Sen. Barack Obama first let the mask slip about what his opinion on the role of taxes in America was at the infamous ABC News debate that had the nutroots claiming that Charlie Gibson and George Stephanopolous were GOP plants.
A quick refresher for those of you who don't remember it:
MR. GIBSON: Senator Obama, you both have now just taken this pledge [to cut taxes] on people under $250,000 and 200-and-what, 250,000.
SENATOR OBAMA: Well, it depends on how you calculate it. But it would be between 200 and 250,000.
MR. GIBSON: All right.
You have however said you would favor an increase in the capital gains tax. As a matter of fact, you said on CNBC, and I quote, "I certainly would not go above what existed under Bill Clinton, which was 28 percent."
It's now 15 percent. That's almost a doubling if you went to 28 percent. But actually Bill Clinton in 1997 signed legislation that dropped the capital gains tax to 20 percent.
SENATOR OBAMA: Right.
MR. GIBSON: And George Bush has taken it down to 15 percent.
SENATOR OBAMA: Right.
MR. GIBSON: And in each instance, when the rate dropped, revenues from the tax increased. The government took in more money. And in the 1980s, when the tax was increased to 28 percent, the revenues went down. So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected?
SENATOR OBAMA: Well, Charlie, what I've said is that I would look at raising the capital gains tax for purposes of fairness.
For Obama, taxes aren't necessarily a way for the government to earn money to provide for the common defense, etc. It's a tool to achieve a desired social restructuring.
This is a point the Wall Street Journal's William McGurn made in a good op-ed piece today.
In fact, the idea of fairness is at the heart of his whole economic argument. And he goes back to it in almost every public appearance.
He talks about it as a general theme: "It is time for folks like me who make more than $250,000 to pay our fair share."
He invokes it as a solution for Social Security: "[W]e will save Social Security for future generations by asking the wealthiest Americans to pay their fair share."
He points to how it guides his energy policy: "The first part of my plan is to tax the windfall profits of oil companies and use some of that money to help you pay the rising price of gas."
And he stuck to it on capital gains, even after ABC's Charlie Gibson noted that the record shows increased taxes on capital gains -- which would affect 100 million Americans -- would likely lead to a decrease in government revenues: "Well, Charlie, what I've said is that I would look at raising the capital gains tax for purposes of fairness."
Translated into ordinary English, what that means is that it doesn't really matter whether a tax increase actually brings in more revenue. It's not about robbing from the rich to give to the poor. Robbing from the rich will do, especially if it's done in the name of fairness.
The solid line in the nearby chart illustrates the effective marginal tax rate under Obama’s tax proposals (based on the authoritative “Preliminary Analysis of the 2008 Presidential Candidates’ Tax Plans,” published by the Brookings Institution/Urban Institute’s Tax Policy Center). These are the marginal rates in 2009 for a two-earner couple with two children—a college freshman and a 12-year-old receiving after-school care—under some specific assumptions. For comparison, the dotted line on the chart illustrates the effective tax rates under current law. The rates shown in the chart are not spelled out in the tax code; they are the result of giving and taking away tax breaks as the household’s income changes.
As the chart shows, Obama’s give-and-take tax policy results in marginal tax rates of 34 percent to 39 percent in the $31,000 to $45,000 income range for this family. That’s an increase of 13 percentage points or more from the current rates.
And here's the chart:
Obama, of course, has promised to cut taxes on the middle class. According to this, the middle class might potentially be a family of four making less than $25,000 a year. Or maybe not. At least in this scenario, it doesn't appear that anyone gets a cut.