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Obama Tax Proposals (Mostly) Bad News
Posted By J.D. Foster, Ph.D. On February 26, 2009 @ 3:13 pm In Ongoing Priorities | Comments Disabled
President Obama’s budget document lacks the details necessary to judge fully his tax proposals. What we have are proposed streams of revenues over 10 years and short tag lines describing the proposals. A full assessment of his tax program will therefore have to wait. The initial impression, however, is that the President intends to carry through on his campaign promises to sacrifice future economic growth at the altars of redistributionism and nationalized health care.
For all liberals’ posturing in recent years, including by President Obama, about the irresponsible Bush tax cuts of 2001 and 2003, perhaps the least surprising aspect of the his tax proposals is that he would keep almost all of Bush’s policies. Consequently, on this count the President is protecting most Americans from a $2.7 trillion tax hike. To paraphrase a line that once described Hollywood – behind all that apparent phony posturing was some real posturing.
The President also seems to be abandoning the liberals’ fondest hope of restoring the Alternative Minimum Tax (AMT) to its full punitive glory. The AMT has been held mostly at bay in recent years, and liberals have tried to use the annual exercise to protect potential AMT taxpayers from a huge tax hike by raising taxes on other taxpayers. This, of course, made no sense and so the tax hikers were thwarted. While the provision’s full explanation is missing, it appears the President is proposing to maintain current policy, protecting against AMT tax hikes. This is good news.
Unfortunately, this good news is quickly and massively eclipsed by the bad news. Almost as if he set out to weaken the economy in the long run, he proposes tax increase after tax increase on savers, investors, small businesses, and upper-income taxpayers. In total, he is proposing over a trillion dollars in tax hikes levied on an average of less than 5 million taxpayers. In that these taxpayers already pay the vast bulk of the income taxes in the United States, asking for another $200,000 a person is adding insult to injury.
These, of course, are just the direct tax hikes on individuals. In addition, the President is calling for $210 billion in higher taxes on American companies trying to compete in the global economy, and $646 billion in cap and trade taxes (humorously labeled “climate revenues”) on American industry at home. These taxes will ultimately be paid through lower wages and dividends, and again through in slower wage growth as they reduce investment, productivity, and competitiveness of U.S. workers and companies.
President Obama’s policies are obviously well intentioned. But with good intentions like these, America’s workers don’t need enemies.
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