I have been asked to create a model to prove that Barack Hussein Obama’s plan to tax higher at his magic number of $250,000 is Socialism. When I left some explanations I was told I’m “dodging” the question.

In fact, it’s Mr. Obama who has spent his whole campaign dodging questions with 1/2 answers, 1/2 truths and no real definition of his plans. Mr. Obama and his magic number are only a starting point because no one has gone back to include his proposal to raise or eliminate the cap on Social Security/Payroll tax, which employers are required to pay into. Social Security tax along with tax on gross receipts, which Obama has failed to define, is another tax on business.

Asking for a financial model but ignoring Obama’s “Spread the wealth around” answer is disingenuous and an attempt to alter the conversation away from Obama Socialism by way of redistribution of wealth. (See Das Kapital but we prefer Edmund Burke, Adam Smith and Milton Friedman) If you want a model try reading my selections.

Richard Nixon appeared on the TV show “Laugh In” September 16, 1968 and exclaimed, “Sock it to me?” Nixon, not a favorite of mine socked it to many people. Barack Obama now wants to “sock it to me” and thousands of American people who work and succeed to pay people who don’t even pay taxes.

How do you create more jobs when you want to levy higher tax rates on the small business owners who are the nation’s primary employers? Democratic Senate Finance Chairman Max Baucus of Montana wrote in a joint press release with Iowa Republican Charles Grassley on August 20, 2001, when they supported the income tax rate cuts that Mr. Obama wants to repeal:

“. . . when the new tax relief law is fully phased in, entrepreneurs and small businesses — owners of sole proprietorships, partnerships, S corporations, and farms — will receive 80 percent of the tax relief associated with reducing the top income tax rates of 36 percent to 33 percent and 39.6 percent to 35 percent.”

“Experts agree that lower taxes increase a business’ cash flow, which helps with liquidity constraints during an economic slowdown and could increase the demand for investment and labor.”

An increase in “the demand for investment and labor” translates into an increase in J-O-B-S. So if lowering these tax rates creates jobs, then it stands to reason that raising these taxes will mean fewer jobs. From 2003 to 2007 with the lower tax rates in place, the U.S. economy added eight million jobs, or about 125,000 per month. The Small Business Administration says small business wrote the paychecks for up to 80% of new jobs in 2005, for example. (WSJ)

How does the Obama increase effect Small Business?

1. Because 85% of small business owners are taxed at the personal income tax rate, any moderately successful business with an income above as little as $165,000 a year could face a higher tax liability. That’s the income level at which the 33% income tax bracket now phases in for individuals, and Mr. Obama would raise that tax rate for those businesses to 36%.
2. The Obama plan phases out tax deductions (the so-called PEP and Pease provisions), thus raising tax rates imposed on this group by another 1.5 percentage points.
3. Mr. Obama would require many small business owners to pay as much as a four-percentage-point payroll tax surcharge on net income above $250,000. All of this would bring the federal marginal small business tax rate up to nearly 45%, while big business would continue to pay the 35% corporate tax rate.

The Wall Street Journal writes:

Mr. Obama responds that more than nine of 10 small businesses would not pay these higher taxes. Last Thursday he scoffed in response to the debate over Joe the Plumber, saying that not too many plumbers “make more than $250,000 a year.” He’s right that most of the 35 million small businesses in America have a net income of less than $250,000, hire only a few workers, and stay in business for less than four years.

However, the point is that it is the most successful small- and medium-sized businesses that create most of the new jobs in our dynamic society. And they are precisely the businesses that will be slammed by Mr. Obama’s tax increase. Joe the Plumber would get hit if he expanded his business and hired 10 to 15 other plumbers. An analysis by the Senate Finance Committee found that of the filers in the highest two tax brackets, three out of four are small business owners. A typical firm with a net income of $500,000 would see its tax burden rise to $166,000 a year under the Obama plan from $146,000 today.

According to a Gallup survey conducted for the National Federation of Independent Business last December and January, only 10% of all businesses that hire between one and nine employees would pay the Obama tax. But 19.5% of employers with 10 to 19 employees would be socked by the tax. And 50% of businesses with 20 to 249 workers would pay the tax. The Obama plan is an incentive to hire fewer workers.

Tax credits as an incentive to hire more makes little sense and provides no relief. Raising marginal tax rates on farmers, ranchers, sole proprietors and small business owners is no way to stimulate the economy and will not create jobs. The Obama plan will discourage small businesses from expanding and hiring more. Taxing and redistributing income from one group to satisfy another group is a model for Socialism and that’s a fact.

Sock it to me. Indeed!

See also: Obama, Tax Cuts or Welfare?