I have some Republican friends who were online giving Obama's plans the old "Socialist/Communist" talking points. I wrote this letter and thought I would share it. If anyone has other points or corrections, please write them so I might be able to steal them.
President Elect Obama's Tax Plan returns the taxes on the top 5% (those making over $250,000/yr) to the 1990's level of taxes (40%). For those that still believe this is socialism or to use Obama's words, "to spread the wealth," this rate is far from the 97% during WWII, the 79% in 1936, 67% in 1918.
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These rates do not reflect what the upper class actual pays. I remember the 2004 election when President George W. Bush and Senator John Kerry released their respective IRS forms. Both candidates used loopholes and only paid roughly 11 -14% of their income in taxes. I believe the working classes (which I believe most of us would fall) pays 27%. I know I do not have the itemized deductions to get that rate lower than 25%. So, my percentage as a working class man is higher than the upper classes percentage.
"Spreading the wealth" can involve more than you are probably thinking. In 1980, it took only 4% of a working middle class income to send a teenager to college. Today that percentage has skyrocketed to 25%. How is America to keep the best jobs and innovation if we are not training our youth? We are currently producing 1/10 to 1/15 (maybe more now) the engineers that India or (not and) China produces.
"Spreading the wealth" to the health care industry may not be a bad idea either. To a country who rates lower than Cuba and has an infant mortality rate higher than most third world countries, something needs to change. After all, we are paying four times more for health care than next highest country who has a single payer system.
"Spreading the wealth" means giving someone who has an idea, the ability to earn an income from that idea. If people can't move because of concerns of debt or health care, then innovation will be slowed. When the bottom of income earners increase their standard of living, then Main Street does better. When Main Street does better, Wall Street does better. When Wall Street does better, the upper class does better and produces jobs to gain more wealth.
Following Reagan's original "Trickle down" theory, the upper class does better, but the incentive is not there to produce jobs. The upper class sends that money overseas to hide from the IRS. Trickle down has not worked and will not work.
The Laffer Curve may be a correct model, but when will we have moved far enough left to satisfy people. As the CBO staff explain, Few tax cuts create jobs, and fewer pay for themselves.