One tactic of the McCain/Palin ticket lately has been to try to use the words "Obama" and "socialist" in the same sentence as much as possible. I have to give it to their campaign--at least they're creative fear-mongers. Too bad they have very few new policy ideas.
I subjected myself to the pain of watching Fox News one day, and saw Hannity and Rove up in flames over the fact that 40% of Americans don't pay income tax, but are getting a tax cut. I thought that a) the 40% to likely be an exaggeration, and it probably is, and b) if so, this is odd...why is this the case, and why do these Americans deserve a tax cut? Now, this wasn't anything that would make me change my vote at all, but I always want to be knowledgeable when debating with conservatives.
So I did what any American would do, which is find out for myself what's going on here. McCain and Palin are relying on not just fear of Obama to get them a victory, but on the fact that people will take them at their word and not cut through the bull.
So, first thing's first: the idea is that people will think that this 40% bloc of people aren't paying
any taxes at all. If that's the case, then who is this FICA guy and why is he taking my money? And why isn't all of it going to where it
should be going?
How much does the payroll tax amount to? Well, last year the
standard income tax brought in $1.17 trillion, while the payroll tax
brought in $873.4 billion.
Technically, payroll tax receipts are supposed to be reserved for
paying for Social Security and Medicare, which is what allows some
people to claim it is not an income tax. However, in practice that
distinction was abandoned long ago. For decades now, the payroll tax
has been bringing in a lot more revenue than needed for Social
Security, and the excess has been siphoned off for general fund use
like any other government money.
Last year alone, $190 billion in payroll tax receipts was diverted
to general fund use, paying for everything from Iraq to the salaries of
park rangers.
OK, so some of the money that should be going towards my Social Security is actually going towards a mindless war. And that $190 billion figure is sure to go up. In essence, the lack of fiscal responsibility may be as big of a reason for the social security problem as the imminent retirement of baby-boomers. You may think you're not paying income taxes, but some of that money is siphoned off for things that only income taxes should pay for.
Furthermore, people forget about the regressive nature of the FICA tax. If someone of a lower income, say below $102,000 (the 2008 wage base) pays income taxes and someone over $102,000 does not pay income taxes, it's possible to have a lower income and pay more taxes overall. Now, the output from social security may be progressive, but if you have more money to invest in the stock market or put into a 401k, then that cancels out Social Security's progressive nature.
These facts notwithstanding, McCain and Palin have offered up another word in the fear-the-black-man lexicon: "welfare". This instills in the mind of a right-winger that they truly are getting "handouts" and in effect are not paying taxes (if not flat-out getting free money). But there are other taxes, many of which are not progressive:
I know, I know: how could there be any sort of tax other than the
(federal) income tax? I have heard that in distant lands there are
strange, exotic taxes, like the "sales tax", the "property tax", "state
and local income taxes", the "capital gains tax", "use taxes", "permit
fees", other fees, the "severance tax", the "occupational privilege
tax", the "estate tax", the "gift tax", the "federal excise tax", and
even the fantastically named "generation skipping transfer tax". But
surely we have no such outlandish customs here! We who live in a
country that has only one sort of tax, the federal income tax, can only
stare in wonder at those benighted countries where people actually pay
taxes whenever they buy a shovel or realize capital gains.
Oh, and let's not forget the 2/3 of corporations that apparently don't pay taxes at all. But that's not welfare, that's part of the whole "supply side" thing. Even Laffer might be laughing somewhere right now.
I even looked on Obama's website, and he does avoid calling it an "income tax cut", but a tax cut nonetheless. And while he is raising income taxes on those who make over $250k a year to cover it, at least he has a way of covering it. It is not a "welfare handout", but an overall reduction in the tax burden of middle-class families. We're already putting FICA and income taxes into one big pot and drawing from it--we probably shouldn't do that, but I think we should look at the entire tax burden one faces when talking about tax policy. The tax code is ridiculously complex, and while it should be simplified, it's ridiculous to take advantage of those who don't understand it for cheap political points like McCain and Palin have.
The right-wing's way of campaiging since the Reagan years has been to not show how good their plan is, but convince you that the Democrats' way of doing things will make things worse, so just give us another chance and we'll get it right. We've been scared into the idea that we have to give the rich a tax cut or else we won't have a job. We've been bamboozled into thinking that we can get more revenues from Reagan-esque policies, but if memory serves me correctly, the national debt tripled under Reagan and doubled under Bush 43. Obama certainly is convincing and articulate, but things have just gotten so bad with these policies that enough Americans want to (gasp) try something different. The third time may be the charm, but I'm not sticking to old sayings when the future of our nation is at stake.