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Obama's Big Tax Cut Proposal: Good Politics and Good Policy
Posted Jan 05, 2009 10:08am EST by Aaron Task in Newsmakers, Recession"The largest piece of tax relief in the new plan would involve cuts for people who pay income taxes or who claim the earned-income credit," The Wall Street Journal reports. "On the campaign trail, Mr. Obama said he would phase out a similar tax-credit proposal at around $200,000 per household, but aides said they haven't settled on an income cap for the latest proposal."
Whether this amounts to a flip-flop or smart, pragmatic policy depends on your perspective, of course. There's also the issue of how Republicans respond: Will they now push for making the Bush tax cuts permanent, or having them expire by Jan. 1, 2011 as scheduled vs. sooner, as Obama campaigned?
Perhaps the more important question is whether this tax-cut proposal, designed to help garner support among Congressional Republicans, is good policy or just good politics.
Details on the plan remain sketchy but the answer may be "both". Raising taxes in the midst of a deep recession was never a good idea and Obama's new plan is aimed at having a long-term affect vs. providing a one-time stimulus.
In addition to tax cuts for individuals, the plan also has benefits for business, according to the Journal, including:
- Accelerated write-off of losses incurred in 2008 and 2009.
- Tax credits for new hiring, or no layoffs.
- $250,000 in write-offs for small business expenditures in 2009 and 2010.
Of course, this being Washington D.C., it's almost certain any final tax plan will look a lot different than the one outlined today, probably to the detriment of the average American.
Yes, the more things change, the more they stay the same.
80 Comments
- Monday January 05, 2009 10:34AM EST
Very cynical conclusion on your part. Let's look for American solutions instead of continuing to try to pit Republicans against Democrats.
- Monday January 05, 2009 10:35AM EST
I thought we were going to get another stimulus check?
- Monday January 05, 2009 10:38AM EST
If it is Obama's intention to cut taxes and these reports are accurate, then this is a positive indication that Obama is not a hard line ideologue who is going to kowtow to the special interest groups that put him in office and is instead a smart and pragmatic politician that has seen the light. Time will tell. I am not one who voted for him, but I would become a fan if he proves to be a president that does not cave into the pressure of his contributors, but instead makes good sound policy decisions regardless of the political cost.
Yahoo! Finance User - Monday January 05, 2009 10:39AM EST
Well at least OBAMA is trying. I will give OBAMA credit for that. Whether it is political or not. And he is NOT even officially President yet.
- Monday January 05, 2009 10:43AM EST
The birds are chirping and they are sounding more upbeat!!! We'll be fine until Volcker goes hunting!!!
- Monday January 05, 2009 10:53AM EST
When can I expect my stimulus check? And how long will I have to wait to see those 22% CDs at the bank again? Obama and Volcker, making it happen in 09 baby WOOOOOOO!
- Monday January 05, 2009 11:07AM EST
2009 is the year of Bonanza,Tax Cuts,Stimulus and More Bail-out and help.....either Financial Institution or Industrial...more jobs more securities and year of recovery....
Yahoo! Finance User - Monday January 05, 2009 11:26AM EST
More socialist crap from the socialists (Democrats) in congress and soon the leading socialist, the messiah, in the oval office. Instead of manipulating the voters with tax cuts, congress should eliminate the federal income tax and replace it with the European style VAT tax. This would instantly put money into workers hands to spend as they wish and stimulate the economic recovery, without partisan politics.
Yahoo! Finance User - Monday January 05, 2009 11:33AM EST
Obama will cut taxes for Republicans whose wealth has been evaporated by supply side Republican economists. Also watch for wages headed toward India levels and retired govt. employees, uions having their pensions cut by 10% or more.
- Monday January 05, 2009 11:36AM EST
Instead of $875Billion in incentives ----let's make it $10Trillion and get serious about getting out of this funk!
- Monday January 05, 2009 11:43AM EST
I'm a WASP...so will watch my Paycheck withholdings closer this year. However...I have learned after the last 8 years that Republicans care Nothing about the American People...but maybe Democrats care too much. So good luck Lord Obama...hope you will be different.
- Monday January 05, 2009 11:43AM EST
Obama has demonstrated time and again that he simply can't be believed. What he says is designed to garner votes. If a poll shows the public believes otherwise, he quickly switches sides. Ethics is no part of Obama's makeup. Calling such switches "smart politics" is a grotesque attempt to pander. Shame apparently isn't a commodity in great abundance here at Tech Ticker.
Yahoo! Finance User - Monday January 05, 2009 11:47AM EST
This is a band aid solution. Whats required is a complete restructuring of the economy. Bring back manufacturing from China. Out with socialism. A balanced budget. Everyone live within their means. No more borrowing from overseas. This was basically the situation in the 1960s and it can happen again. Are you listening Obamassiah?
Yahoo! Finance User - Monday January 05, 2009 11:47AM EST
You cannot give tax cuts to people who pay no taxes. The "rich" that is so demonized by the Democrats and media, pay almost all the taxes in the US. The top 10% of earners pays 75% of all income taxes. The bottom 50% of income earners pays only 2%. No that is not a typo, only 2%. So how in the world is Obama proposing to cut taxes for people who pay $0 taxes? His proposal is nothing but added welfare in the guise of tax cuts.
- Monday January 05, 2009 11:53AM EST
i think obouma will do grate and help the workinz class wizth the tax ut andsave this country that bush distroyed ad clion had it t wee it was good go oboum and do your good deeds for us and keep u from going ino depreshion
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- Monday January 05, 2009 10:24AM EST
GOOD...FOR BUSINESS.....