Tuesday, June 10, 2008

What's In the Box? Part II: Taxes

Barack Obama appeared on CNBC to talk economy and taxes:

...Obama told CNBC that he would raise taxes on Americans making $250,000 a year or more and raise the capital gains tax for those in higher income brackets while exempting small investors. He said the U.S. economy has been "out of balance for too long."

This is insane. Right now the high price of petroleum, coal, and natural gas is spurring a great deal of investment to displace these traditional energy sources. Raising the capital gains tax on investors not considered to be "small" will stifle this investment. Of course, Mr. Obama has a solution to that: take the taxes collected at the increased rate and provide government direction of investment in alternative energies. Like the enthanol boondoggle? A theme begins to take shape: expanding government-supervised industrial policy funded by increased taxes on private investement.

Other questions come to mind: $250K is certainly within the income levels of many small "S" corporations, small entrepeneurships that declare their income on the owners' personal 1040 returns. Will some elaborate tinkering with the tax code be required to patch up this bug? And what in the hell does he mean by "out of balance"? What is an economy that is "in balance"?

Last, but not the least, Mr. Obama wants to institute a windfall-profits tax on "Big Oil". The definition of this term is vague. How much profit is "too much"? Shall such a calculation take into account the actual profit margin of the enterprise ("Big Oil" has suprisingly modest margins)?Shall only the large integrated oil companies be taxed? Should the tax also include the drillers, refiners, or natural gas and coal companies? Such issues must water the mouths of left-wing socio-economic planners.

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