For instance, Barack Obama won't cut any of the tax rates. The only thing that Obama will do is increase certain people's tax rates. He will also raise the payroll taxes for some folks. His so called tax cuts come in the form of tax credits. Here is how the Wall Street Journal described it.
A $500 tax credit ($1,000 a couple) to "make work pay" that phases out at income of $75,000 for individuals and $150,000 per couple.
- A $4,000 tax credit for college tuition.
- A 10% mortgage interest tax credit (on top of the existing mortgage interest deduction and other housing subsidies).
- A "savings" tax credit of 50% up to $1,000.
- An expansion of the earned-income tax credit that would allow single workers to receive as much as $555 a year, up from $175 now, and give these workers up to $1,110 if they are paying child support.
- A child care credit of 50% up to $6,000 of expenses a year.
- A "clean car" tax credit of up to $7,000 on the purchase of certain vehicles.
A "clean car" tax credit may cut the tax burden for many people but it isn't exactly going to make the "tax code simpler". One thing that can't be argued is that all of these new "tax credits" (and yes some of these aren't new but rather increases in old credits) will complicate not simplify the tax code.
There's more. Here is what he said about health insurance and small businesses.
Small businesses that provide healthcare insurance for employees would see a tax credit of as much as 50 percent under a plan proposed by Presidential candidate Senator Barack Obama.
The expense of health insurance makes it an obstacle for small businesses, but it's the one benefit employees tend to seek more than any other when job hunting. A business may find itself out of the running for a qualified employee if they can't offer this benefit.
Obama's plan, discussed with Latino advocacy group National Council of La Raza in Boston, called for offering a tax credit to businesses that give employees health insurance. The Boston Herald noted how Obama's political foe Hillary Clinton advocated a similar plan.
The problem is that he has never defined exactly what a "small business" is. As such, in order to qualify for this tax credit, so called small businesses will need to fit into a nebulous and undefined box. Now, whether or not that is a good idea is a debateable point, it is beyond debate that giving a tax credit for health insurance to an undefined entity WILL complicate the tax code.
Here is what he said about capital gains and small businesses.
To fuel the real engine of job creation in this country, I’ve also proposed
eliminating all capital gains taxes on investments in small businesses and
start-up companies, and I’ve proposed an additional tax incentive through next
year to encourage new small business investment.
Keep in mind that Senator Obama wants to raise the capital gains tax in general. As such, he will give a capital gains tax cut to a yet undefined entity of "small businesses". For both this capital gains tax cut and the health insurance tax credit, at some point there will be a definition of what a "small business" is compared to a "large business". Then each business will do everything they can to fit into the box of "small business". As such, whatever you say about the viability of these ideas, one thing is beyond debate and that is that such tax credits and targeted tax cuts will complicate not simplify the tax code.
Furthermore, Barack Obama will impose a brand new windfall profits tax. Now, he hasn't laid out exactly how that will look but any new tax means the tax code gets more complicated. Think about the man hours of accountants that oil companies will hire to make sure they avoid this windfall profits tax. Whatever the windfall profits tax may or may not do, it WON'T simplify the tax code.
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