Monday, November 3, 2008

Slippery Slope--Obama Aims to Tax Middle Class

Bob Robbins has forwarded the following video about Barack Obama's proposal to raise taxes for those above a threshhold. In July the threshhold was $250,000, and Joe the Plumber was concerned about the effects on ambition. Gradually the Obama campaign has reduced the threshhold to $200,000, and then 150,000 and then $120,000. $120,000 isn't that much in New York City, where rent on a slum apartment (no exaggeration) is often $1,500 a month and taxes eat up half your income. But there is a worse factor, and that is inflation. At present, there is considerable double talk from those advocating ever greater federal welfare subsidies to Wall Street, commercial banks and wealthy stock holders. The $750 billion subsidy has been matched by a 100% increase in Federal Reserve Banking Credit. Incredibly, social democratic and pro-Wall Street economists have been arguing that this massive increase in the money supply will merely stem "deflation". Yet the current inflation rate of 4.9% is the 20th highest since 1913 when the Fed was established. That puts inflation currently in the 21st percentile, when advocates of the big government, social democratic/pro-Wall Street bailout have doubled the money supply. The effects of doubling the money supply can be as bad as doubling wages and prices. If that occurs, the $120,000 will quickly become the equivalent of $60,000, not much more than the median wage in the state of New Jersey.

One of the insidious effects of the inflationary philosophy of the Democrats and Republicans, including the pro-Wall Street Bush administration and its boosters on Fox, is that it is difficult to talk intelligently about prices. A policy is sold on a $120,000 or $250,000 cap, but within five years it become a $60,000 or $50,000 cap.

When Obama says he favors a $120,000 cap, he is really saying that he favors a $60,000 cap. And I wonder if he will repeal the myriad of exemptions and write-offs that characterize our tax code? In the end, the Obama tax proposal will primarily be just another slam to the moderate income people who have suffered from the real wage eroding effects of inflation. The following video is located here.

No comments: