Just some food for thought. The following article from the WSJ oversimplifies the underlying economic and social issues, but the bottom line statements are both stated and implied. The Federal budget is too big, there is no way to pay for it with today's revenue streams, and the incumbents want this budget to get bigger and to raise taxes across the board to pay for it. There is no source to create such revenue for the Government without turning to the center-mass of population numbers. There are not enough "rich" earners out there to play Robin Hood; the poor are numerous, but they already pay almost zero in income taxes - and their sales tax revenue is not enough either (hence the hints at the VAT). With no place to turn but the $50-300k earners (the 200-225 million US taxpayers in the middle) you can expect the politicians to go after the meat and potatoes next.
We should expect a smaller budget that fits within revenue; however, we know that will never happen. Prime examples of the constant Federal bloat are the DoE and the TSA. Other prime examples are the pork riders on every bill that passes either house. Prime examples of Federal (and state) government's inability to plan, execute, and sustain plans of this scope are Social Security, Medicare (Medicaid), the IRS, and government itself. Always growing larger, always demanding more money, always producing less return per dollar and constantly controlling more of your life. And always in the name/guise/sham of being good to you.
Teeing Up the Middle Class
Joe the Plumber’s tax vindication is nigh.
Few of President Obama’s 2008 campaign pledges were more definitive than his vow that anyone making less than $250,000 a year “will not see their taxes increase by a single dime” if he was elected. And he was right, very strictly speaking: It’s going to be many, many, many billions of dimes.
Asked about raising taxes on the middle class on Sunday on CBS’s “Face the Nation,” White House economist Larry Summers wouldn’t repeat Mr. Obama’s pre-election promise. “It is never a good idea to absolutely rule things out no matter what,” Mr. Summers said—except, apparently, when his boss is running for office. Meanwhile, on ABC’s “This Week,” Treasury Secretary Timothy Geithner also slid around Mr. Obama’s vow and said, “We have to bring these deficits down very dramatically. And that’s going to require some very hard choices.”
These aren’t even nondenial denials. The Obama advisers are laying the groundwork for taxing the middle class while claiming the deficit made them do it.
The liberal establishment is even further along in finally admitting that Mr. Obama wasn’t, er, telling the truth. A piece in the New York Times over the weekend declared in a headline that “the Rich Can’t Pay for Everything, Analysts Say.” And it quoted Leonard Burman, a veteran of the Clinton Treasury who now runs the Brookings Tax Policy Center, as saying that “This idea that everything new that government provides ought to be paid for by the top 5%, that’s a basically unstable way of governing.” They’re right, but where were they during the campaign?
In an editorial on February 26, “The 2% Illusion,” we wrote that the feds could take 100% of the taxable income of everyone in America earning more than $500,000 and still have raised only $1.3 trillion even in the boom year of 2006. The rich are fewer and less rich now, while the Obama budget is nearly $4 trillion.
Democrats already plan to repeal the Bush tax cuts, but that won’t raise enough money. So they’re proposing an income tax surcharge on “the wealthy,” but that won’t raise enough either. Democrats have no choice but to soak the middle class because only they have enough money to finance the liberal dream of yoking the middle class to cradle-to-grave government entitlements.
Democrats have already taxed the middle class by raising cigarette taxes to pay for the children’s health-care expansion. They’re also teeing up average earners with their cap-and-tax energy bill. Mr. Obama had hoped that cap-and-tax would raise some $646 billion over a decade, but Democrats in the House had to give most of that away in bribes to business to pass their bill. To finance ObamaCare, they’re also proposing another 10-percentage-point increase in the payroll tax on firms and individuals that don’t purchase health insurance. But this won’t raise enough money either.
So waiting in the wings is the biggest middle-class tax increase of them all: a European-style value added tax, or VAT. This tax would apply to every level of production or service, and it is beloved by politicians in Europe because it raises so much money so easily without voters noticing. Ezekiel Emanuel, a White House aide and brother of Chief of Staff Rahm Emanuel, has advocated a 10% VAT to finance national health care. Look for a VAT to be one of the prominent options when Mr. Obama’s tax reform commission issues its report later this year.
The undeniable reality is that you can’t run a European-style welfare-entitlement state without European-style levels of taxation on the middle class (and eventually without low European-style growth and high jobless rates). It’s looking more and more like Mr. Obama’s no-middle-class-tax pledge was one of the greatest confidence tricks in American political history.
Post a Comment