Free Markets, Free People

The Perfect [Tax] Storm

Raising taxes is the preferred method of increasing revenue to the government (see “Zombie Government”) by both Obama and the Democrats, according to James Pethokoukis. He lists 5 reasons why Obama will raise taxes on everyone:

1) Obama knows the budget math doesn’t work.
2) Obama seems to prefer tax hikes to spending cuts.
3) Obama has already tried raising taxes.
4) Obama’s advisers are for higher taxes.
5) Obama doesn’t seem to think high taxes are harmful.

Pethokoukis explains each of his points in his article, but I listed them in short form so you could easily see that together the 5 create the atmosphere and ingredients necessary for the perfect tax storm. It is obvious to anyone that the 10 year budget proposed by this administration is outrageously expensive and without adequate revenue to implement it. What is also obvious, given the first Obama budget, is there is no desire to cut spending.

That leaves government with few choices for raising the revenue necessary to pay for the planned fiscal profligacy. International interest in our debt instruments is at a low. Mortgaging off the future of our grandchildren is much harder to do now. That leaves the administration with very few alternatives, all dealing at some level or another with taxation. So prepare to hear about increased taxes relatively soon – Turbo Tax Tim Geithner has already floated the “middle class tax” balloon. And of course there are any number of other sorts of taxes – sin taxes, fees, etc. – that the creative minds in Congress will explore and implement.

Yup, the tax man cometh, all the while telling us we have to cut the deficit the administration has run up. They’ll tell us it requires “hard choices”. Of course the only “hard choice” will be when to enact sweeping tax increases so they’ll be the least damaging politically.

Pethokoukis concludes:

Bottom line: The belief in the need for higher, European-style taxes (like a VAT) fills the policy cloud that surrounds Obama. It’s hard to overstate this. It’s right up there with global warming. Obama knows he faces a looming fiscal crisis and higher taxes will be his weapon of choice. To paraphrase Mondale, “Obama will raise middle-class taxes. He won’t tell you (yet). I just did.

Fair warning.

~McQ

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8 Responses to The Perfect [Tax] Storm

  • Also, if Obama can get a bunch of republicans to support tax hikes, then the voters will remian angry at republicans as well as democrats which will help prevent a net loss for dems in upcoming elections.
     
    Why would republicans support tax hikes? They may in order to prevent further government breakdown as the deficit continues to soar.

  • Waterloo might be the wrong metaphor.
    I’m thinking “A Bridge Too Far”.
     

  • 2) Obama seems to prefer tax hikes to spending cuts.
    This only seems to be true for certain segments of the budget (i.e. non-defense).

  • This has got to be the target of every junk mail source by now.

  • A VAT tax does not have to associated with “high” taxes or Europe. The VAT in Taiwan is 5%. That is lower than the 8.75% sales tax in California.
    VAT is also used in China and other fast growing economies – they like it because its rebatable to exporters but applies to imports…and still works with WTO.

  • “He lists five reasons why Obama will raise taxes on everyone…”

    I have some more…check these out:

    6) The Clown™ feels it is imperative to punish success, except his own success, which came because he was a black guy who people were afraid to cross.

    7) The Clown™ wants to fund his ridiculous programs, and he needs untold trillions to pay for it all, because he knows that running for re-election in 2012 on “Honey, I Blew Up the Deficit” just won’t cut it.

    8) Right now, he has enough stoopid Democrats in the House and Senate who think the way he does about punishing success.

    9) The liberal media keeps telling us about “Bush’s tax cuts for the wealthy,” despite the fact that under Bush, more middle class and poor people had their taxes cut, and the wealthy now pay more of a percentage of the taxes than ever before.

    Perhaps there are more, but all this thinking about that thug in the White House masquerading as the President is making me queasy and sick to my stomach.

  • James, I think you also forgot:
     
    10. He is a lawyer. Many lawyers think that law can solve anything without any secondary effects or affect on incentives.