BusinessWeek: Facetme with Barack Obama, April 3, 2008

[Political Heretic]

I always remember an off-hand comment that I heard Noam Chomsky make once, about how if you really want to get the truth from the media, you ought to read financial publications.

In that same spirit, I link to this interview with BusinessWeek. I really didn't want to put it in GD: P because I'm not looking at it as part of the campaign fodder. In fact, I don't even have commentary about it. It's simply good, issue focused information. It's a chance to see Obama responding to the concerns of business interests. Some will like it, some won't.

I present it for informational purposes.

Facetime with Barack Obama
In conversations with Maria Bartiromo, the Presidential hopeful talks about his plans for taxes and charges that he lacks experience

by Maria Bartiromo
Barack Obama is arguably the most sought-after person in America—with the possible exceptions of soccer star David Beckham and Kristen, the call girl in the Eliot Spitzer scandal. So trying to secure an interview on the economy with the senator is about as easy as getting 15 minutes with Alexander Hamilton. Finally on Mar. 27, after Obama delivered an address on the economy in New York, I sat down with him and asked him to plug some specifics into his grand plans for change. Then we talked further by phone on Apr. 2. What appears below is an edited version of both those discussions, including portions of the initial interview that aired on CNBC. Since we first talked, the calls for Senator Hillary Clinton to stand aside and cede the nomination to Obama have grown louder. But as of press time on Apr. 2, the bruising contest showed no signs of ending.

(Questions in the interview include, defending proposed capital gains increase, defending top marginal rate increase, etc.)
http://www.businessweek.com/magazine/content/08_15/b4079017876246.htm?campaign_id=rss_daily

[RUMMYisFROSTED]

1. Short article. Takeaway:

Disagree with cap. gains increase. It should be identical to income tax rate.

39% is too low but if loopholes are closed it's a start.

Middle class tax cut is ok but FICA cap must be taken off completely.

Big thumbs up on mort. deduction

[Political Heretic]

2. Can you explain rationale on the cap. gains increase disagreement?

Identical to income tax rate, so you mean it should be much higher than it currently is on the upper class? Or did you have something else in mind.

Can you quickly explain freaking FICA to me again... I never keep this in my head. :(

39% -- if loopholes were closed you could actually have a rate much lower than this that would still effectively represent a major increase in federal revenue. I don't have the report up (but its saved on my drive) but the average "effective" rate paid by the fifth quintile is something like 10%.... something like that. I can dig up the specifics, but the data is from a GAO report from 2004, so slightly dated.

[RUMMYisFROSTED]

3. Disclaimer: Not an economics expert. All values are estimates, as I think I know them.

Terms and past/current conditions

Capital gains= profit on the sale of an asset
FICA= Federal Insurance Contributions Act; SS and Medicare tax on your paycheck, shared by employer
Income Tax= progressive(?) tax on income

Capital gains are currently taxed at 15% after one year. Income is taxed at a top rate of 28%.
The top income tax bracket used to be 90+% under Roosevelt.
Kennedy cut it to 70% and closed some loopholes. Effectively a tax increase.
Reagan cut it to 28% over his 2 terms but doubled the FICA tax. A tax increase for the poor, mc; decrease for the rich.
Clinton raised it to 32%. A mild increase on the wealthy.
Chimp reduced it back to 28%. An increase on the poor, mc and a decrease on the wealthy.
Corporate taxes are maxed at 15%.

The FICA tax was capped at 92,500 under Clinton and it is adjusted for inflation.
The FICA tax is currently capped at 104,000 under Chimp. All income over $104K is not subject to FICA.

(Making me work!) :)

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My point is that cap. gains should be treated the same as any other type of income. (Imagine it: Fairness!)
My point is that all loopholes should be closed except the mort./personal exemption deduction.
My point is that 39% is too low of a top bracket- it allows unnecessary accumulation of wealth.
My point is that FICA is an unfair burden on the working class.
My point is that corporate taxes should be treated at the same rate as income taxes. See: cap. gains.
Ultimately, a flat progressive tax. No loopholes.

(I'm sure I missed something)

[Political Heretic]

4. Awesome, thanks!!