Tuesday, October 28, 2008

Was Reagan Earned Income Tax Credit Marxist?

Are you getting stressed by these elections proceedings? It is one thing to be competitive and to want to win but it's another to be so dishonest as to start throwing all kinds of labels on your opponent. McCain-Palin is trying to make taxes the political football and they are playing on people's ignorance (lack of knowledge) to score political points.

McCain-Palin tried the paling around with terrorists but that didn't seem to have the desired effect. There is talk about everything except the problems we now face - record unemployment (750,000 lost jobs since January 2008), foreclosures, sub-prime mortgage crisis, public education, medicare, insurance premiums, college tuition and lack of leadership.

Now Obama is a Marxist, socialist because supposedly he wants to spread the wealth around. Wasn't it Ronald Reagan that implemented a tax policy that gave the working poor money back on their taxes? Wasn't this money taken from higher income earning Americans so that those at a lower income bracket could be given a piece of the American pie?

This was Reagan's trickle down economics, the Earned Income Tax Credit. Under Reagan and now Bush, the wealth has been re-distributed upwards towards the top 1% of the population. Does Palin-McCain have a label for this too? Here's one Robin Hood economic strategy or Cops and Robbers.

The Income Tax Act was enacted in 1862 and saw the establishment of the office of Commissioner of Internal Revenue. Now known as the IRS, it was the body that administered the collection of taxes, power to assess, levy and enforce the tax laws through prosecution and property and income seizures.

The Income Tax Act was established to support the Civil War and was based on the basic principles of graduated or progressive taxation and withholding income tax at source. At the time of the Civil War, a person whose income was between $600 to $10,000 per year paid an income tax rate of 3%. Those with incomes higher than $10,000 paid a larger rate.

As far back as 1913, the 16th Amendment to the Constitution made income tax a permanent feature of the U.S. tax system. This amendment gave Congress full legal authority to tax incomes of both individuals and corporations. What's more socialist than the State bailout of Wall Street to the tune of $750B, except that it is necessary to avoid a complete collapse of the entire banking system around the world?

With this legislation in place, there was a huge rise in annual internal revenue collections in the fiscal year 1918 which reached the billion-dollar threshold. By 1920, tax revenues had risen to well over $5.4 billion and by World War II with increased employment tax collections continued to rise even higher.

For McCain to grandstand on political platforms talking about spreading the wealth around is dishonest, deceitful or disingenuous because his tax plan is structured similar to Obama's Tax Plan, except who gets the tax breaks - examine the two proposals for yourself here.

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