Obamanomics: Hidden Regressive Taxes

posted at 8:33 am on September 22, 2009 by Karl

Pres. Obama looked silly trying to deny that forcing people to buy health insurance is not a tax. Even the Associated Press was not buying it. Pres. Obama was willing to look silly on network TV because taxes are not popular — but the underlying issue is much bigger.

For example, Treasury Department officials think cap-and-trade legislation would cost taxpayers hundreds of billion in taxes, according to internal documents obtained by the Competitive Enterprise Institute through a Freedom of Information Act request. At the upper end of the administration’s estimates, the cost per American household would be an extra $1,761 a year. Indeed, Obama pal Warren Buffett had already criticized it:

Anything you put in that effectively taxes carbon emissions is — somebody’s going to bear the brunt of it. In the case of a regulated utility, the utility customers are going to pay for it. I mean, it’s going to become, in effect, a tax which we have decided is needed because the market system doesn’t really appropriately penalize something that hurts the future but doesn’t really hurt us tomorrow morning. But that tax is probably going to be pretty regressive.

Of course, Pres. Obama knows this, too. In January 2008, he openly admitted that his cap-and-trade proposal would make energy prices “skyrocket.”

Cap-and-trade is just one of several business taxes Obama has floated. However, the affected companies will not pay most of these taxes. Research shows that 70 to 92 cents of a dollar of business taxes comes out of employees’ pay.

The appeal of stealth taxation is why the Obama administration and other Democrats cannot bear to rule out a value-added tax, assessed on producers, wholesalers and retailers, despite the fact that this tax would also be hugely regressive.

Willie Sutton used to explain that he robbed banks “because that’s where the money is.” Liberals will always come around to taxing the middle-class because there are just not enough of “the rich” to finance their social engineering. But they cannot be honest about it, so they want to outsource tax collection for the nanny state to the business community (just as they have with payroll taxes). If that means Pres. Obama has to look foolish on network TV, it is a small price for them… and potentially a much larger one for the rest of us.

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