Less Government, More Freedom.
Saturday, May 25th 2013
Obama’s 2011 Budget Comes with Staggering Tax Increases
Although people are dissatisfied with many aspects of President Obama’s 2011 budget proposal, the billions of dollars in tax increases are drawing the most ire. The tax hikes would affect all Americans, but wealthier Americans and businesses will likely absorb the biggest tax increases.
Tax receipts under the Obama plan could increase $1.9 trillion dollars over the next decade. While many Democrats are extremely supportive of the plan, the budget has received only a lukewarm response from others, and Republicans are united against the proposal. Without bipartisan support, it’s clear that the administration faces an uphill battle if they want the proposal to pass.
Whose Taxes Are Increased?
By and large, individuals will bear the brunt of the blow when the tax increases begin in 2011. Over the next ten years, wealthy individuals in American can expect more than $600 billion in tax hikes if the proposal passes.
- $118 billion of this money comes from a hike in the capital gains tax.
- The itemized deductions that many taxpayers make in order to decrease their taxable income would be eliminated, netting the federal government $179 billion in new taxes.
- During the same period, businesses will pay $400 billion in additional taxes.
- Businesses will no longer be able to use LIFO (last in, first out) accounting methods under the tax plan, which has reduced income for them since the 1970s. This move results in $61 billion of extra taxes.
- The largest chunk of taxes on businesses comes from international enforcement and reform deferral, a whopping $210 billion of new taxes on businesses.
What the average American will take issue with the most, however, is that the supposed “tax cuts” for those individuals earning less than $200,000 per year and couples earning less than $250,000. These “cuts” will be offset entirely by the reform, resulting in a net increase of taxes—a very different story than what’s being touted by the White House and the mainstream media.
What Does This Mean For the Average American?
For starters, the top two tax rates for individuals would rise from 33% and 35% to 36% and nearly 40%. (No, you did not misread that—some Americans will be paying nearly half of their incomes to the government as taxes.)
After accounting for the promised $154 billion in tax cuts, according to Heritage Foundation calculations, President Obama’s budget would result in a burden of $17,000 additional taxes per American household over the course of the next 10 years.
To break it down even further:
- Estate taxes on small businesses and farms – the backbone of the American economy – would see their taxes increased dramatically when they pass their livelihood on to their children due to the re-imposed estate tax (commonly referred to as the “death tax”).
- Energy taxes on oil companies would be passed on to the consumer, resulting in higher energy costs.
- The unemployment insurance surtax would be a permanent fixture.
In short, the person who suffers most is the Average Joe.
Problems on the Horizon
The budget proposal is just the beginning of the problems:
- The budget will not be balanced. If President Obama gets his tax plan passed, it will likely look very different from the proposal. Because the United States is mired in nearly $2 trillion of government debt, the tax increases are meant to help balance the budget over the long term, which would theoretically have a positive effect on the economy. However, the changes are only being coolly embraced by Congress, which believes such taxation could hurt businesses.
- Job programs for small businesses may not be funded. The taxation could lead to slower hiring of employees, so the President has proposed in addition a loan program that would use bailout money returned by banks. As this money was previously earmarked by TARP law to reduce the federal deficit, the TARP law will need to be changed or the funding will need to feed the ever growing deficit.
- The national debt continues to grow. In the first two years of his presidency, Barack Obama will have spent nearly as much as the entirety of President Bush’s two terms in office. We face, in 2012, our national debt surpassing our nation’s GDP.
Should the budget, including the tax increases, pass as planned, many analysts believe that we can expect the economy to continue faltering. Small businesses will suffer as a result and hire fewer employees, which would create a chilling effect on the economy.
The lack of jobs threatens the consumer’s ability to spend money, which keeps the economy robust and healthy. Moreover, the anti-business legislation being pushed by the president would likely result in punitive taxes that would end up being assumed by the consumer. It’s clear that the government is out of control, spending way too much money and expecting the citizen to pick up the tab.Published on February 4, 2010 · Filed under: Editorials;
One Response to “Obama’s 2011 Budget Comes with Staggering Tax Increases”
MeSoCutte said on March 18th, 2011 at 12:22 pm
Moving style. I would like to write that way.