Redistributing Your Own Earnings Back to You
Last night, Barack Obama stated:
I think Exxon Mobil, which made $12 billion, record profits over the last several quarters, they can afford to pay a little more so that ordinary families who are hurting out there, they are trying to figure out how they are going to afford food, how they are going to save for their kids’ college education, they need a break.
Pretty much liberal boilerplate and it’s so unsurprising that one is inclined to just let it pass. But it does deserve a closer examination.
Obama thinks businesses–and note how he uses a mega-corporation instead of a more typical small business as an example–“can afford” to pay higher taxes. But ExxonMobil isn’t some benign entity that will fork over the money on it’s own. It is owned by someone, many people in fact, and it is they who will be paying higher taxes to support Obama’s plan. So who are the mysterious owners of oil companies, like ExxonMobil? Probably you.
Looking specifically at education, many of us are saving for college by putting money into a 529 savings plan, which is essentially a mutual fund designed to grow for the purpose of paying college tuition in the future. The same sort of mutual fund that has a stake in ExxonMobil, for instance.
So what’s the effect of Obama’s plan? He’ll raise taxes on public companies, which will reduce their earnings, thereby reducing the amount that average people as individual investors can accumulate on their own as they try to save for college. Further, Obama’s plan will then pass a portion of that corporate tax money–with all the efficiency of government–back to some of these same families as well as others who are not saving for college in this manner.
The net effect: people saving for college via a 529 will also be saving to put other people’s kids through college. Same with those of you saving for retirement via a 401(k) or a pension fund. And here you thought only the rich were going to pay their fair share. Ain’t redistribution grand?