Obama Tax: Is It as Good as "Proposed" to be!

Taxes are an area that affect everyone. From a part-time cashier at McDonalds to a large corporation like Deloitte, what happens with the tax rate and tax spending will impact us all. The new President of the United States, Barack Obama, is stressing a tax increase on the top two tax rates. This will affect those businesses who report more than $200,000 as individuals or $250,000 jointly. Businesses are looking at the President's opinion and aren't too happy with it, especially small businesses. But should they? Since only a low percentage of small businesses actually report that amount, shouldn't the rest of the small business population be OK? If we observe the fact that most small business owners earn a middle-class income, then we'll notice that those owners will actually benefit due to the fact that they will receive tax breaks anyway. Not only that, but it puts large multi-national corporations (MNCs) in their place as well. Most MNCs have locations in multiple countries and contain great knowledge on maneuvering around tax laws. Under the Obama plan, MNCs will no longer be able to receive tax breaks on jobs that are overseas.

If all of that is the case, businesses (particularly small businesses), should be happy with the new plan. But when has a tax rate increase been solely beneficial? All of these things come at a price. Although only a low percentage of small business owners report those income statistics above, the increased tax rate will now make them think about growing. If a small business begins to flourish and have to report numbers greater than those above, then that business is now in the line of fire from the tax increase. This removes the advantage of expansion and can persuade small businesses to stay small. In addition to that, the tax plan will place a limit on itemized deductions, preventing firms to receive full value.

Judging from both perspectives, it's hard to determine whether the tax increase is beneficial or not. I personally don't want an increased tax rate, but I don't make $200,000 either. What does concern me along the lines of the increased tax rate is that our President has now confirmed that more taxpayers money will be spent on human embryonic stem cell research. This is a major subject that has survived many former presidents. However, President Obama will increase the amount of spending, higher than it was under the Bush administration. As a tax payer, it is my duty to know whether my money is being put to good use. According to Dr. Charmaine Yoest of Americans United for Life, spending towards stem cell research is not the way to go. As she states, "Millions of dollars have been spent on embryonic stem cell research and it has failed. To pour more money into it is simply a waste." Is the increase in my tax dollars going towards a failed project? If so, that is where I begin to lean towards the side where tax rates remain the same or decrease. Either way, I do not want hard earned money to go towards a project that will not prove to be a success in my lifetime.

Sources:
1. PR Newswire. "Americans United for Life: Obama Administration Stem Cell Policy an Anti-Life Waste of Tax Dollars." PR Newswire. 9 March 2009. 9 March 2009 <http://sev.prnewswire.com/health-care-hospitals/20090309/DC8065909032009-1.html>.

2. Hoover, Kent. "Business Leery of Obama tax plans." Business Journal. 9 March 2009. 10 March 2009 <http://www.bizjournals.com/birmingham/stories/2009/03/09/daily7.html>.

3. Beach, Jim. "Multinational Companies." Lecture, Fall 2008.