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.
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.