The Wall Street Journal does well to break down Obama’s so-called “tax cuts” for 95% of Americans. The article points out that these aren’t tax cuts, per se, but “sleight of hand” to rename what we used to call “welfare.” It lays out a bunch of tax “credits” for which you would need to qualify for most of get get the welfare, and that isn’t likely by looking at the laundry list.
In other words, they are an income transfer — a federal check — from taxpayers to nontaxpayers. Once upon a time we called this “welfare,” or in George McGovern’s 1972 campaign a “Demogrant.” Mr. Obama’s genius is to call it a tax cut.
Perhaps the most unfortunate part of the welfare for the middle class is that it, over all, discourages people to work.
Some families with an income of $40,000 could lose up to 40 cents in vanishing credits for every additional dollar earned from working overtime or taking a new job. As public policy, this is contradictory. The tax credits are sold in the name of “making work pay,” but in practice they can be a disincentive to working harder, especially if you’re a lower-income couple getting raises of $1,000 or $2,000 a year. One mystery — among many — of the McCain campaign is why it has allowed Mr. Obama’s 95% illusion to go unanswered.
Perhaps Obama’s plan is to raise the unemployment rate to 95% — you can’t be taxed on what you do not earn.
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