September 10, 2008

Will Obama really tax water? What about Capital Gains? Home sales?

Posted in McCain~Palin, Senator Barack H. Obama, taxes, U.S. Economy tagged , , , , , , , , , , , , , , , at 2:38 am by realitytax

No, of course Senator Obama isn’t propsing a tax on water, but that’s among the fantastic smears being emailed around lately in what appears now to be a desperate attempt to mislead middle America.  Are we really that gullible? Do people sit around the cooler at work kicking this one around?

With “both John McCain and Barack Obama offering tax cuts,” according to the Christian Science Monitor, “the 2008 election promises a boost for the typical family budget” regardless of which one wins. But it could also strain the much larger budget of the US government, and there is abundant misinformation circulating about Obama’s plans (and a few outright lies.)

Meanwhile, the commercial media “news” sources (when they bother to report on the rumors) tend to focus on the rumor itself rather than either asking “who benefits” from the confusion, or trying to debunk the untruths. By serving to echo the lie(s) they instill doubts in the less savvy voters. Is that responsible journalism?

Tax The Tax Policy Center has put out an analysis of the Obama and McCain tax plans. Here’s their conclusion:

If enacted, the Obama and McCain tax plans would have radically different effects on the distribution of tax burdens in the United States. The Obama tax plan would make the tax system significantly more progressive by providing large tax breaks to those at the bottom of the income scale and raising taxes significantly on upper-income earners. The McCain tax plan would make the tax system more regressive, even compared with a system in which the 2001–06 tax cuts are made permanent. It would do so by providing relatively little tax relief to those at the bottom of the income scale while providing huge tax cuts to households at the very top of the income distribution.

What follows is a brief discussion of some of the particulars people seem to be asking about often – with interest that may well stem from the debunked but still-circulating emails.  In case you want it spelled out, Obama has never proposed or even hinted at a tax on water or any other natural resource.

Doubled Taxes?

The claim that “Under Obama your taxes will more than double!” circulating in some emails is simply false. The comparative rate tables that e-mail provides for McCain and Obama were fabricated for another false e-mail during the primaries and copied. It is supposedly a comparison of tax rates before and after the Bush tax cuts, but it grossly overstates the effect of the Bush cuts. Furthermore, Obama proposes to retain the Bush cuts for every single income level shown in this bogus table.

Taxing IRAs and 529s:

Contrary to the claim in this e-mail, raising tax rates on capital gains or dividends would not result in higher taxes on any investments held in Individual Retirement Accounts or in popular, tax-deferred “college funds” under section 529 of the Internal Revenue Code. The whole point of such tax-deferred plans is that dividends and capital gains are allowed to accumulate and compound tax-free, and neither Obama nor McCain proposes to change that. And as previously mentioned, any capital gains or dividend income from stocks, bonds or mutual funds owned outside of tax-deferred accounts would continue to be taxed at current rates except for couples making over $250,000, or singles making more than $200,000.

Home Sales:

The claim that Obama would impose a 28 percent tax on the profit from “all home sales” is false. Both Obama and McCain would continue to exempt the first $250,000 of gain from the sale of a primary residence ($500,000 for a married couple filing jointly) which results in zero tax on all but a very few home sales.

Capital Gains Rate:

It’s untrue that Obama is proposing a 28% capital gains tax rate. He said in an interview on CNBC that he favors raising the top rate on capital gains from its present 15% to 20% or more, but no higher than 28 percent. And as for a 28% rate, Obama added, “my guess would be it would be significantly lower than that.” Furthermore, he has said only couples making $250,000 or more (or singles making more than $200,000 according to his policy advisers) would pay the higher capital gains rate. That means the large majority of persons who pay capital gains taxes would see no increase at all.

Why all the misinformation?

Some of it’s based on simple confusion. After all, Obama’s not prone to cute sound-bites such as “Read my lips: No new taxes.”

Some of the emails circulating, however, are so consistently mis-representing the facts – easily verified – that one can only conclude a deliberately malicious intent to strike fear in the wallets of middle class voters is behind the lies.

In an ideal setting voters would all have access to reliable, current, accurate information sources. They’d also take the time to examine that information, no matter if it was Obama’s stand on taxes, McCain’s statements about taxes or his speeches on why health care doesn’t need the fixes Obama’s proposed, or rookie Governor Palin’s pork barrel “Bridge to Nowhere.” (Yes, I know she’s on record as being against it, but it turns out not only was she for it initially, she was also for a $24 million “access road” after the bridge was declared too ear-marky to survive public scrutiny, and she also KEPT the federal money after the project was cancelled.)

In practice, time is short, and rumors often get as much (if not more) coverage as facts on the evening TV news or in newspapers. It’s often hard to tell which part of a media report is the truth. The “news” producers have motives that must be examined: they profit from selling commercials, that’s their income. When in doubt, follow the money.

Questions:

Who profits from the election of McCain or Obama — or your mayor?

Who profits from voters feeling disenfranchised and tuning out?

Don’t ask what you can do – ACT!

The airwaves are as full of misinformation – willfully employed – as the email is. Are you ready to step up and be an Agent of Change, to contribute to help spread the truth?

Say it with me: No more lies ! “

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