Sunday, March 22, 2009
Obama's Tax Policy
Taxes Two Step
Chief among the concerns is the White House's tax policy.
On one hand, tax cuts on 95 percent of households may sound good, but are so small they are unlikely to more than soften the pain of the downtown.
Some 95% of American families at lower income levels will share about $770 billion in new tax breaks through 2019.
In particular, the stimulus package provides tax cuts of roughly $400 for individuals and $800 for couples.
Compare that to the rebate checks under the 2008 stimulus plan, which worked out to $600 per person and $1,200 per family, plus $300 dollars per child. They barely made a dent in the economy, with economists estimating as much as 40-percent directed to savings rather than spending.
“It’s not sufficient,” says Richard Hastings, who follows the consumer sector for Global Hunter Securities. “At this level you’d have to wait a year and a half to see anything.”
What’s more, the long-term Reagan and Bush administration tax cut measures involved a broad range of income groups and spared taxpayers far more money, but were still subject to a lag affect of a year or so.
Meanwhile, the White Houses’ budget proposal to hike taxes on the two top income groups (covering 3 million households), as well as capital gains rates, though not intended to take effect until 2011, will arguably begin to depress consumer spending even before that time.
As proposed under the $3.6 trillion-budget blueprint, rates will rise from 33 percent to 36 percent and 35 percent to 39.6 percent, respectively, generating $637 billion.
Chief among the concerns is the White House's tax policy.
On one hand, tax cuts on 95 percent of households may sound good, but are so small they are unlikely to more than soften the pain of the downtown.
Some 95% of American families at lower income levels will share about $770 billion in new tax breaks through 2019.
In particular, the stimulus package provides tax cuts of roughly $400 for individuals and $800 for couples.
Compare that to the rebate checks under the 2008 stimulus plan, which worked out to $600 per person and $1,200 per family, plus $300 dollars per child. They barely made a dent in the economy, with economists estimating as much as 40-percent directed to savings rather than spending.
“It’s not sufficient,” says Richard Hastings, who follows the consumer sector for Global Hunter Securities. “At this level you’d have to wait a year and a half to see anything.”
What’s more, the long-term Reagan and Bush administration tax cut measures involved a broad range of income groups and spared taxpayers far more money, but were still subject to a lag affect of a year or so.
Meanwhile, the White Houses’ budget proposal to hike taxes on the two top income groups (covering 3 million households), as well as capital gains rates, though not intended to take effect until 2011, will arguably begin to depress consumer spending even before that time.
As proposed under the $3.6 trillion-budget blueprint, rates will rise from 33 percent to 36 percent and 35 percent to 39.6 percent, respectively, generating $637 billion.
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