Obama Planning $310 Billion Tax Cut to Prime Economy

President-elect Obama is reported to be planning a $310 billion tax cut as part of his $700 billion stimulus program the WSJ reported tonight. The tax cuts would provide cash to both individuals as well as businesses.

The largest piece of Obama's tax cut plan would:

"...involve cuts for people who pay income taxes or who claim the earned-income credit. It would serve as a down payment on the "Making Work Pay" proposal Mr. Obama outlined during his election campaign, providing a credit to offset Social Security and Medicare payroll taxes of $500 per individual or $1,000 per family."

There are also several provisions for tax cuts for businesses, including allowing them to write off any losses from 2008 and potentially 2009, receive credits for hiring and retaining employees, and write-offs for investments, although the exact nature of those investments are not yet clear.

In terms of punch, the plan would have a bigger two year impact than George Bush's 10 year, $1.35 trillion tax cut of 2001. That plan would also be larger than the 10-year, $350 billion package passed by President Bush in 2003.

And therein lies the problem. At what point do we simply stop paying taxes altogether and close up shop? Since 2001, the government has paid an increasing amount to fund a huge growth in entitlements, war in Iraq and Afganistan, and now corporate bailouts of epic proportions.

Didn't the Bush tax cuts in 2001 and 2003 help get us into this mess? Aren't we still feeding off those cuts while planning to spend and cut some more?

One of the Greek philosophers (I believe it was Aristotle) didn't believe democracy was viable because he thought at some point, the citizenry would simply vote to stop paying taxes. It makes sense from an individual standpoint but not if you look at the welfare of a nation. I'm not saying we should raise taxes but at what point does the solvency of the country become a problem? I'm worried that one day we're going to wake up and find out that no one is willing to finance our debt anymore, just like Bear and Lehman and AIG. What happens then?

Wouldn't it make more sense in the long-run if we take the pain now and allow the market to straighten out our economy instead of artificially trying to resuscitate it? Shouldn't we let failed business models go under so that new innovative companies can come forward?