The Obama plan: massive tax hikes

posted at 9:03 am on February 27, 2009 by Ed Morrissey

Jake Tapper took a look at the fine print in Deadbeatonomics yesterday, and discovered a lot of tax hikes among the Hope and Change.  His plan for revitalizing the economy relies on sucking about a trillion dollars out of it over a ten-year period, starting in 2011:

1) On people making more than $250,000.

  • $338 billion – Bush tax cuts expire
  • $179 billlion – eliminate itemized deduction
  • $118 billion – capital gains tax hike

Total: $636 billion/10 years

2) Businesses:

  • $17 billion – Reinstate Superfund taxes
  • $24 billion – tax carried-interest as income
  • $5 billion – codify “economic substance doctrine”
  • $61 billion – repeal LIFO
  • $210 billion – international enforcement, reform deferral, other tax reform
  • $4 billion – information reporting for rental payments
  • $5.3 billion – excise tax on Gulf of Mexico oil and gas
  • $3.4 billion – repeal expensing of tangible drilling costs
  • $62 million – repeal deduction for tertiary injectants
  • $49 million – repeal passive loss exception for working interests in oil and natural gas properties
  • $13 billion – repeal manufacturing tax deduction for oil and natural gas companies
  • $1 billion – increase to 7 years geological and geophysical amortization period for independent producers
  • $882 million – eliminate advanced earned income tax credit

Total: $353 billion/10 years

Most of this is vaporware.  This is a triumph of static tax analysis, which assumes that increased taxes have no effect on the amount of money available for taxation.  For instance, the hike from 15% to 20% on capital-gains taxes assumes that people will invest and cash out in the same manner they do at 15%.  They won’t.  The fact of increasing the tax will discourage investors and encourage them to shift money out before the hike.  Not only will the extra revenue vanish, but investment levels will drop, leading to job losses and less opportunity for American businesses.

And what “itemized deduction” will get eliminated?  All of them?  Some of them?

The business tax hikes are even worse.  Obama will increase taxes on existing American oil production starting in 2011.  Do we have massive amounts of alternative energy capacity ready to replace the energy production and usage that this will discourage?  A growing economy has to have a reliable energy supply.  Energy producers get hit on several fronts in this plan, and those costs will either result in lower energy production or increased cost to the consumers.

Again, the expected revenues will far exceed the reality, once the depressive economic effects of these taxes kick in.  The spending, unfortunately, will be all too real, which will mean huge, ballooning deficits.  It’s the inevitable result of Deadbeatonomics.


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Comment pages: 1 8 9 10

Just back from a short break but could not find any of “GETALIFE’s answers. Here is one more did this stimulus work under FDR or under Brezhnev, Gorbasism? I have about forty five minutes GAL.

garydt on February 28, 2009 at 11:28 PM

No filibuster-proof majority.

sethstorm on February 28, 2009 at 10:21 PM

So that is your defense?

Johan Klaus on March 1, 2009 at 2:00 AM

People seem to forget that WW2 ended the Great Depression, not FDR’s policies. Methinks Obama spent too much time in law school and not enough time in economics and history studies.

bryan2369 on March 1, 2009 at 3:23 AM

Sethstorm, the economy didnt start declining till the end of 2007.

All the Democrats inherited from Bush was their own policy failures.

Looking forward to March’s 2 trillion in new debt financed spending.

Chuck Schick on March 1, 2009 at 9:38 AM

As I told many at the DC Tea Party, I am amazed at the lack of punditry about the impact of the 2011 tax rates. According to the company software Mr. Geithner could not understand, Turbo Tax states that the income tax rates will reset to the 2001 rates; 15%, 27.5%, 30.5%, 35.5% and 39.6%. President Obama said he would allow them to reset. Presently they are 10%, 15%, 25%, 28%, 33% and 35%. And look at the impact on the poorest Americans; the special low 10 percent bracket is eliminated. President Bush, in his 2008 budget, proposed the present tax rates become permanent. The Democratic congress ignored this request. So not just those over $250,000 will pay more because of their loss of mortgage deduction, charity deductions and the increased tax rates proposed for them next year, but all Americans who pay taxes will be impacted by this return to the 2001 tax rates as well as indirectly by the carbon cap taxes. I also imagine that some of those now not paying taxes, again the poorest Americans, will have to pay taxes since the Bush tax cuts raised the amount earned exempt from taxation. Plus they, I assume, would not receive money from the “negative income tax” program.

amr on March 1, 2009 at 9:45 AM

Turbo Tax states that the income tax rates will reset to the 2001 rate

2001- when the federal budget was balanced? I mean, what do you really expect- that the nation continue adding to the already massive federal debt? Bush lowered taxes while increasing spending under the brilliant position that “deficits don’t matter”. If the US had entered this massive economic crisis with only $5 trillion in debt (what Clinton left behind along with an annual surplus), the US could enact much larger stimulus spending bills and force the economy back on track. But Bush and Cheney decided to take that option off the table for us by straddling the nation with so much debt that our options now are greatly limited.

Although I do agree with you that these policies do NOT live up to his campaign promises. I suspect that Obama will argue that the middle and lower income tax brackets will not be affected.

bayam on March 1, 2009 at 3:41 PM

PARTIAL LIST OF DOCUMENTS THAT BARACK OBAMA REFUSES TO RELEASE -. OBAMA’S SECRECY AND “CLOSED RECORDS” POLICY
Indonesian Passport – Not released
Application for U.S. Citizenship (as former citizen of Indonesia) – Not released
Immigration Records – Not released
Original Vault Copy Birth Certificate – Not released
Certificate of Live Birth – Counterfeit Version on Obama Web Site
Obama / Dunham Marriage License – Not released
Soetoro / Dunham Marriage License – Not released
Soetoro Adoption Records – Not Released
Fransiskus Assisi School Application – Not released
Punahou School Records – Not released
Selective Service Registration – Counterfeit version generated
Occidental College records – Not released
Columbia College Records – Not released
Columbia Thesis – Not released
Harvard College Records – Not released
Baptism Certificate – None
Medical Records – Not released
Illinois State Senate Records – Not released
Law Practice Client List – Not released
University of Chicago Scholarly Articles – None ….///,

searcher484 on March 1, 2009 at 11:08 PM

bayam on March 1, 2009 at 3:41 PM

1) Bush inherited a weak economy, that was made weaker after 9/11. Economists, even those of the left credit the tax cuts with rescuing the economy.

2) The budget was only balanced because SS surpluses were added to it.

3) It’s awful strange of you to complain about Bush’s deficits, while at the same time championing Obama’s, which are 10 times larger.

4) Bush’s deficits were coming down fast, until the Democrats took over congress.

MarkTheGreat on March 2, 2009 at 8:28 AM

“To compel a man to subsidize with his taxes the propagation of ideas which he disbelieves and abhors is sinful and tyrannical.”

Thomas Jefferson

kriscoleman on March 2, 2009 at 9:41 AM

PARTIAL LIST OF DOCUMENTS THAT BARACK OBAMA REFUSES TO RELEASE -. OBAMA’S SECRECY AND “CLOSED RECORDS” POLICY
Indonesian Passport – Not released
Application for U.S. Citizenship (as former citizen of Indonesia) – Not released
Immigration Records – Not released
Original Vault Copy Birth Certificate – Not released
Certificate of Live Birth – Counterfeit Version on Obama Web Site
Obama / Dunham Marriage License – Not released
Soetoro / Dunham Marriage License – Not released
Soetoro Adoption Records – Not Released
Fransiskus Assisi School Application – Not released
Punahou School Records – Not released
Selective Service Registration – Counterfeit version generated
Occidental College records – Not released
Columbia College Records – Not released
Columbia Thesis – Not released
Harvard College Records – Not released
Baptism Certificate – None
Medical Records – Not released
Illinois State Senate Records – Not released
Law Practice Client List – Not released
University of Chicago Scholarly Articles – None ./,’[.,

searcher484 on March 2, 2009 at 10:20 AM

Bush lowered taxes while increasing spending under the brilliant position that “deficits don’t matter”.

bayam on March 1, 2009 at 3:41 PM

Obama’s doing the exact same thing to a far greater degree. I have seen absolutely no one from the left has had a problem with it.

Chuck Schick on March 2, 2009 at 1:40 PM

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