President Obama's Tax Piracy

Custer, Pickett and the Goats of West Point

Peter Ferrara

• Publisher: Encounter Books
• Year: 2010
• ISBN:
  9781594035579
• Topic: Economics
• Subtopic: Economic Policy
• Index: Economics

Starting on Jan. 1, 2011, President Obama’s economic recovery policy will begin the implementation of comprehensive, across-the-board tax rate increases for every major federal tax, along with some completely new taxes. Yet Obama and Congressional Democrats seek even more tax increases.In this insightful Broadside, Peter Ferrara shows that while President Reagan’s tax policies created a 25-year economic boom, the Obama tax tsunami will sink the economy further if it is not stopped. It will produce a double-dip recession in 2011, if not a full economic crash. President Obama’s tax policies are effectively tax piracy, and they are more likely to lose revenue and leave bigger federal deficits and debt for the country.

STARTING ON JAN. 1, 2011, President Obama’s economic recovery policy will begin the implementation of comprehensive, across-the-board tax rate increases for every major federal tax. The top two income tax rates will effectively climb by nearly 20 percent, counting the phaseout of deductions and exemptions. The top capital gains tax rate is scheduled to soar by nearly 60 percent, counting the application of ObamaCare’s new 3.8 percent tax on investment income. The tax rate on dividends is scheduled to nearly triple, from 15 percent to 43.4 percent, counting the ObamaCare tax as well. The ObamaCare legislation also increased the top Medicare HI payroll tax rate by 31 percent. On our current course, the death tax will also be reimposed next year with a 55 percent top rate.

Meanwhile, America suffers under the second-highest - soon to be the highest - corporate tax rate in the industrialized world. The federal corporate tax rate of 35 percent is pushed close to 40 percent on average by state corporate income taxes, leaving American businesses and employers uncompetitive in the global economy. Yet the Obama administration refuses to consider any reductions in this corporate tax rate.

Starting on Jan. 1, 2011, President Obama’s economic recovery policy will begin the implementation of comprehensive, across-the-board tax rate increases for every major federal tax.

Ironically, however, much of the rest of the world has learned the lessons of Reaganomics. The average corporate tax rate in the European Union has been slashed from 38 percent in 1996 to 24 percent today. Germany’s corporate tax rate has been reduced all the way to 15 percent, with Canada, now at 18 percent, scheduled to join them at 15 percent in 2012. Ireland adopted a corporate tax rate of 12.5 percent in 1988, which caused per capita income in that longtime poor country to soar from the second lowest in the EU to the second highest. Our own Department of the Treasury has said Ireland raises more corporate tax revenue as a percentage of gross domestic product than we do with our much higher rates. Corporate tax rates in India and China, our emerging competitors, are lower as well.

Instead of lowering these stifling business taxes, President Obama and congressional Democrats are increasing them. President Obama insists on double taxing the foreign earnings of American companies with a ^$122 billion tax increase, further reducing the international competitiveness of American businesses. Then there’s a ^$90 billion tax increase on banks and a ^$40 billion increase on oil, gas, and coal producers.

ObamaCare adds still more tax increases.

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A so-called “Cadillac” tax is imposed on high-value health plans equal to 40 percent of plan costs above certain thresholds, amounting to ^$32 billion in taxes on such health insurance during the first 10 years. But the thresholds are indexed only for general inflation, not health care inflation, so the tax will apply to more and more plans over time, eventually applying to average, ordinary plans. Less well known is that ObamaCare imposes a second tax on health insurance equal to ^$60 billion during the first 10 years. The health care take-over legislation also adopts new taxes on medical device manufacturers, prescription drugs, and even tanning salons, among other taxes.

The individual mandate requiring individuals without employer-provided health insurance to buy government-specified health insurance is also a tax. Even with the budget-crushing health insurance subsidies provided in the ObamaCare legislation, the required insurance will be quite expensive, ranging up to 2 percent of income for people at 133 percent of the poverty level and up to 9.8 percent for those at 400 percent of the poverty level (^$88,000 for a family of four). That is like a new payroll tax.

The employer mandate in the ObamaCare legislation is also an economically deadly tax. For companies that do not currently provide health insurance to their employees, mostly smaller businesses, the employer mandate will add substantially to worker costs, killing jobs. In addition, in my own recently released comprehensive study of the ObamaCare legislation, The ObamaCare Disaster: An Appraisal of the Patient Protection and Affordability Act, published by The Heartland Institute, I explain all the ways in which the legislation will increase the cost of health insurance. With the employer mandate, this will kill jobs even for employers that currently provide health insurance, as their employee costs will also rise as a result.

But even with ...

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