Cramer Supports Obama's Tax Hikes

     CNBC’s resident loose-cannon had been on a string of outstanding behavior. He criticized the government’s handling of Freddie Mac and Fannie Mae. He gave the media grief for overanalyzing the oil market fluctuations. And a year ago, he slammed the Federal Reserve’s monetary policy inaction.

      But on CNBC’s August 27 “Mad Money,” Jim Cramer bucked his recent trend and called for higher taxes for top income earners. In his “Mad Mail” segment, a viewer asked Cramer if Democratic presidential candidate Sen. Barack Obama’s plan to raise taxes on incomes higher than $250,000 and redistribute the money to lower income earners would be good for the economy.

    “If Obama puts more money in the hands of the majority of the consumers in this country (who make less than $250,000), won’t that be a big push for the economy, and in turn for stocks?” the viewer, “Laurence in Iowa,” asked.

     Cramer took the Warren Buffett/populist stance and said he’d be willing to pay more in taxes.

     “Everyone hold their ears here, okay – because I know this is going to sound really bad and very contrary, but if you make more than $250,000 maybe you should be paying a little more tax. I do, and I’m willing to pay,” Cramer said. “A lot of people make a lot less than I do and they should be paying less tax. I don’t know – that’s what Lincoln said. It’s Lincoln’s view, it’s my view.”

     The August 25 issue of Barron’s reported Obama’s plan would raise taxes on incomes above $250,000 – with the highest rate at 39.6 percent – and redistribute the wealth to the poor and middle-class. But that would be a big mistake, according to Jim McTague’s article in the financial newspaper.

     “It’s almost as if Obama wants to repeat the mistakes of Herbert Hoover,” McTague said. “During the Great Depression, Hoover raised the top marginal rate to 63% from 25% and hiked corporate taxes, too, says Michael Aronstein, chief investment strategist at Oscar Gruss & Son in New York. The moves siphoned needed investment capital out of the markets and into the hands of bureaucrats, delaying the turnaround.”