making less than $150,000 will get a tax break.

Actually the "100 million" figure is not families. It is not households. It is tax returns. But that's a somewhat minor issue in the whole scheme of things. The figure is incorrect because Sen. McCain, even relative to a current policy with Alternative Minimum Tax (AMT) patch baseline, does cut corporate income taxes and provides his refundable health care tax credit, which would reduce that "100 million won't get a tax break" figure. That figure is technically correct if you look only at the individual income tax and ignore Sen. McCain's health care tax plan, and if you do it relative to a current policy baseline with AMT patch. Furthermore, Sen. Biden makes the same error as Barack Obama in mixing baselines. The "95 percent" figure (when properly used) gives Obama credit for an AMT patch whereas he does not give McCain credit for an AMT patch tax cut when referring to the 100 million figure.

But the "95 percent" figure is just plain wrong as well. According to the Tax Policy Center, no income quintile (including those earning under $150,000) would even see 95 percent of its tax units receiving a tax break under Pres. Obama's tax plan in 2009. Even in 2012 under Obama's tax plan relative to current law, an average of the fraction of tax units that receive a tax cut in the bottom four quintiles is less than 90 percent. In other words, Biden's statement is factually incorrect. The "95 percent" figure is fairly accurate when Obama uses it to talk about the fraction of working families that would receive a tax cut under his plan, but not the entire population nor the entire population earning under $150,000.

Regarding Sen. Biden's claim that no American making less than $250,000 per year would see a tax hike, that is incorrect too. Some Americans making less than $250,000 would see a tax increase under Pres. Obama. For example, the Tax Policy Center estimates that in 2009, 14.8 percent of tax units earning between $111,645 and $160,972 would actually see a tax increase under Pres. Obama's proposed tax plan, relative to current law. Now it is true that 83.3 percent of the tax units in that group would see a tax cut, but to say that "no one making less than $250,000 under Barack Obama's plan will see one single penny of their tax raised" is factually incorrect.

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