Barack Obama's acceptance speech mentioned the following promise:
I will -- listen now -- I will cut taxes -- cut taxes -- for 95 percent of all working families, because, in an economy like this, the last thing we should do is raise taxes on the middle class. - NY Times
Are you kidding me? This is pure fantasy, especially considering that the bottom 40% of wage earners in the country already pay no taxes. So his statement could only be true if 40% of the country was not working at all. (He promised to lower taxes for most working families, not all families)
So how do you cut taxes for people who don't pay any now? Well, if your Barack Obama, you give them other people's tax money:It turns out that about 41 percent of us have no income tax liability whatsoever, the highest percentage in modern history. Around 32 percent of all tax returns filed have no liability, so they get back everything they paid. An additional group of people don't even have to file.
Of the people who file income taxes, including the third that has no liability, the bottom half pays 3 percent of all taxes and the top half pays 97 percent of all taxes. Narrowing even further, the richest 1 percent of all taxpayers account for 40 percent of taxes paid. - Union Leader, New Hampshire
Giving people who already pay no taxes money is not a tax cut, its a handout and Obama's tax cut promise is little more than a gimmick and an expensive one at that if he gets elected.
When Obama says that he will cut taxes for 95 percent of Americans, he is talking about his proposal for a $500 refundable income tax credit for all but the top 5 percent of income earners. For the bottom 40 percent of income earners, this will be just another check from the federal government rather than a reduction in tax liability. It is another sharp increase in government spending rather than any sort of tax cut. An arbitrary cash grant does not, moreover, do anything to improve the economy or incentivize productive business. That only comes from cutting tax rates. What Obama is proposing here is really quite similar to George McGovern's 1972 plan to send everyone a $1,000 check, which voters rightly saw as a crass vote-buying scheme rather than serious policy. - AEI