The Brookings Institute, one of Washington’s most respected think tanks, has a very informative page on Obama’s and McCain’s tax policies(McCain’s policies aren’t of significance for obvious reasons). Obama is officially going to be our president today, so it’s about time I’ve fully analyzed his policies and adjust my behavior accordingly. To my surprise, his policies are reasonable and is potentially extremely beneficial, financially, to my family(and most American families). Although I have to reiterate that my criticism of Obama was mainly based on the misleading messages of the Obama campaign in addition to the biased role that media played.
The Obama Administration’s newly introduced policies are mostly innovative and prudent, I’ve listed below the ones I felt will make the greatest impact on everyday Americans.
The 6.2% “Make Work Pay Credit” that maxes out at $8000,Â is a much needed counter-measure against the significant increase in welfare the Obama Administration intends to provide. This also will truly benefit the middle class, which I believe needs the most help in this economy.Â As a economic conservative, I believe one of the most disturbing patterns in United States public economic policy is the increasing reliance on the government to provide for the poor by taxing the working class. It encourages able workers to sit back and enjoy the unemployment benefits at the expense of hard working Americans; doesn’t sound very “fair” to me. I do not think such a blatant attempt at income redistribution is necessary considering that the wealthy is already supporting the lower class by paying for many extraneous or underutilized public services, such as the public school system. This country also cannot habitually resort to taxing the wealthy to cover the deficits created by other social programs, a line has to be drawn somewhere.
The up to $800 “Universal Mortgage Credit” on 10% of mortgage interest is also a wise policy, much wiser than dumping over a trillion dollars in to the banking and auto industry. This is again, greatly beneficial to the middle class homeowners, who has been sorely neglected in my opinion.
Another disturbing pattern I see in the American economy is the lack of savings by individuals. The savings rate has been historically mostly negative, which is evident in the huge amount of credit card debt and unpaid mortgages. America cannot sustain the constantly increasing annual deficit and remain credible and trusted by the rest of the world. A first step to reversing this process is to encourage workers to save, rather than buying the latest iPod or gambling it away. The saver’s credit of up to $500, representing 50% of the first $1000 in contributions is a great way to accomplish this goal.
As a college student, I can obviously appreciate the “American Opportunity Tax Credit”, which refunds the first $4000 of college expenses. I am definitely biases in this respect, but one of the few areas where government intervention is greatly needed is keeping college tuition costs, which has been rising far beyond inflation, reasonable for ALL income levels, especially for the middle class families that make just enough not to qualify for aid.
Obama’s four new tax cuts have garnered mostly positive reviews, and rightly so, covering employment, mortgages, savings and education costs, important but lacking elements in the American economy today. However, my opinions are a bit more murky on Obama’s proposal changes to capital gains and corporate tax, which I will cover in my next post, hopefully in the near future. I also have to add that is is very hard to have an unpopular individual tax cut since tax cuts in general benefit one or more party at the expense of increasing a deficit so large that most costs pale in comparison.Â It is also very likely that the trillions of dollars of debt is going to be passed on to the next generation which hardly justifies the spending spree by the federal government right now.