Reuters has pulled a story on how the Obama Administration intends to short circuit any incipient American economic recovery by stealth tax raises.
NEW YORK (Reuters.com) –The Obama administration’s plan to cut more than $1 trillion from the deficit over the next decade relies heavily on so-called backdoor tax increases that will result in a bigger tax bill for middle-class families.There are other tax hikes as well. Read the whole thing.
In the 2010 budget tabled by President Barack Obama on Monday, the White House wants to let billions of dollars in tax breaks expire by the end of the year — effectively a tax hike by stealth.
While the administration is focusing its proposal on eliminating tax breaks for individuals who earn $250,000 a year or more, middle-class families will face a slew of these backdoor increases.
The targeted tax provisions were enacted under the Bush administration’s Economic Growth and Tax Relief Reconciliation Act of 2001. Among other things, the law lowered individual tax rates, slashed taxes on capital gains and dividends, and steadily scaled back the estate tax to zero in 2010.
If the provisions are allowed to expire on December 31, the top-tier personal income tax rate will rise to 39.6 percent from 35 percent. But lower-income families will pay more as well: the 25 percent tax bracket will revert back to 28 percent; the 28 percent bracket will increase to 31 percent; and the 33 percent bracket will increase to 36 percent. The special 10 percent bracket is eliminated.
Investors will pay more on their earnings next year as well, with the tax on dividends jumping to 39.6 percent from 15 percent and the capital-gains tax increasing to 20 percent from 15 percent. The estate tax is eliminated this year, but it will return in 2011 — though there has been talk about reinstating the death tax sooner.
And why was the story pulled? Instapundit says it was due to pressure from Obama who claims the story is in error - at least in part.
- Our budget explicitly calls for permanently extending the Bush tax cuts for households making less than $250,000. - Our budget explicitly calls for allowing the top rate on dividends to increase to 20% for households making over $250,000. - Our budget accounts for the cost of continuing the AMT "Patch". The last administration's budgets ignored these costs, but we explicitly account for them. - Our budget extends expiring tax provisions through 2011.So let me see if I can get a handle on this: high earners who are investors in our economy are going to be punished. Investment creates jobs. So by punishing high earners Obama will be punishing people who are out of a job.
Perhaps Obama needs to read a book. This book: The Forgotten Man: A New History of the Great Depression.
I like what one reviewer had to say when discussing what he learned from reading the book.
3. The struggle over economic policy in the 1930's was really an episode in the long, historical conflict between business participants in the market and anti-business academics. Roosevelt gave free rein to the professors, until the start of the Second World War led him to realize that he would need the tycoons to help mobilize to defeat Hitler. I suspect that one reason that Roosevelt and the New Deal come off so well in the conventional wisdom is that history books are written by professors, not by entrepreneurs.Say. Don't we have an anti-business academic for President? Yes we do.
Cross Posted at Classical Values