As things stand this morning, all signs are pointing to an Obama victory tomorrow. I am hoping for this result. One of the reasons I am hoping for an Obama win is the candidate’s tax proposals. As the election reached the final stages, other than negative ads, the only argument McCain seemed to throw at Obama is that his tax policy is going to cost America jobs. At first glance, the logic does seem to back up McCain. What McCain and other conservatives seem to ignore is that some of their own policies show Obama’s plan will be better for the economy.
It is true that until recently, Bush’s tax plans seemed to be working. Companies were profitable and other than post 9/11 the markets were growing. This did not continue though, and for the last two or three years, economic indicators showed that the economy was slowing down.
The fact that the economy slowed down is not an argument against Bush and McCain’s tax plan. The argument is the economic stimulus plan that both Republicans and Democrats supported in an attempt to stop the slowdown. The economic stimulus plan gave the middle class extra income. The hope was this extra income would go towards the purchase of goods and services in an attempt to jump-start the economy. This is counter to the trickle down tax policies of Bush’s eight years. If trickle down economics worked, the solution to the economic slowdown would have been to send the stimulus package to large companies so they could pay their employees more, or show more profit on their balance sheet. One could argue that the reason this was not proposed is it sounds insane. I say that Bush’s argument for trickle down economics sounded just as insane.
Looking at the two presidential candidate’s tax plans in this context may not be 100% correct, but it is interesting. In this context, Obama’s plan acts like an economic stimulus plan for anyone making less than $200,000. Granted he will repeal Bush’s tax cuts, which will hurt some upper income tax payers. This is not a problem if you believe as I do that everyone is better off if everyone who makes less money than them makes more money. Why do I think this? It is simple, for business to thrive it needs customers. For people to be customers they need money to spend on goods and services. If you run a business, chances are you can afford your product. If everyone who bringing home less income than you has more disposable income, you have more potential customers. More customers mean more opportunities to bring home a profit, which will trickle up to those hurt by Obama’s tax policies.
Obama's tax plan acts like an economic stimulus plan. It gives the middle class extra take home income to the middle class that they can use to purchase goods and services. If a $600 per person economic stimulus package is good for the economy, how can anyone say that Obama's tax plan is going to kill job creation. If that was the case then conservatives should have fought tooth and nail to keep the economic stimulus package from going through.