Obama's Tax Cut Logic..

I was looking into the reasoning behind the tax cuts, which yet again, hurt the wealthy. The 98% of the population that make less than $250,000 a year, will enjoy tax cuts. Therefore leaving the wealthy 2% attacked again by taxes.

I found this article with Obama and his economic advisors, where they were debating on the new tax cuts, with the economic advisors suggesting to include the wealthy in the tax cuts, while Obama ignored their opinions. The opinion of a Harvard's economist, Martin Felstein, who served as chairman of the White House Council of Economic Advisors under Ronald Reagan, was over ruled by Obama, with questionable reasons.


"I think the two-year extension would help to keep demand alive at a time when the economy is weak,” Mr. Feldstein told Mr. Obama, “and the notion that it would not continue after that would take some $2 trillion off the size of the national debt at the end of the decade. And that would give a boost to confidence that the administration is really focusing on bringing down the out-year fiscal deficit.”

Mr. Obama reiterated his support for extending the tax cuts for families earning less than $250,000, which would be about 98 percent of Americans, arguing that extending them for the 2 percent who make more than that would not generate as much economic benefit since the wealthy would not be as likely to spend the extra money. Two other members of his board, Paul A. Volcker, the chairman, and Laura D’Andrea Tyson, backed him up.

Mr. Feldstein countered: “The impact of the tax increase for the high income who represent, as you say, 2 percent of the taxpayers but about 50 percent of the tax dollars, the impact is one of attitude, confidence.” He added: “So the increase in the tax on those individuals is a signal that the administration – ”

Mr. Obama interrupted. “They have to pay slightly higher taxes,” he said to laughter. That, in other words, was the signal.

http://thecaucus.blogs.nytimes.com/2010/10/04/obama-debates-advisers-on-tax-cuts/?scp=10&sq=tax&st=cse 

New Proposed Estate Tax

The new proposed estate tax to be effective in January of 2011, takes a large cut at the wealthy. There will be a 50% inheritance tax on any estate valued higher than $1.5 million. This means that if a nephew was to receive a mansion from his uncle valued at $3.5 million, the nephew would also automatically inherit a $1 million US debt. Although this may not concern a large majority of the US population, as they won't have an estate worth more than $1.5 million, it still greatly effects a number of people. Half of the wealthy's estate will go straight to taxes. The immediate family will however not be taxed, yet everyone else will be. With this in place, it will make the wealthy much less inclined to donate large sums to businesses, charities and friends, hurting the economy. Some may argue that they will still have a large amount of money at their disposal; however, losing millions of dollars is still very hurtful, regardless of who you are. Why should it be fair to take away half of their hard earned fortune? Instead, they should no instate this tax, or, if they choose to, they should make it fair to everyone by enforcing an estate tax that affects everyone, instead of targeting the wealthy as always. The wealthy will still be contributing the majority of the tax money, but this way, they aren't the only victims of the tax.