Argument: A progressive tax policy and a cut in military spending are what America needs.

To pay for his government programs, Obama supports a progressive tax system, with higher taxes for the rich, and lower taxes for the middle class. The need for such a system of taxing the rich to pay for government services has grown since 1980, when income gains between the rich and the poor began to diverge at a faster pace. [1] Recent data shows this trend continuing: in 2011 the wealthiest Americans got richer while median income fell by 4%. [2] Despite these trends, the top marginal tax rate is at nearly an all-time low! [3]

Increasing tax on individuals who earn more than $250,000 and even more for multi-millionaires because the marginal utility of wealth is lower for the super-rich than it is for the poorer. In other words, a millionaire is not particularly worse off if he or she is worth $10 million instead of $15 million. $5 million when spent on welfare programs such as pensions, education, healthcare or housing produces vastly greater utility. We thus see how a progressive tax system ensures a more efficient management of wealth across the economy.

Obama proposes to rake in more government revenue by raising the top marginal tax rate and instituting the Buffet Rule (a stipulation in President Obama’s plan which would apply a minimum tax rate of 30% to individuals making over $1 million per year). Crucially, Obama plans to continue to cut taxes for the middle classes in order to increase their purchasing power and stimulate the economy. [5]

As the 2012 presidential election approaches, President Obama’s long-term focus has been primarily on decreasing the federal debt, estimated at about $15 trillion. Specifically, Obama’s plan, detailed on his website, targets tax loopholes for households with annual incomes over $250,000, via efforts such as the Buffet Rule, while simultaneously reducing taxes for middle-class families and small business owners. [6] In September, President Obama revealed a plan to reduce the deficit by about $3.2 trillion in the next ten years. [7] This will be achieved through an increase in taxation of the nation’s wealthiest, and cuts in spending to the armed forces – as Obama plans to end American involvement in Iraq and Afghanistan.

[1] Centre on Budget and Policy Priorities: “A Guide to Statistics on Historical Trends in Income Inequality”, March 5 2012, http://www.cbpp.org/cms/index.cfm?fa=view&amp;id=3629

[2] Nocera, Joe: “Romney and the Forbes 400”, The New York Times, September 24 2012, http://www.nytimes.com/2012/09/25/opinion/nocera-romney-and-the-forbes-400.html?_r=1&amp;

[3] Tax Policy Centre, http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=213 , accessed 8/10/2012

[4] The White House, http://www.whitehouse.gov/economy/buffett-rule , accessed 8/10/2012

[5] Politifact: “Barack Obama said he’s cut taxes for ‘middle-class families, small businesses’”, http://www.politifact.com/truth-o-meter/statements/2012/sep/07/barack-obama/barack-obama-said-hes-cut-taxes-middle-class-famil/ , accessed 8/10/2012

[6] Barack Obama Website, http://www.barackobama.com/taxes?source=primary-nav , accessed 8/10/2012

[7] The White House, http://www.whitehouse.gov/omb/budget , accessed 8/10/2012

Candidate 1: "Raising taxes for individuals with income over $250,000 will have a hugely detrimental outcome. This is because a huge number of small businesses are legally taxed as individuals. Raising taxes may be manageable for wealthy individuals, but small firms will be crushed by such huge tax increases proposed by Obama. The effects of this will be hard felt across the country, since small firms employ half of all private sector employees in the USA. [1] These small companies will see their investing and spending power vastly reduced and will lead to thousands of redundancies that will ensure the American economy remains stagnant! Low taxes are the key to economic growth, not high taxes and government spending.

[1] US Small Business Administration, FAQs, http://web.sba.gov/faqs/faqIndexAll.cfm?areaid=24 , accessed 8/10/2012"
Candidate 2: "Government spending of the level advocated by Obama will only lead to a handicapped economy riddled with inefficiencies.

The figures alone suggest that the Keynesian theory of increased spending stimulates growth and reduces unemployment is a myth. Despite trillions of dollars of spending from Obama, the US economy is stagnant and unemployment is higher than it was in 2008. [1] This happens for two reasons. First and foremost because high spending levels must be funded by high taxation levels that stifle individuals’ purchasing power and the private sector as a whole. Secondly, government spending generally causes higher inflation, meaning that the net effect of government spending in real terms is negligible, and only makes the system more inefficient! [2]

[1] Powell, Jim: “Why Government Spending Is Bad For Our Economy”, Forbes, 10/13/2011, http://www.forbes.com/sites/realspin/2011/10/13/why-government-spending-is-bad-for-our-economy/

[2] ibid"
Candidate 3: "A minimalist state enables a fairer and more competitive economy.

Romney believes the best way to improve society is not to spend huge amounts of taxpayer dollars on inefficient government programs, but rather to tax citizens less and allow free-market innovation to improve the quality of life in America. Low taxes are necessary to stimulate innovation and the growth of business because people and businesses are self-interested; they will only invest when they believe they will get the profits from their investment and lowering taxes mean that they will get more of the profit from their investment.[1] At the same time government is a poor manager of the economy because small numbers of people cannot calculate all the effects of central planning and the impact it will have on individuals choices, essentially the market is simply too complex for the government to master so the best option is to reduce government interference as much as possible.[2] For this reason, Romney’s policy preference of lower taxes is coupled with a proposal to cut spending on a wide range of social programs.

Romney also outright rejects the idea of “redistribution” of wealth [3], believing it is unfair to those who have worked hard to build businesses and establish their own well-being. The protection of private property is central to the American political system, and taking from one group of citizens to give to another violates the right of private property. [4] In addition to being unfair, it is impractical, as it creates a disincentive for business people to further increase their wealth by working and investing in businesses that would grow the economy and create more jobs.[5]

[1] Thurow, Lester C., “Profits”, The Concise Encyclopedia of Economics, 2nd Ed., 2008, Library of Economics and Liberty, http://www.econlib.org/library/Enc/Profits.html

[2] "Friedrich August Hayek." The Concise Encyclopedia of Economics. 2nd ed., 2008. Library of Economics and Liberty. http://www.econlib.org/library/Enc/bios/Hayek.html

[3] Becker, Kyle: “Mitt Romney: We believe in free markets and free people, not wealth “redistribution””, Independent Journal Review, September 19 2012, http://www.ijreview.com/2012/09/16615-mitt-romney-free-markets-and-free-peoples/

[4] Dorn, James A.: “Ending Tax Socialism” September 16 1996, http://www.cato.org/publications/commentary/ending-tax-socialism , accessed 8/10/2012

[5] Li, Wenli &amp; Satre, Pierre-Daniel: “Growth Effects of Progressive Taxes”, US Federal Reserve, November 2001, http://www.federalreserve.gov/pubs/feds/2002/200203/200203pap.pdf"
Candidate 4: "Tax cuts and spending cuts are necessary for growth.

With a national unemployment rate of 8.1% as of September 2012 [1], the United States economy has not recovered from the global financial crisis of 2008 and the recession that followed it. Governor Mitt Romney’s plan to cut taxes would lessen the burden on American citizens, and spur businesses and entrepreneurs to create more jobs.

Governor Romney advocates a Reagan-esque devotion to laissez-faire economics, arguing that with substantial tax cuts and limited regulation on private businesses, the economy will naturally grow. Mr Romney states on his website that he would reduce government spending from its current level, around $33,000 per household, to around $25,000, while maintaining individual tax rates but decreasing rates for private corporations. [2]

Regarding government programs, Governor Romney opposes President Obama’s spending, vowing to repeal Mr Obama’s healthcare act, saving the country around $95 billion, according to his website. He also has advocated cutting spending on social programs by 5 % (without touching national security spending) and pulling funding from the National Endowment of the Arts and Humanities, the Corporation for Public Broadcasting, and the Legal Services Corporation. Furthermore, he plans to save up to $100 million by reducing foreign aid.

The budget deficit will be reduced despite the proposed tax-cuts. This is because tax cuts will have a positive effect on growth, while the spending cuts and clamp down on loopholes and inefficiencies will also help cut the deficit.

Overall, Mitt Romney’s economic policies boil down to taxing less and spending less, allowing the free market to work uninhibited. As with Obama, Romney’s position on this issue reflects his broader beliefs about the problems facing America. His plan to eliminate Title X Family Planning funding, for example, draws quite publicly from his opposition to abortion rights. While, also like Obama, his main concern is lowering the national deficit and paying back the national debt, the ways he would go about it are very different from those of his opponent, and realistically would benefit very different types of Americans.

[1] Google Public Data, http://www.google.com/publicdata/explore?ds=z1ebjpgk2654c1_&amp;met_y=unemployment_rate&amp;idim=country:US&amp;fdim_y=seasonality:S&amp;dl=en&amp;hl=en&amp;q=us+unemployment , accessed 8/10/2012

[2] Mitt Romney Website, http://www.mittromney.com/issues/spending , accessed 8/10/2012"

Raising taxes for individuals with income over $250,000 will have a hugely detrimental outcome. This is because a huge number of small businesses are legally taxed as individuals. Raising taxes may be manageable for wealthy individuals, but small firms will be crushed by such huge tax increases proposed by Obama. The effects of this will be hard felt across the country, since small firms employ half of all private sector employees in the USA. [1] These small companies will see their investing and spending power vastly reduced and will lead to thousands of redundancies that will ensure the American economy remains stagnant! Low taxes are the key to economic growth, not high taxes and government spending.

[1] US Small Business Administration, FAQs, http://web.sba.gov/faqs/faqIndexAll.cfm?areaid=24 , accessed 8/10/2012
