The Market Center Blog

Center for Freedom and Prosperity Foundation

For Immediate Release
Wednesday, July 23, 2008
202-285-0244
www.freedomandprosperity.org
 

New Video Explains Economic Risks of
Senator Obama's Proposal to
Expand Social Security Payroll Taxes

(Washington, DC, Wednesday July 23, 2008) The Center for Freedom and Prosperity Foundation has released a new mini-documentary analyzing Senator Obama's proposal to dramatically expand the burden of Social Security payroll taxes. Entitled "Senator Obama's Social Security Tax Plan," the video explains that Obama's proposal would mean an increase of as much as 12 percentage points in the top marginal tax rate on work and entrepreneurship. Combined with the Senator's proposal to kill the 2003 income tax rate reductions, the United States would be saddled with a top tax rate of more than 50 percent, hurting America's competitiveness in the global economy. The video's narrator, Daniel Mitchell of the Cato Institute, warns that pushing tax rates up to French and German levels almost certainly means some degree of French-style and German-style economic stagnation.

Youtube link:  http://www.youtube.com/watch?v=ADdgmfVWAkM

Other Links to the video:  Google | Capitol Hill Broadcast Network

"This new mini-documentary explains why higher tax rates are not an effective way to address Social Security's huge long-run deficit," said Andrew Quinlan the president of CF&P Foundation. "The video publicizes the research of a former Governor of the Federal Reserve [mistakenly promoted to Vice Chairman of the Fed in our video script], who looked at the economic impact of higher tax rates and estimated that Senator Obama's proposal would reduce the private sector by about $5 for every $1 collected by government. No sensible person should support a scheme that would impose so much damage to collect so little revenue," added Quinlan.

The video focuses on the economic impact of Senator Obama's Social Security tax plan while avoiding any political commentary. Indeed, the narrator notes that Republicans also have some very misguided proposals and Dan Mitchell concludes by stating that "what matters is freedom, not whether there's a D or an R after your name."
 

Executive Summary of the Senator Obama's Social Security Tax Plan video:

In addition to several other tax increases, Senator Barack Obama wants to increase the Social Security payroll tax burden by imposing the tax on income above $250,000. This would be a sharp departure from current law, which only requires that the tax be imposed on the amount of income needed to "pay for" promised benefits. But more important, at least from an economic perspective, the Senator's initiative would increase the top tax rate on productive behavior by as much as 12 percentage points - and this would be in addition to his proposal to kill the 2003 tax rate reductions and further boost the top rate by 4.6 percentage points. This mini-documentary explains why a big tax rate increase on highly productive people would be very damaging to America's prosperity, especially in a competitive global economy. Simply stated, pushing top tax rates in the United States to French and German levels means at least some degree of French-style and German-style economic stagnation.

The followong is the link to other CF&P Foundation videos including Tax Competition Primer, Global Flat Tax Revolution, Cutting the U.S. Corporate Income Tax and a three-part series on the Laffer Curve.
Link: http://www.freedomandprosperity.org/videos/videos.shtml

Web Links to the Senator Obama's Social Security Tax Plan video:

Youtube
http://www.youtube.com/watch?v=ADdgmfVWAkM

Capitol Hill Broadcast Network
http://www.chbn.com/Clip.aspx?key=286E70021BBC7AD9

Google
http://video.google.com/videoplay?docid=3621561978081155891&hl=en

For additional comments:
Andrew Quinlan can be reached at 202-285-0244, andy@freedomandprosperity.org
Dan Mitchell can be reached at 202-218-4615, dmitchell@cato.org

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