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Obama's tax on the wealthy, corporations could harm working-class Americans
Alex Jablokov '09
Issue date: 10/1/08 Section: Opinion
Over the past year, presidential hopeful Barack Obama has emphasized the need for economic and tax reform, both of which-he claims-could lead to a more just and fair redistribution of wealth in the U.S.
Obama's tax increases on the "wealthy" have been at the forefront of his economic plan, but the question remains whether or not these increases will penalize more than just the rich.
Obama says that his tax increases won't affect people who make less than $250,000 a year, but a quick analysis of his taxation plan finds this to be false.
If Obama is elected this November and fully implements this plan (a big if, considering Congress), it won't raise income taxes for most people. However, he does want to significantly raise the capital gains tax and taxes on corporations.
Corporations sound like big, evil entities, but many of them are, in fact, very small. Many small family-run businesses today are corporations; for example, the Imperial Agency and Modern Dental Associates near the University Press on City Avenue are both incorporated.
These businesses do this because, in our legislative society, it allows them to have limited liability. If something happens and the company is sued, they can only lose the assets of the corporation. If they weren't incorporated and were operating under a partnership, for instance, they could lose their business, house, retirement savings, etc.
By raising taxes on 'corporations', Obama will, in effect, raise taxes on some working class people. If you consider the breakdown of large corporations, this fact becomes even more obvious. Those "evil" corporations employ millions of people. Many corporations need investors and are responsible to those investors for creating profits. If you raise taxes on corporations, you will obviously lower their net income.
This loss of income will eventually trickle down to the investors, who will, in turn, get less money through dividends; their investment, therefore, becomes less profitable and their willingness to invest at home will potentially decrease. Perhaps instead of looking into domestic corporations, they will choose to invest in Europe, China, or India where the likelihood of profits is higher.
Obama's tax increases on the "wealthy" have been at the forefront of his economic plan, but the question remains whether or not these increases will penalize more than just the rich.
Obama says that his tax increases won't affect people who make less than $250,000 a year, but a quick analysis of his taxation plan finds this to be false.
If Obama is elected this November and fully implements this plan (a big if, considering Congress), it won't raise income taxes for most people. However, he does want to significantly raise the capital gains tax and taxes on corporations.
Corporations sound like big, evil entities, but many of them are, in fact, very small. Many small family-run businesses today are corporations; for example, the Imperial Agency and Modern Dental Associates near the University Press on City Avenue are both incorporated.
These businesses do this because, in our legislative society, it allows them to have limited liability. If something happens and the company is sued, they can only lose the assets of the corporation. If they weren't incorporated and were operating under a partnership, for instance, they could lose their business, house, retirement savings, etc.
By raising taxes on 'corporations', Obama will, in effect, raise taxes on some working class people. If you consider the breakdown of large corporations, this fact becomes even more obvious. Those "evil" corporations employ millions of people. Many corporations need investors and are responsible to those investors for creating profits. If you raise taxes on corporations, you will obviously lower their net income.
This loss of income will eventually trickle down to the investors, who will, in turn, get less money through dividends; their investment, therefore, becomes less profitable and their willingness to invest at home will potentially decrease. Perhaps instead of looking into domestic corporations, they will choose to invest in Europe, China, or India where the likelihood of profits is higher.
Viewing Comments 1 - 5 of 5
richard
posted 10/16/08 @ 6:26 PM EST
I'm completely baffled as to why Senator McCain has not stated the facts similar to those found herein regarding the impact of Obama's tax plan. All I can say is his campaign is clueless. (Continued…)
Courtney
posted 10/23/08 @ 10:51 AM EST
I hardly think that if a "small-business" produces $250,000 a year they will suffer from a slight increase in taxes, especially if this increase is necessary for the greater good of the economy. (Continued…)
JDublU17
JW
posted 10/24/08 @ 8:01 AM EST
When I was in college (which wasn't that long ago), $25,000 seemed like a boat-load of money yet alone $250,000. I can tell you that $250,000 is not a massive amount of revenue for a small business. (Continued…)
Nick
posted 11/24/08 @ 11:49 PM EST
Just to clarify..."Take, for example, what happens when senior citizens, who bought their houses for $100,000 several years ago, sell it for $400,000 to move into a retirement home. (Continued…)
Lemonade Diet
posted 11/27/08 @ 12:09 AM EST
Hopefully McCain's message may have gotten thru or Obama will be advised against this course of action.
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