election 2008: taxes

like with many things in life, this issue-by-issue breakdown of the campaign hasn't gone as i had planned. here it is just 3 days from election day and i've only posted a few reviews of issues. at this point, i should hope you all know who you're voting for, but i'll leave one last issue post because i'd like to discuss (rather one-sided, i might add) something i've become a litte fired up about lately.

i will direct you to the candidates' official websites here and here to review their tax plans if you haven't already. briefly, mccain suggests across-the-board cuts, while obama suggests cuts for most except the weathly. obama also supports increasing taxes on such things as capital-gains, large corporations, oil company windfalls, and estates over $7M. it is hard to find some of the specifics to the obama tax plan with regards to tax increases on his website- some are insinuated, others not mentioned directly at all.

was on an e-mail thread earlier in the week with wiley and a few others regarding the candidates and their economic policies. the debate mostly centered around obama's plans and whether his plans for tax increases on the wealthy and on businesses would do anything to help the beleaguered economy. many argued that his tax plan will hurt businesses to the point of forcing jobs overseas, forcing job cuts and forcing price increases. they argued that there was no proof that tax hikes would help the economy; rather, that history and economic research showed tax cuts across the board were better for stimulating investment and business. the claims of "redistrubution of wealth" were made, and it was suggested that the obama plan just moves money around, rather than helping everyone get more money on their own.

it is hard to dispute some of those claims. i would tend to agree that the mccain plan is more favorable for business, which suggests that it should thus be better for the economy as a whole. (there are however some prominent economists who argue that under democratic presidents and their tax policies (higher taxes for the wealthy and business), the GNP historically increases more than it does under republicans.) but while mccain's plan will put more money in everyone's pocket, it will do so in a way that will significantly widen the gap between the haves and the have-nots.

here's a graph the washington post drew up showing how different income brackets would be affected by each candidate's tax plans. now here's another interpretation of those same data, illustrated so that each group is displayed proportionate to its size. notice in those graphs how the mccain tax cuts get larger for each increase in income, thus bringing more money to those already more fortunate. notice also how almost 2/3 of americans, the 2/3 that need it most, fare significantly better under the obama plan, and 99% will be the same or better off. the increase in take-home revenue for those people should increase demand for goods and services. this demand should force businesses to keep prices stable, force supplies and thus production up, and create jobs, thereby offsetting the potential negative effects of corporate tax increases.

with regards to government revenue from taxes, when 1% of americans are essentially paying for programs and policies that the other 99% are more likely to use, it is hard to deny that there is a redistribution of wealth. this is where the debate leaves economics somewhat and turns to social justice. i would argue that "redistribution of wealth" is not a pejorative term, but a necessary process in a healthy society. to help the least of our society should allow them to be better suited to help society as a whole, thus contributing more and ultimately reversing their position from that of a financial drain to one of financial support. it's also the moral and ethical thing to do.

this process of rehabilitating the lower class takes efficient, well-designed social plans that require significant sums of money, money which must ultimately come from those who are more fortunate. it would also take way more time (and space) to discuss, so for now, i will leave you with my final assessment on the issue of taxes: for the reasoning i outlined above, i've gotta side with the obama plan.

tomorrow, my final assessment.