Tax cuts or welfare spending?

To pieces in the Wall Street Journal outline Obama’s economic mindset and platform.  William McGurn explains how Obama’s tax policies are all informed by a desire to create fairness not revenue or economic growth:

In fact, the idea of fairness is at the heart of his whole economic argument. And he goes back to it in almost every public appearance.

He talks about it as a general theme: “It is time for folks like me who make more than $250,000 to pay our fair share.”

He invokes it as a solution for Social Security: “[W]e will save Social Security for future generations by asking the wealthiest Americans to pay their fair share.”

He points to how it guides his energy policy: “The first part of my plan is to tax the windfall profits of oil companies and use some of that money to help you pay the rising price of gas.”

And he stuck to it on capital gains, even after ABC’s Charlie Gibson noted that the record shows increased taxes on capital gains — which would affect 100 million Americans — would likely lead to a decrease in government revenues: “Well, Charlie, what I’ve said is that I would look at raising the capital gains tax for purposes of fairness.”

Translated into ordinary English, what that means is that it doesn’t really matter whether a tax increase actually brings in more revenue. It’s not about robbing from the rich to give to the poor. Robbing from the rich will do, especially if it’s done in the name of fairness.

Peter Ferrara points out what this means in practice:

He proposes to raise marginal rates for just about every federal tax. He also proposes a raft of tax credits that taxpayers can receive if they engage in various government-specified activities.

Moreover, the tax credits would mostly go to those who pay little or nothing in federal income taxes. His trick is to make the tax credits “refundable.” Thus, if the tax credit is for $1,000, but the taxpayer would otherwise only pay $200 in taxes, the government would write a check to the taxpayer for $800. If the taxpayer pays nothing in federal income taxes, the government would pay him the whole $1,000.

Such credits are not tax cuts. Indeed, they should be called The New Tax Welfare. In effect, Mr. Obama is proposing to create or expand a slew of government spending programs that are disguised as tax credits. The spending on these programs is then subtracted from the total tax burden, in order to make the claim that his tax plan is a net tax cut overall.

[. . .]

Consequently, to say, as the campaign does say, that the candidate’s tax plan is a tax cut on net — and that it would limit taxes to 18.2% of GDP — is grossly misleading. The Obama tax plan would sharply increase real taxes. It also would come nowhere near to paying for the massive increases in federal spending he has proposed, including the spending that is disguised in the form of refundable tax credits.

Obama’s economic philosophy comes down to redistribution of wealth pure and simple.  He goes out of his way to try and frame this as a matter of fairness because that vague term is one most Americans relate to and support.  But, as with so much of Obama’s rhetoric, this platitudinous perspective hides real economic impact and consequences.  Raising marginal tax rates on the most productive is not a smart strategy during normal times, but during a slowdown it is surely folly.

But as McGurn points out it isn’t even fair:

Related Reading:

Complete Guide to Real Estate Tax Liens and Foreclosure Deeds: Learn in 7 Days-Investing Without Losing Series

Income Tax Fundamentals 2009 (with TaxCut Tax CD-ROM)

Every Landlord's Tax Deduction Guide