I posted below the Fox report on how Obamanomics would mean that nearly 50% of all Americans would pay no income taxes. Now this via Hotair. McCain’s plan would do just about the same thing. No this is not good for the same reasons stated below. But there is a distinction. Here’s the relevant portion from the Tax Foundation:
Both the McCain and Obama plans would increase this number by expanding existing tax benefits or creating new ones. Senator McCain is proposing one expanded provision—the dependent exemption—and one new credit, a $5,000 refundable health care tax credit. The Obama plan contains seven new provisions, including a new “Making Work Pay Credit,” a “Universal Mortgage Credit,” and a plan to eliminate income taxes for seniors earning under $50,000.1
Taken together, the Tax Foundation estimates the McCain proposals would increase the number of nonpayers by about 15 million, bringing the total number of taxpayers who pay no personal income taxes to 62 million, roughly 43 percent of all tax filers. Almost all of this is due to McCain’s health care credit, which dramatically realigns health care incentives and gives people a powerful motive to buy health insurance. This tax provision has a bigger impact on cutting people’s taxes than any single proposal from either party.2
Obama uses a longer list of smaller tax credit ideas to reduce a similar number of taxpayers’ liability to zero. About 16 million people who are currently paying at least a little income tax would see their liability zeroed out, bringing the total to 63 million, or 44 percent of all tax returns.
There are major distinctions between the two plans. The largest part of McCain’s plan would use fiscal policy to put power back into the hands of the people and this the market, the tax credit for health care. This is in itself a good thing. But what the authors are saying is the tax credit would be so large that for many it would essentially eliminate all tax liability for many.
Meanwhile the Obama plan does nothing to put power back into the hands of people but rather becomes a grab back of transfer payments for everything from college, to health care, to a universal mortgage credit.
Still, none of this is good news for either government or the governed. When only a small percentage of the population are asked to contribute to the welfare of a nation, the nation becomes a welfare state funded by the few for the many. Fiscally, resources become ever more finite, even as spending spirals out of control. Remember, there is less fiscal responsibility on the part of anyone who spends OPM as opposed to their own. Psychologically, the nation becomes less entrepreneurial, less productive, standard of livings are likely to decline and I would envision a general largess overcoming a population of increasingly dependant on the state for its welfare rather than its own individual initiative.