Kowabunga

Obama wants to put in play one huge tax increase. Although it may not directly impact the average American as what Obama is proposing is eliminating the cap on Social Security taxes, not, in this case, a regular income tax increase. The current cap is $97,000 and is adjusted fairly regularly (it wasn't all that long ago that the cap was $60,000).

The claim is that it would generate $1 Trillion dollars over ten years, the theory being that it would be sufficient to cover the projected shortfalls.

There are some pitfalls, some obvious and ignored.

The ABC News report sights that removing the cap will erode support for Social Security amongst the 5% (or so) of Americans that would be directly impacted. It states that this would be a 12.4% tax increase.

Part of the problem with removing the cap is that companies that pay high-end executives, especially CEOs exorbitant salaries will pass that cost on to consumers in the form of higher prices for products and services. This will impact just about every aspect of American life, from the price of a loaf of bred to a gallon of gas and the cost of a lawyer.

Many companies will seek a way to keep the high paid executives and other professionals happy by switching them over to more incentive based compensation: stocks.

It will also impact professional sports (which may not be a bad thing) as those players with the huge multi-million dollar salaries (I trend I disagree with) will be impacted, as will the franchisees that operate the teams. If you think the price of going to a ball game is high now, wait until Obama has his way on mucking up social security.

Further, although they predict it will generate sufficient money to shore up the system, it is doubtful that it will as a more likely scenario is to throw this country into a recession while companies figure out how to readjust their prices so that they can pass the tax onto the consumer.

Edwards is floating a proposal that isn't much better as it leaves those workers earning between $97K and $200K exempt and then kicks the tax back in for those earning more than $200K. Members of Congress would still be able to opt out of the Social Security program under either plan.

"With their proposals to raise Social Security taxes, it appears that John Edwards and Barack Obama are engaged in competition to see who can wreak more havoc on the economy," said Club for Growth spokeswoman Nachama Soloveichik. "Obama comes out the winner with his proposal to raise Social Security taxes on more Americans than Edwards proposed in his plan. But make no mistake: While Obama's plan is worse, both plans would significantly increase America's tax burden; devastate the economy, and turn Social Security into a full-fledged welfare program."

Although the piece does not elaborate on what Soloveichik means by wreaking havoc, when you take into account that half of that 12.4% is employer paid payroll taxes, that means it gets passed on to the end consumer.

"Middle class and working families are paying a much higher percentage of their income [than wealthier Americans] -- that was Warren Buffet's position," said Clinton at a June 29 PBS debate, "When you cut off the contribution at $90,000, $95,000, that's a lot of money between $95,000 and the $46 million that Warren Buffet made last year. And he's honest enough to say, 'Look, tax me because I'm a patriotic American and I want to make sure our country stays strong and is fair.'"

There is only one problem with Hillary's statement: Warren Buffett's salary as the CEO of Berkshire Hathaway is $100,000. The vast majority of his income is from capitol gains, dividends, interest and so on, none of which is subject to the Social Security tax.

As for Warren "Tax Me More" Buffett, there is nothing in any law that says you can't pay more in taxes than is required by the law. Since Buffett thinks California's Prop. 13 provided a tax disparity where property taxes are concerned, what's stopping him from paying more into the public coffers. If Buffett were being honest, he would be pushing for a stiff tax on accumulated wealth, not on base income.

The same is true of the leftist-Democrats, whether we are talking Hillary Clinton or Barack Obama. If they truly believe that people of wealth, including themselves, are not paying their "fair share," then they should be pushing for a tax on accumulated wealth. And kick back while the revolution takes place.

Removing the cap on the Social Security tax will not fix the problems inherent in a system that is a pipeline. The only way to fix it is to give the American worker control over that money taken from them by allowing them to invest part (or all) of it in any fashion they wish, including stocks, bonds, real estate, savings accounts or, for that matter, letting government bureaucrats continue to mismanage billions of dollars every year. In a free society, being able to choose how you participate in Social Security should be the norm, not the exception.

Tags:

Obama Hillary Social Security Taxes