Written by Ryan Ellis, Tax Policy Director at Americans for Tax Reform. Posted with permission from Americans for Tax Reform.
What are the top ten tax hikes in President Obama’s new budget?
There are literally dozens of new tax increases in the FY 2014 Obama budget. In total, they increase taxes by nearly $1 trillion over the next decade. They would permanently bring the federal tax burden to 20 percent of economic output, a level only reached in one year since World War II (FY 2000, when the economy was roaring and tax revenues were pouring into Washington as a result).
Below are the top ten tax increases in President Obama’s budget (all numbers are over a decade):
1. Chained CPI. The budget would change the definition of inflation for all federal budget purposes, including federal tax provisions. Because tax brackets and other tax items are indexed to inflation, slowing down their growth is an income tax increase. This is a tax increase for all Americans who pay income tax, including middle class Americans. In the past, Congress’ Joint Committee on Taxation has estimated that enacted “chained CPI” would be a $100 billion tax increase
After a two-month delay and missing a legally-required deadline, President Barack Obama finally unveiled his budget for FY 2014. The spending plan is, unfortunately, just more of the same from this president:
President Obama’s 2014 budget calls for a trillion dollars in new taxes, almost twice as much as previously thought, The Washington Examiner has learned.
“Of the more than $1 trillion in new taxes, about $800 billion is raised through the individual income tax system, about $125 billion comes from new excise taxes — including new taxes on tobacco and financial companies,” a source familiar with the president’s budget explained. “The remainder comes from reverting back to the 2009 estate tax parameters and other miscellaneous tax increases.”
Despite the talk of deficit reduction, President Obama’s budget doesn’t substantially reduce spending and will never balance. The only constant in is the same, old class warfare rhetoric.
In a telling moment with reporters yesterday, Senate Majority Leader Harry Reid (D-NV), who voted for the sequester in 2011, said that the spending cuts should take place if no deal is brokered with House Republicans for more tax revenue:
Senate Majority Leader Harry Reid would support letting the $85 billion in across-the-board sequestration cuts take effect on Friday if Republicans don’t agree to increasing taxes as part of an alternative plan, the Nevada Democrat said on Tuesday
“Until there’s some agreement on revenue, I think we should just go ahead with the sequester,” Reid told reporters after a meeting with Senate Democrats.
Basically, the scare tactics haven’t worked. They’re not going to work. With that statement, Reid is admitting that everything — all of the fearmongering and brow-beating of Republicans — was just for show.
It looks like Senate Democrats, who have not passed a budget since April 29, 2009, are once again falling down on the job. Over at the Washington Examiner, Conn Carroll notes that they’re blaming the sequester for their failure to perform one of the most basic functions of government:
Well that was fast. Less than a month after Senate Democrats passed a debt limit hike that included a provision delaying their pay if they failed to pass a budget this year, Senate Democrats are already signaling that no budget should be expected.
“Senator Murray is working on a budget right now and we hope we can get that done,” Sen. Jack Reed, D-R.I., told CNN yesterday. “But we need time. So the sequestration will prevent — preempt us from getting a budget done and other factors.”
So don’t blame the Democrats if they can’t pass a budget. It’s the sequester’s fault. Never mind that Democrats never had any intention of passing a budget anyway. Pressed to commit to a budget in November, Senate Budget Committee Chairman Patty Murray, D-Wash., told The Hill she “had no idea” whether Democrats could come to an agreement.
Warren Buffett is back in the national news. With talks on the “fiscal cliff” heating up, Buffett is once again pushing for a “millionaires” tax (also known as the “Buffett Rule”) as bridge between some sort of comprehensive tax reform plan:
In an op-ed column in Monday’s New York Times, Buffett advocates that taxable income of between $1 million and $10 million should be taxed at a minimum 30% rate, and that income above $10 million should be taxed at 35%.
“A plain and simple rule like that will block the efforts of lobbyists, lawyers and contribution-hungry legislators to keep the ultrarich paying rates well below those incurred by people with income just a tiny fraction of ours,” Buffett writes. “Only a minimum tax on very high incomes will prevent the stated tax rate from being eviscerated by these warriors for the wealthy.”
Some have suggested comprehensive tax reform, which eliminates many deductions across the board and simplifies the tax code, would be the best policy for the economy. Buffett writes he supports such tax reform, but that he believes higher tax rates on the wealthy should be an interim step.
“The reform of such complexities should not promote delay in our correcting simple and expensive inequities,” he wrote in the Times. “We can’t let those who want to protect the privileged get away with insisting that we do nothing until we can do everything.”
Over the last year or so, President Barack Obama and Democrats in Congress have made a push for a new tax, dubbed the “Buffett Rule,” on the rich. The tax, which would ensure than anyone making over $1 million pays at least a 30% tax rate, wouldn’t raise a significant amount of money, but its supporters say that it’s needed as a matter of “fairness.”
While the Buffett Rule won’t pass Congress anytime soon, it looks like the United Nations has a plan of its own to tax the wealthy for programs to help the poor around the world:
The United Nations on Thursday called for a tax on billionaires to help raise more than $400 billion a year for poor countries.
An annual lump sum payment by the super-rich is one of a host of measures including a tax on carbon dioxide emissions, currency exchanges or financial transactions proposed in a UN report that accuses wealthy nations of breaking promises to step up aid for the less fortunate.
The annual World Economic and Social Survey says it is critical to find new ways to help the world’s poor as pledged cash fails to flow.
The report estimates that the number of people around the globe worth at least $1 billion rose to 1,226 in 2012.
There are an estimated 425 billionaires in the United States, 315 in the Asia-Pacific region, 310 in Europe, 90 in other North and South American countries and 86 in Africa and the Middle East.
Together they own an estimated $4.6 trillion so a one percent tax on their wealth would raise more than $46 billion, according to the report.
The Congressional Budget Office (CBO) warned back in May that failing to extend the 2001 and 2003 tax cuts would, in these very tough economic times, lead to yet another recession. Higher taxes would, according to the CBO, “discourage people from working and saving, further reducing output and income.” That would seem to most like a basic understanding of economics. Unfortunately, President Barack Obama is unconcerned and is leaving no one to believe that he is willing to make a deal to keep this from happening.
But another study shows that if taxes aren’t kept at current rates, that it will slow economic growth, taking the economy down a tumultuous path:
A new study released Friday shows that letting any of the Bush-era tax cuts expire will weigh heavily on economic growth and lead to millions of job losses, likely plunging the economy back into recession.
The report by the American Council for Capital Formation (ACCF) shows that if Congress fails to take any action and to address the so-called fiscal cliff, a combination of expiring tax provisions and automatic spending cuts, the economy will lose $855 billion from gross domestic product, more than 1 million jobs next year and up to 3 million in 2014 along with an average of $1 trillion in lost consumer spending.
Economic growth would drop by 2.6, 3.3 and 0.5 percentage points from 2013 through 2015.
On Monday, the Washington Post reported that negotiations had begun in Congress to deal with what has become known as “Taxmageddon,” when the 2001 and 2003 tax cuts expire. Even though it seems that the larger focus is tax reform, Conn Carroll notes that no one should bank on President Barack Obama going along with extending current tax rates, even temporarily:
If American voters reelect President Obama, they have no right to complain when their taxes go up by $494 billion on January 1st. That is the total amount taxes are set to increase, automatically if Congress does not pass, and Obama does not sign, tax relief before December 31st of this year.
In the current edition of The New Yorker, Ryan Lizza reports that unlike 2010 and 2011, Obama is prepared to follow through on his threat to let taxes go up after he no longer has to face voters ever again: “Several White House officials I talked to made it clear that if a deal, or at least the framework of a deal, is not reached before December 31st Obama would allow all the Bush tax cuts to expire – a tactic that would achieve huge deficit reduction, but in a particularly painful and ill-conceived fashion.”
There is always ego involved in politics, there is no denying that. Some elected officials may say that they are public servants or what have you, but that’s a talking point more than anything else, so a certain amount of arrogance and narcissism is expected when dealing with elected officials. But what you don’t expect is a president to go through White House biographies of their predecessors to invoke themselves:
Many of President Obama’s fervent devotees are young enough not to have much memory of the political world before the arrival of The One. Coincidentally, Obama himself feels the same way—and the White House’s official website reflects that.
The Heritage Foundation’s Rory Cooper tweeted that Obama had casually dropped his own name into Ronald Reagan’s official biography on www.whitehouse.gov, claiming credit for taking up the mantle of Reagan’s tax reform advocacy with his “Buffett Rule” gimmick. My first thought was, he must be joking. But he wasn’t—it turns out Obama has added bullet points bragging about his own accomplishments to the biographical sketches of every single U.S. president since Calvin Coolidge (except, for some reason, Gerald Ford). Here are a few examples:
We’ve had to endure overtures from Warren Buffett and Matt Damon about how they and other wealthy people should be paying a higher tax rate, a problem they could solve by simply visiting Pay.gov, a handy website where individuals can send more money to the federal government if they so desire. But now Stephen King, a brilliant writer, has joined the calls in a post at The Daily Beast: