Is Obama Planning A $3 Trillion Tax Increase?
It sure sounds that way listening to Obama administration economist Christine Romer:
But the chairman of the president’s Council of Economic Advisers admitted that health reform and a growing economy isn’t enough to bring down the deficit. She did mention one other place that revenue could come from: letting the Bush tax cuts expire.
So how does that translate into a $3 trillion tax hike? James Pethokoukis explains:
Since Obama already wants to get rid of the income and capital gains tax cuts for wealthier Americans that expire at the end of 2010, clearly what Romer is referring to is the rest of the 2001 and 2003 Bush tax cuts. Letting all the 2001 cuts — rate reductions, child tax credit marriage penalty relief — expire would raise tax revenues by $2.5 trillion through 2019. (These CBO numbers assume no negative economic feedback impact from higher taxes.) And letting the 2003 tax cuts on capital gains and dividends expire would be tantamount to a $350 billion tax increase through 2019. And none of this includes possible plans for a VAT that could raise $400 billion a year more to close the huge projected gap — maybe 7 percentage points — between spending as a percentage of GDP and revenues as a percentage of GDP.
That’s well over $3 trillion out of our economy and into the government.
Assuming, of course, that these new taxes would dampen the economic transactions that produce the revenue. Which, of course, they will. When you tax something you get less of it.
What’s sad is that for all Obama’s blather about deficit reduction, this is actually his solution. No spending cuts from the government’s already exorbitant budgets. Just more taxes taken out of America’s already staggering economy.
This isn’t going to end well.
