How Do We Pay for Iraq?

I got one of those viral emails that are going around, this one on taxes. It’s full of lies and fudging, is written in funny type and large letters and on a sixth grade reading level. I get these things all the time, usually don’t read them. But I should – this is where the business of the country is going on – it’s an incubator for public opinion.

Here’s are just a few excerpts:

Capital Gains:

MCCAIN: 15% (no change)
OBAMA: 28%
CLINTON:24%

How does this affect you? If you sell your home and make a profit, you will pay 28% of your gain on taxes. If you are heading toward retirement and would like to down-size your home or move into a retirement community, 28% of the money you make from your home will go to taxes. This proposal will adversely affect the elderly who are counting on the income from their homes as part of their retirement income.

Most people don’t have capital gains, though mutual funds often make capital gains distributions that affect small investors. The wealthy set has always been big on this – the type of income that they receive should be set aside and treated different than the type of income that ordinary people receive. Heritage Foundation and Cato Institute, funded as they are by wealthy patrons, each has servants on staff that will vouch for this – income that wealthy people receive is far too important to all of us to tax at regular rates.

The question is, do we let the Bush tax cuts expire and go back to the way we did things before the massive deficits that the cuts engendered? That’s an odd thing about right wing ducks – they talk about taxes on one hand, ignore deficits on the other. That’s far too complex for a viral email.

The part about paying capital gains tax on the sale of your home is a lie. The first $250,000 of gain ($500,000 for a married couple) is exempt from tax. Surely the person who wrote the email, probably somewhere in the depths of RNC headquarters, knew this, but in emails the truth is both incidental and inconvenient.

DIVIDEND TAX

MCCAIN: 15% (no change)
OBAMA: 39.6%
CLINTON: 39.6%

How will this affect you? If you have any money invested in stock market, IRA, mutual funds, college funds, life insurance, retirement accounts, or anything that pays or reinvests dividends, you will now be paying nearly 40% of the money earned on taxes if Obama or Clinton become president. The experts predict that “Higher tax rates on dividends and capital gains would crash the stock market yet do absolutely nothing to cut the deficit.”

Where to begin. One, allowing the Bush tax cuts to expire will not up the tax on dividends to 39.6%. That’s a lie. They would be taxed at normal rates starting at 10-15%, which is where low income people reside. Pensioners mostly fall in those rate brackets. It is true that if the Bush tax cuts expire, the wealthiest among us would pay tax at a top rate 39.6% instead of 35% on the last dollar earned – this is people who have taxable income of around $350,000 – and this is the group that the people who wrote the email seeks to protect.

Also, the experts who predict a stock market crash if the tax on dividends is put back at normal rates are again Heritage and Cato, servants of wealth. And retirement accounts are not taxed on dividends or otherwise. That’s a lie. Life insurance “dividends” are not income and are not taxed, and retirement accounts are not taxed until money is withdrawn, and then as ordinary income. (Dividends and capital gains received by ordinary 401K and IRA investors receive no special treatment now, and would not under McCain.)

INHERITANCE TAX

MCCAIN: 0%
OBAMA: keep the inheritance tax
CLINTON: keep the inheritance tax

How does this affect you? Many families have lost businesses, farms and ranches, and homes that have been in their families for generations because they could not afford the inheritance tax. Those willing their assets to loved ones will not only lose them to these taxes.

One, it is the “estate” tax, and not the “inheritance” tax, which sounds like it affects ordinary people, and two, only the very wealthiest people in the country, like Dennis Rehberg, have to pay it. But isn’t it interesting how they frame this as an issue that affects everyday Joe? Sneaky, eh?

NEW TAXES BEING PROPOSED BY BOTH CLINTON AND OBAMA
* New government taxes proposed on homes that are more than 2400 square feet
* New gasoline taxes (as if gas weren’t high enough already)
* New taxes on natural resources consumption (heating gas, water, electricity)
* New taxes on retirement accounts
and last but not least….
* New taxes to pay for socialized medicine so we can receive the same level of medical care as other third-world countries!!!

Notice how the email suddenly became vague? No more specifics. That’s because every single word in the last part is either made up or wildly exaggerated. Someone at RNC had an important appointment or something and had to quit work early and just slopped together some random lies to complete the email.

But that’s how it works in viralville. There are no rules.

And it leaves me with a question – something I find perplexing about the right wing. You gave us Iraq, but no way to pay for it except to borrow from our grandchildren. Shouldn’t you guys who are so willing to spend tax dollars be willing to pay them?