More class warfare

The tax platforms of the Democratic Party’s leading presidential candidates can be summed up in two words: class warfare.

Illinois Sen. Barack Obama released the specifics on his redistributionist policies on Tuesday, proposing more than $80 billion in tax cuts for senior citizens and lower- and middle-class households and at least that much in tax increases on the upper-middle class, the affluent, investors of all means and corporations that employ millions of Americans.

“We need a tax code that’s fair — a tax code that rewards work and advances opportunity,” Sen. Obama said in a speech unveiling his plan.

Sen. Obama would seem to be advocating a flat tax rate for all wage earners, or one that allows workers to keep an increasing share of their income as their skills and careers advance. That’s not the case.

The focal point of his proposal is what he calls the “Making Work Pay” tax credit, which would cut $500 from the tax bills of lower-class and middle-class filers, but wouldn’t be available to households earning at least $150,000 per year. So the home with two college-educated professionals, each grinding out 50-hour weeks at an annual salary of about $75,000 — middle class by every definition — wouldn’t be entitled to the credit. This, to Sen. Obama, is “rewarding work” and “advancing opportunity.”

Sen. Obama suggests allowing senior citizens who earn less than $50,000 per year to be exempt from all income taxes. He would also allow homeowners who don’t itemize their tax returns to claim a tax credit — not a deduction, but a tax credit — equal to 10 percent of the year’s mortgage interest payments. Sen. Obama proposes no similar credit for those who itemize their returns.

Meanwhile, he wants to the raise tax rate on the top income bracket from 35 percent to 39.6 percent, nearly double the tax rate on capital gains and dividends, and eliminate all tax breaks for the gas and oil industries and private equity firm managers.

Talk about a recipe for economic disaster. Taking tens of billions of dollars that would otherwise be invested and dumping them into the black hole of the federal treasury risks stunting job growth — and the prosperity of the very people Sen. Obama wants to help.

All these ideas are born from the Democratic Party line that “working families” pay too much in taxes and “the rich” (who don’t actually “work”) aren’t paying nearly enough. But the numbers don’t bear that out. According to the Congressional Budget Office, 40 percent of American households already pay no income tax. The top 40 percent — filers who make at least $44,000 — pay 99 percent of all income taxes. And the wealthiest 10 percent — households earning at least $90,000 per year — carry 71 percent of the country’s tax burden.

Already, 60 percent of the populace is, through the force of their elected government, making the other 40 percent pay all the bills. Sen. Obama and his rivals for the Democratic presidential nomination are prodding this dependent 60 percent, telling them how bad they’ve got it, and promising them more programs — universal health care, help with their mortgage payments — at no cost to the beneficiaries.

To make sure this loyal constituency pays no taxes, Sen. Obama would have the IRS pre-prepare the returns of lower-income filers, being sure to include all appropriate tax credits. Sen. Obama touts this proposal as “tax simplification.”

“We shouldn’t be distorting our tax code to benefit a few powerful interests,” Sen. Obama said. Nor should it be distorted to transfer wealth from the few to the many — or to “cut” the taxes of those who don’t pay any taxes in the first place.

Americans need genuine tax reform. They need a fairer system that doesn’t punish success — tax cuts for one group shouldn’t necessitate tax increases on others. And they need real simplification that allows all taxpayers, regardless of their income, to complete their returns in less than an hour.

Sen. Obama’s plan is more tired populism that would add countless pages to the tax code in the name of social engineering, pitting young against old and class against class. When it comes to taxation, Sen. Obama is no candidate of change — he’s strictly status quo.