Talking of "Bush tax cuts" at this point, as so many seem to do when discussing the change in tax policy set to go into force this coming New Years Day, is beyond absurd. What's coming on Jan. 1, 2011 is the Obama Tax Increase -- no less than the largest tax increase in our history, courtesy of a president who, last Tax Day, declared that working Americans should be "saying thank you" for the hefty check they had to write Uncle Sam in order to support the eternally vacationing president and his increasingly out-of-control federal bureaucracy.
At a time when copious amounts of smoke and mirrors are required to even create the illusion of an economic recovery in this country, the Obama tax increases are a disaster in the making that will drive the "progressive" knife further into the backs of the American working man and woman.
In their zealous, rigidly ideological desire to both fund their pet programs (like the $800 billion "porkulus" project) and lavish state trips and to punish the nefarious "rich" who dared to be successful in a country built on merit-based reward, the president and his party -- neither of whom are particularly perceptive when it comes to unintended consequences -- are setting up the working class not only for an increase in taxes, but a decrease once again in employment and profitability.
The Obama Tax Increases aren't, of course, limited just to those eeeevil "rich." Rather, they will directly affect every American who currently pays into our bloated federal system, and in more than one way.
Back in July, Americans for Tax Reform released an outstanding one-pager on what we can expect when the Obama Tax Increases kick in January 1. Here are a few highlights:
- 10% [income tax] bracket rises to an expanded 15%
- The 25% bracket rises to 28%
- The 28% bracket rises to 31%
- The 33% bracket rises to 36%
- The 35% bracket rises to 39.6%
The marriage penalty will be expanded and the child tax credit reduced, and "the capital gains tax will rise from 15 percent this year to 20 percent in 2011. The dividends tax will rise from 15 percent this year to 39.6 percent in 2011. These rates will rise another 3.8 percent in 2013" (ATR, same citation). Adding further insult and hardship to this is the return of the Death Tax, which is set to jump from 0 to 55%, meaning that over half of what you leave to your children when you die will go directly into Barack Obama and the Federal Government's pockets. It may be time to start hiding that inheritance cash under a mattress or loose floorboard, unless you really do wish to will Obama & Co. as many rounds of golf and $200m/day Indian vacations as half-plus-five of your legacy can purchase.
The ramifications of the Obama Tax Increases for working class Americans are not limited to money being directly lifted from their paychecks and investment returns by the federal government, though. The fact is, even if the tax increases on the low and middle income portion of the work force (arguable and elastic designations both) are done away with by a lame duck session of the Democrat-led 111th Congress, and increases are put in place only for the "rich," money -- and, worse, jobs -- will still be taken directly from working class Americans.
In June, economist Arthur Laffer wrote the following about the looming Obama Tax Increase:
...if people know tax rates will be higher next year than they are this year, what will those people do this year? They will shift production and income out of next year into this year to the extent possible. As a result, income this year has already been inflated above where it otherwise should be and next year, 2011, income will be lower than it otherwise should be.
Also, the prospect of rising prices, higher interest rates and more regulations next year will further entice demand and supply to be shifted from 2011 into 2010. In my view, this shift of income and demand is a major reason that the economy in 2010 has appeared as strong as it has. When we pass the tax boundary of Jan. 1, 2011, my best guess is that the train goes off the tracks and we get our worst nightmare of a severe "double dip" recession.
This was put much more casually and accessibly by Senator-elect Rand Paul (R-KY) on Tuesday night, when he responded to Wolf Blitzer's on-air inquiry about the wisdom of a tax increase "on only the wealthiest Americans -- those making $250,000 a year or more." Paul said (paraphrase), "We all make a living working for, or selling things to, 'rich' people," so taking more money out of their pockets directly affects the people whose livelihoods depend on that work and those sales.
Unfortunately, extravagant vacations and failed spending programs require capital -- and the easiest way for the current administration to gain that is to simply take more of it, at the point of a gun, from the people who currently have it.
As Nathan Wurtzel wrote Wednesday on Twitter, following the president's amazingly out-of-touch post-election press conference, "People who are scared of freedom bitterly cling to their government and spending" -- a play (albeit a true one) on the ivory tower president's campaign statement that when those wrong-headed, uneducated Americans "get bitter, they cling to guns or religion or antipathy to people who aren't like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustration."
Given the penchant this president and his party have already shown for thumbing their collective nose at the wishes of the American people (on the "stimulus," on Obamacare, etc.), and for referring to those who dare question their policies as "unpatriotic, "dangerous to our democracy" and "our enemies," it should be no surprise that the outcry of the citizenry, demonstrated both in protests and at the ballot box, would be swept aside by "progressives" who clearly believe they simply know better than everybody else what this country and its people need.