In reading the political forums today, I came across the following statement in defense of Obama’s claim that “95% of Americans will get a tax cut.” I couldn’t help but laugh that someone believed this statement enough to write it, but I’m not posting it necessarily for the sake of humor but rather as a basis for discussion.

Creating opportunities to become rich for 95% of people is not socialism.

First of all, the analysis done on Obama’s tax plan reveals that there isn’t an actual tax rate cut, but rather a series of deductions and credits taxpayers can make when filing their taxes. Such deductions and credits include:

  • a $500 to “make work pay” for people making less than $75,000
  • a $4,000 college tuition tax credit
  • up to $6,000 tax credit for child care

Unless you make a certain amount of money or are in a position to take advantage of things like the college tuition credit or child care credit, you won’t be seeing a major change in your taxes, and the tax rate itself will not be decreasing. So, this puts a hole in the initial argument that 95% of Americans will receive a tax cut.

Secondly, the tax changes don’t create opportunities for people to become rich. If you are capable of maximizing your credit savings, then you could potentially receive over $10,000 in credits or refunds a year. If you are capable of receiving and stashing those credits away without touching it for 40 years, you could save half of a million dollars, which may or may not be a lot of money in the future depending on inflation. On the other hand, if you are attending college and paying childcare (as mentioned in the credits listed above), you will probably need to use some of that $10,000 to pay your bills. Additionally, as you finish taking your classes and your children grow up, you lose those credits, so the $10,000 credits/refunds suddenly disappear.

Lastly, income redistribution is designed to create a “classless” society, a tenet shared by socialists. Our nation has a history of some sort of income redistribution, including programs such as welfare, unemployment, and tax refunds, though the purpose was not to equalize the financial situations of the population. The same is with Obama’s tax plan. If Obama were to equalize the economic situation of all Americans, the credits would not be dependent upon many variables but would rather be a flat rebate based upon income.

For additional analysis on Obama’s tax plan, I recommend the following articles:
The Wall Street Journal – “Obama’s 95% Illusion”
PolitiFact – “Under Obama’s tax plan, ’95 percent of you will get a tax cut.’”
The American Spectator – “Searching for Obama’s 95 Percent”
Alex Chediak – “Obama’s ’95% will get a tax cut’ Illusion”

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