Comparison has been made between Obama's tax plan and that of Herbert Hoover when he raised taxes in 1932 with devastating results, which are blamed for deepening the Great Depression.
Comparison between Obama Tax Plan and Hoover's
According to The Bulletin: Philadelphia's Family Newspaper, in an article written by Herbert Denenberg on October 9, 2008, "One of the ways Hoover helped us into the Great Depression is that he followed the same Obama plan for tough economic times." Denenberg writes that Sen. Obama proposes tax increases for investors and the wealthy, the same group that provides employment for workers.
Obama's Tax Proposals
Increases in marginal tax rates hurts the economy, says Peter Ferrara writing in Human Events on October 6, 2008. The Tax Policy Center estimates that Obama's tax plan would raise taxes by $627 billion over 10 years.
Obama proposes:
- To Increase the top individual income tax rate by 13% and the second individual income tax rate by 10%.
- To Increase the capital gains tax rate by 33%.
- To increase the tax rate on dividends by 33%.
- To raise the top payroll tax rate by between 16%-32%.
- New payroll tax on employers to help pay for national health insurance.
- Reinstatement of the death tax, which is being phased out under current law, with a new top marginal tax rate of 45%.
- Protectionist trade policies and higher tariff taxes.
Obama's Tax Credit Plan
According to the Wall Street Journal (WSJ),(Aug. 19, 2008) Obama proposes a raft of tax credits that taxpayers can receive if they engage in various government-specific activities. Moreover, the tax credits would go to those who pay little or nothing in federal income taxes. If a tax credit is $1,000. but otherwise the taxpayers would only pay $200 in taxes, the government would give them a check for $800. If taxpayers pay no income tax, they would receive a check for $1000. WSJ asks if this is just government spending disguised as tax credits.
Productive citizens, such as small business, would make up the difference in more taxes. The effect on capital gains, which would discourage investment, would rise by one-third. Social security payroll taxes would be raised between 16% and 32% for families making over $250,000.
Amity Shlaes, author of The Forgotten Man", a detailed history of the Great Depression, has pointed out that Obama's economic policies are what Herbert Hoover adopted to transform a 1929 economic downturn into a Depression by sharply increasing marginal tax rates and protectionism.
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