Analysis of President Obama's proposed tax policy

     In this post, I will take a look at the tax policies that President Obama is positioning as a candidate for a second term as President of the United States.  As I have done in my previous posts, this will be an analysis from a realist perspective.  With that being said, let us begin looking at what exactly the tax policy would be. The positions that are being shown can be found here.  Additionally, this shows the power of the bully pulpit that every president enjoys, as President of the United States (POTUS) can utilize multiple media platforms in order to inform and persuade the American public.

•  Lower tax rates
    The first policy in President Obama's tax policy is "the tax system should be simplified and work for all Americans with lower individual and corporate tax rates and fewer brackets."  This is by far an idealistic, and honesty a simplistic way of attempting to address what is currently a major dialogue point in American politics.  Any candidate, regardless of party,  can attach themselves to a lower tax rate pledge.  The difficulty now is how do you attempt to keep taxes low, while at the same time expanding the spending required by the federal government.  Again, the same issue that plagues Governor Romney's plan as shown in my last post, is here as well.  The simple, realistic, and quite honestly, obvious issue is that attempting to maintain any level of spending without either (a) changing mandatory spending laws, or (b) raise the tax rate to support the current spending requirements, is untenable in the short and long term.
•      Cut inefficient and unfair tax breaks.
       This portion of the President's plan is also overly idealistic.  The use of terms like "fair" and "unfair" creates an immediate spearation in the society.  As stated in the proposal, "cut tax breaks that are inefficient, unfair, or both so that the American people and businesses spend less time and less money each year filing taxes and cannot avoid their responsibility by gaming the system. This includes cutting tax preferences for high-income households; eliminating special tax breaks for oil and gas companies; closing loopholes for investment fund managers; and eliminating benefits for corporate jet owners."  The last statement is one that does nothing to actually address the issue of cutting inefficient and unfair tax breaks.  A more realistic approach would be to state that tax loopholes would be closed to ensure that businesses are unable to not pay the current tax rate.  In this way, there is clear cause and effect.  This is the point of dialogue, not to set an idealistic view that somehow all people feel that there are those that have and those that have not.  To do so does not address the issue at hand, that of spending and tax revenue.
•      Cut the deficit.
       The President's plan says it wants to "cut the deficit by $1.5 trillion over the next decade through tax reform, including the expiration of tax cuts for single taxpayers making over $200,000 and married couples making over $250,000."  This is the first portion of the plan that comes close to passing a realist view point.  From this, it is easier and more identifiable to see how the President views deficit cutting in light of current tax law.  To allow the expiration of tax cuts, as stated above, is not fully accurate.  In fact, the tax cuts had a greater impact than just on those making over $200,000.  The chart linked here does a great job of explaining that.  If it is just a matter of letting those tax rates revert back to their previous levels, it is a true statement that the government will gain more funds to spend.  This may be the most realistic approach to increase the coffers while not creating any new taxes.  No whether or not Congress has the political will to do so is another issue entirely.
•      In this preliminary analysis, it is obvious that these policies are overly idealistic in their nature.  Perhaps the most difficult question either candidate will have to answer will be, how do you maintain federal spending while not increasing or changing the tax rate?  In my next blog post, I will analyze the last two points of President Obama's tax policies.