The Lies About Taxes

One of the constants of this election cycle is that both candidates like to play fast and loose with the tax issue. Obama swears that 95% of the "working families" will receive a tax cut under his plan. Of course roughly 40% of working families pay no income tax at all and a good chunk of them get some or all of their social security payments back in the form of earned income credits. So the numbers don't work out since only 60% pay income tax. Additionally, Obama says he will let the Bush tax cuts of 2003 expire in 2010. Since those cuts affected every tax bracket everyone who pay taxes will realize an increase and some that aren't paying taxes under the current tax brackets will after the expiration.

Not to be outdone John McCain swears that he will make the Bush tax cuts permanent and give an additional tax cut to "stimulate growth of the economy". There is only a couple of things wrong with this plan. First, I don't know how he thinks he will manage to get a Democrat congress to go along with making them permanent. With Harry Reid and company controlling the Senate such legislation will never see the light of day. The second problem is that McCain is unlikely to get his additional tax cut through the same congress. So taxes will go up for him as well.

Another important point is that neither of these guys are known to be champions of tax cuts. I expect Obama to follow in the footsteps of Bill Clinton (who also promised a middle class tax cut in 1992) and renege on the promise. The financial "crisis" sets it up perfectly. McCain, who voted against the Bush tax cuts twice now expects us to believe he is drinking the tax cut Kool-aid and will seek to make them permanent. Neither of them will make the necessary effort to control the spending of a runaway government so cutting the revenue just puts us further in the hole.

The long and short of it, boys and girls, is that you should not count on any significant reduction in your tax liability in the years to come. Fairy tales like that really should begin with "once upon a time.....)