Obama's plan: 58% Tax Rates

Kevin McCullough
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Posted: Jul 19, 2009 12:00 AM

I was asked this past Thursday morning on Fox News about the impact of President Obama spending the day in New Jersey campaigning for the immensely unpopular sitting governor Jon Corzine. I was asked if it was a good use of the President's time. I was asked if there were bigger things he should be focused on. I was asked if it might not even backfire against Corzine or other candidates in the immediate electoral future. Obama dedicated not just a speech, but the entire day to the Corzine cause.

My response is simple, "It's what he has to do."

President Obama now finds himself facing a political divorce on his policies while most Americans still find him a likable guy.

"But job performance counts, words mean things, and elections have consequences," I proffered.

And when the most read New York daily newspaper plasters its front page with the new startling fact that the marginal tax rates for small businesses will be jumping from 35% to 58%, we can understand one other important truth. President Obama is hurting working class people.

Let me break it down for you with some common sense. If a small business owner has revenue of $250,000 for a year of business and is forced to cough up the current top tax rate of 35%, said business owner is left with $162,000. Doing nothing but letting the Bush tax relief for small businesses expire, the business owner will have only $155,000 left. But bumping the rate to the suggested 58% (according to the Tax Foundation) the small business man is left with only $105,000 of the original $250,000 of revenue. And what did the Obama administration do to help that business owner earn the $250,000 in revenue?

Nada...

So why are they entitled to nearly six dollars out of every ten that a small business owner earns?

A top margin tax rate of 6 cents out of every 10 cents earned sort of ceases to be taxation and begins to look like outright theft. This stunts growth, slows production, eliminates jobs, and brings markets to abrupt halts.

If the administration also does as it has implied, that business owner might also then be forced to offer expensive health insurance programs to workers who may or may not wish to be covered by the company's plan. Of course the employees would also then be taxed for those benefits.

Let's also be clear: this is not a debate between the left and right. Democrats spoke at both of the recent Tea Parties I keynoted. And little hole-in-the-wall eateries in the meatpacking district of Manhattan have to make a payroll just as the Christian book shop owner in Texas does.

Let's also be clear about one other thing. Both Democrat John F. Kennedy and Republican Ronald W. Reagan implemented the same solution to the recessions they faced. Note that both the Democrat and Republican chose exactly the opposite action that the current administration seems determined to fulfill. Kennedy and Reagan lowered the top marginal tax rates. When they did, small businesses hired more people, expanded the middle class, and brought the U.S. Treasury record revenues the years following the implementation.

If President Obama wishes to genuinely solve the joblessness problem, all he has to do is embrace the historically proven solution.

Thursday morning two people in the Fox News building asked me, "What rate would you suggest?"

I would today, as I did in my first hardback, lower the rates across the board. End discrimination in the tax process by ceasing the punishment of those who succeed. Institute a tax rate of 10% across all economic spectrums. Job creation would explode in response, the economy would burn white hot back to health, and it would make President Obama not only a popular figure, but someone whose policy decision solved multiple issues for families in the process.

For if you fix the economy, health care, retirement, and independent planning for investing relieve much of the burden of medicaid, medicare, and Social Security.

The White House is now going silent on the impact of breaking their campaign promises, the first of which was to return to only the tax rates of the Clinton era, and secondly to not raise the tax load on Americans making under $250,000 by "one single dime."

The White House's smarmy Robert Gibbs promises, "It's a process that we're watching" or worse yet, that the administration is "going to let the process, work it's way through." These are not convincing arguments, even to the White House press corps.

And while Gibbs smugly leaves the West Wing, stagnation, joblessness, and lack of opportunity continue to bite at the administration's heels.

But they probably didn't notice, because President Obama was too busy campaigning on Thursday.