Obama’s Plan to Destroy the Middle Class
Obama, the self-anointed champion of the middle class, will actually destroy the middle class with his regressive socialist “budget” plan.
Using the old class warfare mantra, that the rich need to pay their “fair share,” his tax plan is nothing but catastrophe for the average American.
His proposal to triple the tax rate on corporate dividends is nothing but a sham to appear to be attacking the bogey-man, the corporations, but is actually an attack on all.
Obama is proposing to raise the dividend tax rate to the higher personal income tax rate of 39.6% that will kick in next year. Add in the planned phase-out of deductions and exemptions, and the rate hits 41%.
Then add the 3.8% investment tax surcharge in ObamaCare, and the new dividend tax rate in 2013 would be 44.8% (nearly three times today’s 15% rate).
Keep in mind that dividends are paid to shareholders only after the corporation pays taxes on its profits. So assuming a maximum 35% corporate tax rate and a 44.8% dividend tax, the total tax on corporate earnings passed through as dividends would be 64.1%.
Of course, the White House wants everyone to believe that this new rate would apply only to those filthy rich individuals who make $200,000 a year, or $250,000 if you’re a greedy couple. We’re all supposed to believe that no one would be hurt other than rich folks who can afford it.
The truth is that the plan gives new meaning to the term collateral damage, because shareholders of all incomes will share the pain.
Who would get hurt? IRS data show that retirees and near-retirees that depend on dividend income would be hit especially hard. Almost three of four dividend payments go to those over the age of 55, and more than half go to those older than 65, according to IRS data.
But all American shareholders would lose. Higher dividend and capital gains taxes make stocks less valuable. Stock prices would fall over time to adjust to the new after-tax rate of return.
How does this help the middle class? It doesn’t.
According to the Investment Company Institute, about 51% of adults own stock directly or through mutual funds, which are more than 100 million shareholders. Tens of millions more own stocks through pension funds. Why would the White House endorse a policy that will make these households poorer?
Welcome to Obama’s brand of destruction of the middle class to lessen the threat of revolt against his desire to destroy America from within.
***Ed Randazzo, is a nationally syndicated author. He has been a conservative activist and consultant for over 30 years and is currently the Chief News Editor of Life and Liberty Media***
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