Tax Hikes

Obama Advisor: Increase taxes to bring down deficit

Paul Volcker, Chairman of President Barack Obama’s Economic Recovery Advisory Board, suggests that tax increases, including a tax on carbon emissions, and a value added tax are necessary to reign in budget deficits:

The United States should consider raising taxes to help bring deficits under control and may need to consider a European-style value-added tax, White House adviser Paul Volcker said on Tuesday.

Volcker, answering a question from the audience at a New York Historical Society event, said the value-added tax “was not as toxic an idea” as it has been in the past and also said a carbon or other energy-related tax may become necessary.

Though he acknowledged that both were still unpopular ideas, he said getting entitlement costs and the U.S. budget deficit under control may require such moves. “If at the end of the day we need to raise taxes, we should raise taxes,” he said.

The Tax Foundation looked into where tax rates would need to be to erase the $9.8 trillion in budget deficits over the next ten years.

Tax Foundation Budget Deficit

We do not have a revenue problem, we have a spending problem. Increasing taxes risks economic growth and penalizes the job creators. That hardly seems like a plan for recovery from a very deep recession.

Trading off the cadillac tax for a worse tax

Josh Barro, an economist from the Manhattan Institute, notes that the “cadillac tax” on high-end health insurance plans was scaled back in the latest version of ObamaCare and the administration wants something worse to make up the difference:

The President proposes to more than make up for the lost Cadillac Tax revenue by extending Medicare Tax to high-income people’s unearned income. (Currently, Medicare Tax is a flat 2.9% tax on earned income only.) He’ll use the extra revenue to make insurance premium subsidies more generous.

The President would expand the Medicare Tax to unearned income, including capital gains and dividends, for filers making over $250,000. (The Senate Bill already imposed a surtax of 0.9% on these taxpayers’ earned income, which Obama would maintain.) Combined with other tax proposals from the administration, this would raise the top tax rate on capital gains to 22.9% from 15% today.

The White House did not issue revenue estimates for the individual components of its proposal, but it’s likely that their proposed Medicare Tax increases constitute nearly as large a high-income tax hike as the House bill’s $460 billion income surtax, with similarly negative economic impacts.

I’m not endorsing Barro’s opinion on the “cadillac tax,” but any increase in taxes is going to have negative impacts. However, Barro points out one thing missing from the health reform “debate.” He says, “America’s health care problems are in two parts: too many of us don’t have insurance, and those of us who do, eat too much care at too high a price. Attempting to fix the first problem without attacking the second will only make health care more intolerably expensive in the long run.”

Both are a result of government intervention.

Chart of the Day: Top US tax rates compared to other nations

Over at Cato at Liberty, Chris Edwards notes that while the rest of the world is cutting taxes on individuals and business (many of whom file as individuals) President Barack Obama is making a push to increase taxes, putting economic growth in jeopardy, and putting the United States at a competitive disadvantge with other industrialized nations.

Obama “agnostic” to tax increases on middle class

During the 2008 presidential campaign, Barack Obama often said that no family earning less than $250k a year would see a tax increase. This is a statement he has made as president well. He has specifically targeted individuals making over that dollar threshold (which is a terrible idea), most recently in his State of the Union address.

Now President Obama says he is “agnostic” to the idea of increasing taxes on families making under $250k, proving once again that he is less interested in substantive spending cuts as a means to go tackle the deficit:

President Barack Obama said he is “agnostic” about raising taxes on households making less than $250,000 as part of a broad effort to rein in the budget deficit.

Obama, in a Feb. 9 Oval Office interview, said that a presidential commission on the budget needs to consider all options for reducing the deficit, including tax increases and cuts in spending on entitlement programs such as Social Security and Medicare.

“The whole point of it is to make sure that all ideas are on the table,” the president said in the interview with Bloomberg BusinessWeek, which will appear on newsstands Friday. “So what I want to do is to be completely agnostic, in terms of solutions.”

ATR finds new tax hikes from ObamaCare

The guys over at the Americans for Tax Reform have gone through the health care “reform” bill and found 18 different tax hikes to bring in billion in new revenues that won’t even pay the plan, ranging from the individual and employer mandates to an excise on comprehensive health plans and early health savings account withdrawals.

Obama: Lets “Hold Off” On Tax Hikes

The uber-tax-and-spend-liberal Obama is now on the defensive since being shoved to 2nd place after the nomination of quasi-libertarian Sarah Palin. Whether her nomination had any major effect or not, there is a shift in the Democratic Nominee’s position on taxation. He is sliding back on his promise to immediately attempt to rescind the “Bush Tax Cuts” and is also stating any new tax hikes should be put on hold, pending the current condition of the economy. This is a shift that is layered on top of a previous tax shift concerning subjecting payroll taxes to wealthy Americans, which he now says “should be put off until years down the road, like ten years”.

WASHINGTON (AP) - Democrat Barack Obama says he would delay rescinding President Bush’s tax cuts on wealthy Americans if he becomes the next president and the economy is in a recession, suggesting such an increase would further hurt the economy.

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