Calling for a “rollback” of the tax cuts for “the wealthy” has been a populist mantra for President Obama and his allies in Congress. As with much of our president’s rhetoric, the gulf between his promises and reality is rather wide. The truth is that come January most Americans, not just the rich, will see their taxes increase. The folks at smartmoney.com have looked at what will happen when the tax cuts expire:
You may have been led to believe that only individuals in the top two brackets will face higher federal income taxes when the Bush cuts go bye-bye. Not true!Just a few months ago, it seemed like a safe bet that Congress would make a fix to keep the existing 10%, 15%, 25% and 28% rate brackets to help out lower and middle-income folks. That bet is now looking iffy.
Are you married? Your taxes are going up. A senior citizen with investment income? Your taxes are going up.
Their bottom line:
The Bush tax cuts don’t just offer tax relief to the wealthiest Americans. They offer it to just about anyone who pays federal income taxes.
The Democrat majorities in Congress aren’t simply contenting themselves by letting tax cuts expire, they are seeking new ways to tax the American public. The borrow and spend spree they have been on since January 09 is just the beginning of their plans for an ever bigger government. When President Obama came to office our national debt equaled 40% of our Gross Domestic Product(GDP), at the end of this year it will be 62%. The president’s budget blueprint calls for increasing the debt by a further $10-12 trillion over the next ten years. To pay for all this spending the Democrats have floated two ideas to find the revenue to pay for a government as big as their dreams.
The first is to enact a value added tax(VAT). This tax is very popular in Europe because being based on consumption, it’s paid by rich and poor alike. Dictionary.com has the following definition for VAT:
a tax levied at each addition of value in the processing of a raw material, the performance of a service, or the production and distribution of a commodity with each payer except the consumer reimbursed from payment at the next stage.
Their latest brainstorm has been dubbed the ATM tax. This is from The Hill newspaper:
One idea for raising taxes to pay down the debt is the bill introduced this February by Rep. Chaka Fattah (D-Pa.). His “Debt Free America Act” (H.R. 4646) would impose a 1 percent “transaction tax” on every financial transaction — whether paid by cash, credit card or any form of financial transfer, the only exception being transactions involving the purchase or sale of stock. Theoretically, everyone would pay one cent on the dollar for every such transaction in America every day — whether $3 million on a $300 million business acquisition, $300 on the purchase of a $30,000 car, or $5 on a $500 ATM withdrawal.
The Democrats are pushing this idea because it would represent a revenue bonanza for big government.
Using 2008 numbers as an example: There was $755 trillion in total transactions that year. If you deduct the exempted $312 million in stock transactions, that leaves $443trillion in new revenues
What it means for Americans is a quadruple tax whammy. Not only will your income taxes increase, you’ll be taxed an extra 1% on what’s left when you deposit your paycheck. Also, thanks to the VAT, everything you buy: food, shelter, transportation etc. will cost more, plus the 1% transaction tax.
President Obama promised to “spread the wealth around”, but what he’s doing with the aid of Congress is to spread the debt around. Very soon, it will be the incomes of the working and middle classes as well as the poor that gets “redistributed” to Washington D.C. along with those of the rich.
Speaker Pelosi is planning a very busy lame duck session after November’s election. Every member of Congress, whether they are on the ballot this Fall or not, should answer if they support passage of the VAT and ATM taxes.
Crossposted to http://fiscalwatchdog.blogspot.com