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
- $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.