Free Markets, Free People

Obama seeks tax increases to fund welfare state cut deficit

With Wall Street already showing absolutely no confidence in Barack Obama and Tim Geithner, the president is announcing tax increases in an attempt to cut the budget deficit by half in four years:

A summary of Obama’s budget request for the fiscal year that begins in October will be delivered to Congress on Thursday, with the complete, multi-hundred-page document to follow in April. But Obama plans to unveil his goals for scaling back record deficits and rebuilding the nation’s costly and inefficient health care system tomorrow, when he addresses lawmakers and budget experts at a White House summit on restoring “fiscal responsibility” to Washington.

Yesterday in his weekly radio and Internet address, Obama said he is determined to “get exploding deficits under control” and said his budget request is “sober in its assessments, honest in its accounting, and lays out in detail my strategy for investing in what we need, cutting what we don’t, and restoring fiscal discipline.”

Reducing the deficit, he said, is critical: “We can’t generate sustained growth without getting our deficits under control.”
[...]
To get there, Obama proposes to cut spending and raise taxes. The savings would come primarily from “winding down the war” in Iraq, a senior administration official said. The budget assumes continued spending on “overseas military contingency operations” throughout Obama’s presidency, the official said, but that number is lower than the nearly $190 billion budgeted for Iraq and Afghanistan last year.

Obama also seeks to increase tax collections, mainly by making good on his promise to eliminate some of the temporary tax cuts enacted in 2001 and 2003. While the budget would keep the breaks that benefit middle-income families, it would eliminate them for wealthy taxpayers, defined as families earning more than $250,000 a year. Those tax breaks would be permitted to expire on schedule in 2011. That means the top tax rate would rise from 35 percent to 39.6 percent, the tax on capital gains would jump to 20 percent from 15 percent for wealthy filers and the tax on estates worth more than $3.5 million would be maintained at the current rate of 45 percent.

Obama also proposes “a fairly aggressive effort on tax enforcement” that would target corporate loopholes, the official said. And Obama’s budget seeks to tax the earnings of hedge fund managers as normal income rather than at the lower 15 percent capital gains rate.

Overall, tax collections under the plan would rise from about 16 percent of the economy this year to 19 percent in 2013, while federal spending would drop from about 26 percent of the economy, another post-World War II high, to 22 percent.

Add this to the list of “Things Not To Do During A Recession.” Soak the achievers and give absolutely meaningless tax cuts, $13 dollars a week, to the rest of us while the government continues to plunge us further into debt.

Enough with wealth envy and populism. Let’s cut taxes for everyone, cut spending and kill the corporate income tax.

15 Responses to Obama seeks tax increases to fund welfare state cut deficit

  • This was particularly painful to read this AM as I just finished my 2008 taxes.  May the AMT be damned and burn in HELL!!!  ugh – We’re going to start looking at reducing our income.  How’s that gonna work for you Mr. President?

  • The Obama administration wants to rewrite Economy 101

    When you raise taxes on business you are increasing the cost of doing business.

    A business must do one of three things.

    a.  Raise prices to maintain profit level.

    b.  Cut costs to maintain same prices and profit levels.    To do this 99.9999% of the time they must 
         fire employees.

    So with option A we have inflation  and with option B we have higher umemployment.

    These are indisputable facts that

    a.  Obama is either willfully ignorant of
    b.  He is aware of them and wants to change something which cant be changed or
    c.  He is trying to increase inflation or unemployment or both.       
         

  • I saw the headline about raising taxes on Drudge and mumbled .. raising taxes during a recession depression .. this man is an idiot.  He must be bucking for infamy with Hoover, Smoot or Hawley.

  • It wasn’t even what, a week or two ago, that we heard we need to institute buy American only provisions into the Feds in order to help business’s. Now, we hear we should raise taxes on business. It makes no sense. The two ideas do not mesh.

  • And yet every paper continues to carry water for this guy.

    Yesterday, the NY Daily News had the uber-important front page story on the 1st Lady’s changed hairdo.

    And today the headline is “Gold Rush! Obama promises you’ll see tax relief by April 1st”

    Of course, when you open the paper and read the story, buried is the small detail that the “gold rush” is a whopping $65 per month.

    Then again, that’s more info than they gave us when the stimulus was being debated…

  • Obama also proposes “a fairly aggressive effort on tax enforcement

    ***

    So will the members of his administration and the Dems in congress pay up this year?

  • Gee, I wish he’d been in favor of shrinking the budget deficit last week.

  • He keeps stating that these were the campaign promises that got him elected and it’s what America wanted.  My question is have we grown so used to seeing politicians backtrack on all their campaign promises that we expected obama to do the same?  Did we really believe that he was going to embrace domestic oil drilling, make the bush tax cuts permanent, cut business taxes, cut gov’t spending, etc? 

    Next thing you know he might actually start posting bills on whitehouse.gov for public comment before signing.  Oh wait he did that too sorta.  I guess coal industry will be the next target for destruction since he did say he wanted to bankrupt the coal industry on some radio show in california.

  • Just keep nominating Democrats for cabinet positions.

  • Another country with smart leaders could use this era to their significant advantage.  Cut taxes right now, foster a friendly business environment, and loosen immigration requirements.  You would see productive Americans flock.  

    “Future producers” have seen the writing on the wall and the idea to leave the US isn’t as crazy as it may have seemed 15 years ago.  In my schooling recently, it has not been uncommon to hear the question “do you think you could work abroad?”.  I’ve actively looked into the idea.  It’s interesting to note that you will be taxed punitively on any wealth should you decide to renounce your citizenship, so the law effectively *encourages* younger, non-established professionals to flee early rather than wait things out.

    The only thing keeping smart young minds in the US right now is lack of an alternative.  All an enterprising country would need to do would be to provide that incentive.  MDs, PhDs, innovators, and other high economic producers would flee.  Our leaders are stupid stupid people.  

  • I haven’t read anyone say things like this since I stumbled on http://www.BizPlusBlog.com by Kevin Price.   He’s also the Host of the Price of Business Show on CNN 650.  He says we should do away with all taxes on business because business don’t pay taxes, but collect them.  It is a fixed cost for doing business and if it is too high, businesses have no choice but move.

  • Well, TAO promised change, and here it is:

    We’ve had tax and spend.

    We’ve had borrow and spend.

    Now, courtesy of The Annointed One, we’re getting:

    Tax AND borrow AND spend, and spend, and spend, and spend…

    calvaria,

    I also looked a bit into going overseas.  Except for the fact that (A) my wife is dead against it (it’s hard for an American to practice law outside the United States) and (B) owning a gun will get you hanged in some of the more economically attractive countries, I’d be looking SERIOUSLY into it.