• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • Do Partisan Politics Spell Tax Hikes?

    One of the most pressing pieces of legislation that the lame duck Congress must deal with is the impending expiration of the 2001 and 2003 tax relief.

    Led by President Obama, the Democrats have long argued for extending the tax relief for families making less than $250,000 a year while raising taxes on those families and small businesses that earn above that arbitrary threshold. Despite election results that clearly show that Americans do not want tax hikes, even if they are just on “the rich,” Democrats have devised a new strategy to do just that.

    Their new plan, according to Politico, is to raise the threshold of what is “rich” from $250,000 of annual income for a family to $500,000 or $1 million. The second stage of the plan is to permanently separate the middle-income tax cuts from the tax cuts for the rich. They would do this by permanently extending the tax cuts for middle-income taxpayers and only temporarily extending them for the rich.

    The purpose of this new strategy is to make it easier for Democrats to raise taxes in the future. As the thinking goes, families and small businesses making more than the new threshold will be less sympathetic than those making above $250,000, so raising their taxes will be easier politically. By doggedly pursuing a policy of class warfare for perceived political gain, Democrats are oblivious to the fact that no matter where the threshold of “rich” falls, soaking high-earners with higher taxes hurts us all.

    Research from The Heritage Foundation’s Center for Data Analysis shows just how badly tax hikes on the rich will hurt Americans down the income scale. If Congress were to pass the Obama tax hikes, the economy would produce about 800,000 fewer jobs through 2019. That would be 800,000 Americans needlessly out of work due to an unnecessary tax increase. The vast majority of these folks are not rich by any definition.

    The Obama tax hikes would also cause incomes to fall by more than $700 billion over the next 10 years because of the slower economic growth. That is an income reduction of more than $6,000 for every household in America.

    The argument that President Obama makes frequently—that tax hikes on the rich are necessary to close the deficit—holds no water. If President Obama and his supporters were intent on reducing the deficit by raising taxes, they would not just single out the rich for higher levies. As the chart to the right shows, the middle- and low-income tax cuts reduce revenue considerably more than the high-income relief by a ratio of almost four to one.

    In his weekly address Saturday, President Obama said the message of the election was clear that voters are “fed up with partisan politics and want results.” It seems President Obama’s conception of compromise is the same as it was for the stimulus, health care, and a host of other issues: He has his plan. The Republicans have theirs. Compromise consists of Republicans abandoning their positions and submitting to his.

    The President needs to finally realize that a majority of the American people and a majority of Congress (including many members of his own party) have rejected his tax hike plan. They want to see the tax relief extended for all taxpayers. To get it done, President Obama must adjust his one-sided conception of bipartisanship. The big question is if the President is capable of accepting compromise that doesn’t consist of him getting everything he wants. The fate of the economy depends on him doing just that.

    Posted in Economics [slideshow_deploy]

    19 Responses to Do Partisan Politics Spell Tax Hikes?

    1. Bobbie says:

      Obama speaks as though, for Americans? America? He speaks for immigrants legal and not, socialists, welfare recipients, his chosen and he leads like third world leaders. It's funny he doesn't give up for the sake of personal sacrifice for the good of the country, but he'll watch with delight as his select go done while those that could stand on their own, continue to hold his hand of government. It must stop. Businesses with opportunities need to flourish with low taxes and no extensive government intrusion.

    2. Pingback: Higher Taxes Looming in Lame Duck | RedState

    3. Pingback: Higher Taxes Looming in Lame Duck

    4. AWM -NW Indiana says:

      Those in our unofficial "focus group" have been predicting such a move, since the day the magic $250k figure was delivered from on-high by The Man himself!

      We figured he would at minimum double the number- and base it on nothing more than a "feeling" that it defined The Rich.

      Of course, he is assuming that those of us making slightly more than that initial $250k, would breath sighs of relief, and say, "Yes! Those are the people who are REALLY rich- not us!"

      Of course, there will be a small number of people who will do so- but the vast majority of us believe in some things which typically seem to escape the left: like principle, honor, character…….

    5. Rick74 says:

      If a tax hike is needed … then pass a bill to institute a tax hike.

      The idea of passing tax legislation that "sunsets" with rates returning to previous levels is ludicrous. The games that have been played with the "Bush tax cuts" and with the "death tax" have gone on too long, have fostered a continuing class warfare, and have wasted time that should have been devoted to real legislation.

      Tax hikes and tax cuts – Make each bill proposing a tax hike or cut "permanent" or describe it as "supplemental" and attach it for a particular purpose.

      Tax rate adjustments – Make each rate adjustment "permanent" – period.

      A rate adjustment could then only be addressed/changed by a new bill proposing a new adjustment. Wheter the rate change is up or down would not matter.

      We need more transparency in Congress, and more realism.

      Using "real" numbers vice "projected" numbers would help.

      Using "hard" or "permanent" tax changes would help even more.

    6. David Bialczak, Sant says:

      The third sentence of the sixth paragraph starts out "As the chart below shows,"

      where is the chart?

      Thank you

    7. Jill, California says:

      There's another point that most folks are ignoring. Raising taxes on the so-called rich will ultimately result in those taxes being passed on to the middle class.

      People who own small businesses cannot absorb those losses alone. They will be forced to raise prices for their goods and services. Thus those of us in the middle class will be forced to pay higher prices for the things we need, so our standard of living will go down.

      Already we're seeing the cost of many things, from food to health insurance premiums to anything else we can imagine, increase 10% to 15%. But our salaries aren't increasing proportionately. Some people are being forced to take pay cuts instead. We're falling further and further behind every day. Taxing the so-called wealthy, many of whom are small business owners, will merely accelerate our dilemma.

    8. Daniel says:

      All of this information is based on Heritage Research alone. It's all Conservative opinion and most of it is just pulled out of thin air. Sources? Credible sources?

      8.9 percent of small business have incomes over $250,000. Your providing broad statements like "small business will be effected by raising taxes on $250,000" That is just simply not true. It's a lie.

      Taxes for $200,000 individual and $250,000 will go up around $7,500 for household and $6,000 for individual, and that's before they use business or personal deductions. In reality, high income earners will not feel anything, and if they did, it's around $15 dollars a day. They will adjust just as they did from 1992-2000.

      Pro growth policies? Where? When? Exactly what jobs did the tax cuts create?

      When tax rates were at the 2nd lowest since 1952(where they will be if we let them expire), when Clinton was President, I seem to remember 23 million jobs created. Besides, what business is hiring right now with the tax cuts? Most are recording record profits and still not hiring.

      1.9 trillion has already been ripped from federal revenue with another .6 trillion in interest from Bush tax cuts. If we let them extend, it will be another 3 trillion by 2016. That's 5.5 trillion. Bush Tax Cuts are a huge percentage of the current deficits and increase to the national debt whether you refuse to believe it or intentionally forget.

      Sorry guys, you cant have two wars, tax cuts for the rich that double the cost of everything Obama and Democrats have passed so far, and expect it to cost nothing. Conservative policy and the previous Administration own our nations debt just as much as Obama and Democrats do. Heritage, all it's bloggers and moderators own this debt too(you voted for these policies and don't forget it.

      What programs will you cut?

      How do you keep the tax cuts and lower the deficit?(if you can answer that I will join conservatives), otherwise I will stay in my opposition to 30 years of tangible failed conservative policy.

      Trickle down, supply side, reaganomics, vodoo economics are all political lies. I just love Heritage bloggers with all the partisan broad opinions.

      Fox News and conservative media decided the election on November 2nd and the people got shamed. Now that you guys have the house, you got 18 months to fix everything….GO!

    9. Dr dbiggs.CA says:

      Pres OBOZO: "Tea Bagger-in-Chief"

      You Can LIE but can you READ?

      Invasion by illegal ie "Criminal Aliens"

      Obviously you have never read the United States Constitution or

      else feel that in your ivory tower and wealth that it does not apply to you!!

      I feel you need to read the following and act according to the peoples wish

      not your wishes or special interests wish list!

      There are three references to the words "invasions," "invaded," and

      "invasion" in our U.S. Constitution:

      Article I, Section 8: "The Congress shall have Power To Provide for calling

      forth the Militia to execute Laws of the Union, suppress

      insurrections and repel Invasions."

      Article I, Section 10:"No State shall, without the Consent of Congress, lay any

      Duty of Tonnage, keep Troops, or Ships of War in time

      of Peace, enter into any Agreement or Compact with

      another State, or with a foreign Power, or engage in War,

      unless actually invaded, or in such imminent Danger as

      will not admit of delay."

      Article IV, Section 4:"The United States shall guarantee to every State in the

      Union as Republican Form of Government, and shall

      protect each of them against invasion, and on

      Application of the Legislature, of of the Executive (when

      the Legislative cannot be convened) against domestic

      Violence."

      Your Oath of Office and sworn duties as referenced mean you must Act and

      put a Stop to the Invasion of all the Illegal immigrants we are experiencing.

      Our U.S. Constitution mandates that invasions shall be repelled by Congress.

      and that means the persons in the House of Representatives and the U.S.

      Senate. Our nation's sovereignty must be protected.

      How can you even stand in front of a mirror and even look yourself in the eyes

      knowing you are a "Bought & Paid Hoe" for special interests and the

      Democratic Party Hacks? Tell me I am wrong, please because I fear for the

      future of our country as you certainly don't care about the people or our

      country!!

      You go to the SAME PLACE for LYING as you do for STEALING!!

    10. Brad, Detroit, MI says:

      Jill is right on the money. Taxes on anything – corporations, profits, fuel, sales tax, – you name it, are never "absorbed" by the recipient of the tax hike. Do you think gas stations don't simply pass on gasoline taxes right to the consumer ? If you tax the wealthy and small business owners, they have less money to invest, spend and otherwise employ other people. It's all about the economy stupid ! Stop the wasteful spending and let a couple of the states that have real spending problems (NY, CA, MI to name a few) to go bankrupt so they can break their onerous public union contracts. Who ever heard of getting sweetheart retirement packages after 20 years of work ? Not in the real (private sector) world.

    11. Zack says:

      So now you have basically decided to shut me out 100% Your cowards. Even Mike Church made fun of Heritage today. Ensuring 700 billion defense budgets from here on out? Are you cowards insane! This is for Heritage and its moderators" FUCK YOU. You are all un-american liars that are out to make money off fear mongering. You will be held accountable for your actions. If you conservatives want a war, you got one coming. Just remember what happened the last time racist, white trash, redneck, bigoted, lunatics tried to take down the federal government- you got your ass kicked. Your not wanted here. Conservatism is dead. Your policies have already failed. Your losing. Im embarrased to be in the same species as you animals. Fuck you.Take care:)

    12. Bill, California says:

      Brad, while it may be true that public employees in Michigan can look forward to a sweetheart retirement after only 20 years, but that's not the case in California. As a County employee, our retirement is a 2% at 55 which means after 30 years of service, you will received 2% x 30 years = 60% of your single highest paid year. If you were making $3000 a month while working, you could look forward to $1800 a month retirement pay for the rest of your life. Not exactly what I would call a sweetheart deal. Yes, I work hard for my county and yes, I only make $3000 a month after 27 years!

    13. gene Alaska says:

      Sorry Jill your California comments dont work. The left is in control in Calif. and your bankrupt, the right is in control in Texas and they are booming. Reagan tax cuts created a 30 year boom to the economy. The Democrats created the housing disaster and G W Bush warned congress and congress ignored him. The left wants a dictatorship and they will destroy the country to get it. They dont understand the True American will never allow it to happen.

    14. Daniel says:

      Gene, so many broad statements I don't know where to begin.

      Please clarify how "Democrats created the housing disaster and G W Bush warned congress and congress ignored him"

      and how the "Reagan tax cuts created a 30 year boom to the economy"

      -both comments could not be farther from reality.

      The rest is just funny, but please explain both comments. Anyone else on this blog care to answer for Gene if he can't? Curtis? Brad? Bill?

      Please explain, it would make my day!

    15. Keating Willcox - Ha says:

      First, tax rates and tax increases are not identical. As soon as we choose not to have a flat tax, then it is ok to have taxes based on income. It is obvious to me that we need tax bracket(s) well over what we now have. A family making $250,000 is quite different than a family making $5,000,000 and the tax rates should recognize that. But, this does not imply a tax increase, as you can adjust all rates to be revenue neutral.

      All taxes should encourage employment growth. The Congress should immediately amend tax laws, health care obligations, and regulations so that if you are starting a business, we give you every possible chance to succeed.

    16. Keating Willcox - Ha says:

      California is way more generous to its many employees compared to other states, and California is way more generous to its welfare clients. If Ca wants to return to sanity, it must limit welfare by insisting on employment for the able bodied. It must insist on lower wages for new government hires. It must insist on a greater reliance on internet based distance ed before advancing to college or junior college. It must end initiatives for big projects like solar energy or high tech business.

      While they are at it, they will need to shore up infrastructure, and they need a massive increase in police and prison resources. Like NYC, they should adopt a massive increase in police street frisks to restore order to the massive barrios. All prisoners should be forced to do almost continuous distance ed, or live in solitary.

    17. Pingback: When “I Can” Becomes “You Must” « Hot Air

    18. xfactor says:

      "Sources? Credible sources?" – Daniel

      You ask for sources, even credible sources, then provide not 1 yourself.

      What Clinton policy created those 23 Million jobs? How many were from the dotcom boom?

      How does a Tax Cut, giving people who have already earned that money back to them, create a deficit?

      National Debt up $3,214,089,190,140.70 Trillion since obama took office 20 JAN 2009

      Why would anyone hire now when they don't know what their Tax rate will be? The cost to provide forced obamacare?

      You even old enough to remember the carter years? Clinton enjoyed those low Tax rates due to the Reagan Tax Cuts that created over 16 Million jobs which you can verify at http://www.bls.gov/

      The Tax Cuts for the rich fallacy? The Bush Tax Cuts were across the board Tax Cuts and they helped create over 4.598+ Million jobs while Republicans controlled the 107th, 108th and 109th Congresses.

      "How do you keep the tax cuts and lower the deficit?(if you can answer that I will join conservatives" – Daniel

      First off, what do Tax rates have to do with the deficit? Stop spending will lower the deficit, regardless if the Tax Cuts are kept.

      If you go out to eat and your bill is $15.58 and you hand the waitress a $20 dollar bill, is the $4.42 you get back a defcit? Did your National Debt increase?

      How would Republicans controlling the 112th Congresses House lead you to believe that they could fix what's wrong without Democrat bipartisian support?

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.

    ×