Obama's tax plan will not increase taxes for anyone making less than $250,000. Let me repeat that: Obama's tax plan will not increase taxes for anyone making less than $250,000.
There was no need to repeat it. It's being repeated over and over again. Here are the problems:
1. I don't believe it. The Democrat leaning Tax Policy Center says that Obama's plan will add almost three trillion dollars to the deficit and, of course, Obama proposes almost a trillion in new spending on top of that. The TPC says that McCain's plan doesn't add up either, so we know that neither one of these guys will do exactly what they say.
2. Obama's rhetoric and record points to more taxation.. Obama's underlying political philosophy - to attract votes by taking from a few Peters to pay many Pauls - suggests what he would do. If it's OK to raise taxes on the top 5% to give money to others, then why not the top 10,15,25,or even 40? The idea is that Obama's instincts are to raise spending and taxes. McCain's are otherwise.
3. Obama's instincts are anti-growth. Higher marginal tax rates, all else equal, create disincentives for work or investment and incentives for unproductive tax avoidance. Of course, there may be reasons to raise them and one reason might be to reduce the deficit, but that's not Obama's reason. I might buy into small increases in marginal rates to bring government's expenditures more in line with its revenues, but Obama simply proposes to redistribute the wealth.
This is, I think, more likely to create less income than more.
That doesn't mean, as the commenter suggests, that I oppose public education or a public safety net. But those things exist and no one is proposing to do away with them.
4. The third rail remains untouched. The greatest policy failure of may generation has been the repeated refusal to deal with the coming entitlement crisis. Obama's suggestion - lifting in some way the cap on social security taxes - is a potentially disastrous disincentive to growth.
5. Obama's America is further divided into tax payers and tax recipients. One of the impact of the GOP's relentless "tax cuts for the rich" is to remove large numbers from the income tax rolls altogether. Both McCain's and Obama's proposals would increase that number from approximately one third of all filers to something approaching 50%. Obama exacerbates the problem by increasing the number who receive a government check. Do we really want large numbers of voters - perhaps a majority - to be net recipients of government largesse?
6. Obama will have to feed a hungry Congressional majority. Apart from Obama's own political proclivities, it looks like he will have large Democrat majorities in both the House and the Senate. Having been out of power for so long, there is going to be a great deal of pent up demand for new programs.
All of this was, I think, captured in Obama's answer to the now iconic Joe the Plumber. He wants to "spread the wealth around" as it is all his to bestow.