Or to be more precise, he’s preventing economic recovery — and thus dooming his political future.
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Reducing tax rates provides such incentives because it allows producers to keep a higher percentage of what they produce. If a tax rate is reduced from 50% to 25%, what the taxpayer keeps out of his own production rises by one third from 50% to 75%. That provides increased incentives for investment, starting new businesses, expanding businesses, creating jobs, entrepreneurship, and work. This is what Reagan did in comprehensive fashion, producing a 25-year economic boom. But President Obama won’t even consider such policies because they run counter to his ideological left-wing extremism.
Even President Obama’s tax cut for 95% of Americans is not pro-growth. That turned out to be just a pitiful $400 per worker tax credit, less than $8 per week, which is economically the same as sending each worker a $400 check. That involves no change in the future incentives to invest or produce for anyone. And borrowing $400 from someone else to give you $400 again does not add anything to the economy on net. Moreover, even this sop is eliminated after next year.
You Ain’t Seen Nothing Yet
But the disastrous policy failures of Obamanomics are just beginning. President Obama is now campaigning daily for a government takeover of health care involving comprehensive government health care rationing, where the government will tell Americans what health care they can have and when, and ultimately deny them health care to reduce costs. This is all fully explained in a recent report from President Obama’s own Council of Economic Advisors, which Obama has touted as showing how he would reduce health costs.
But because government spending overall under that health takeover will go up, not down as President Obama is promising, the health care takeover bill in the House, fully endorsed by Obama, now specifies exactly what tax increases will be necessary to finance this increased spending. These include:
• An income tax increase on workers who do not purchase the government required health insurance equal to 2.5% of adjusted gross income or the average individual premium amount for such insurance for the year, whichever is less.
• A new payroll tax on employers who do not provide health insurance equal to 8% of payroll.
• A new excise tax on private health insurance plans.
• A new income tax surcharge on small business and others that would raise total income taxes paid to start by 1% in 2011, rising to 2% in 2013, on families earning from $350,000 to $500,000, 1.5% in 2011, rising to 3% in 2013, on families earning from $500,000 to $1,000,000, and 5.4% in 2011 on families earning over $1,000,000. These income tax surcharges would start for singles earning $280,000.
These tax increases are all on top of the tax increases in the Obama budget that will go into effect in 2011. All of these Obama income tax increase proposals together would raise the top marginal federal tax rate to almost 48% from 35% today. Counting state income taxes, the average top income tax rate in America would climb to about 52%.
Such tax rates would be almost the highest in the world, higher than in socialist Europe, formerly socialist India, and Communist China. Only three countries, Denmark, Sweden, and Belgium, out of the 30 Western countries measured by the OECD, would suffer under higher top marginal tax rates. If you are a blue-collar worker with a job in manufacturing, say goodbye to it as it moves to South Korea, where the total top marginal tax rate is 38.5%. The U.S. rate would be over 35% higher, completely uncompetitive. The U.S. rate would also be higher than France, Germany, Canada, and Poland, among 23 others in the OECD.
Indeed, in five states politically dominated by liberal Democrats — California, New York, New Jersey, Hawaii, and Oregon — the total top tax rate would be higher than in socialist Sweden. The nonpartisan Tax Foundation reports that 10 states would suffer total top tax rates above 54%, which is higher than in socialist Belgium at 53.7%. The Tax Foundation reports 39 states would suffer total top income tax rates over 50%.
Moreover, the economically sensitive federal capital gains tax rate would be almost doubled from 15% today to 26.5%. The tax on corporate dividends would be more than tripled from 15% today to 46%.
When these tax rate increases become effective in 2011, America will be left completely uncompetitive in the world economy. These tax increases will translate into still higher unemployment, fewer jobs, lower wages, and still slower economic growth. The new employer mandate payroll tax is a heavy new burden sharply raising employment costs for small business, which will result in still higher unemployment.
The top 1% of income earners already pay 39% of all federal income taxes. The top 5% pay 61% and the top 10% pay 73%. President Obama’s tax piracy policies on top of this will cause capital flight from the U.S., as both domestic and foreign capital seeks more friendly tax jurisdictions in emerging markets in India, Brazil, China, South Korea, and even in Eastern Europe where favorable flat tax policies now proliferate. Yes, even the Communist Chinese feature more pro-growth economic policies than Barack Obama. As discussed above, even most of Western Europe will have more competitive tax policies. There is no rule of reality that says America has to have the highest standard of living in the world. Under this tax piracy, it soon will not.
A man of faith in a godless age is hitting Americans where it hurts.
Mr. and Mrs. American Spectator Reader, let P.J. O’Rourke talk sense to your kids.
In Britain, defending your property can get you life.
The debacle of this president’s administration is both a cause and a symptom of the decline of American values. Unless Congress impeaches him, that decline will go on unchecked. An eminent jurist surveys the damage and assesses the chances for the recovery of our culture.
It won’t take long for conservatives to scratch this presidential wannabe off their 2008 scorecard.
The American Christmas, like the songs that celebrate it, makes room for everybody under the rainbow. Is that why so many people seem to be hostile to it?
Was the President done in by the economy, or by the politics of the economy?