Americans for Prosperity has an article on the upcoming taxes we will be experiencing as well as a table to provide some perspective.
Obama’s High Tax Budget
Tuesday, March 17th 2009
The Obama 2010 budget contains $1.96 trillion in new taxes over the next 10 years, while cutting taxes only $614 billion, for a total net tax hike of $1.35 trillion. The budget overstates the amount of tax relief at $940 billion by including the “refundable” portion of certain provisions, which amount to $326 billion worth of “refund” checks sent to people who pay no taxes, which the budget itself admits is spending in a footnote. The real number for tax relief is just $614 billion. This budget raises taxes an astonishing $1.35 trillion to fund an unprecedented expansion in government.
Cap-and-trade
The Obama budget proposes the largest excise tax in history—in disguise—the cap-and-trade energy tax. Speaking to The San Francisco Chronicle last year, Obama said: “Under my plan of a cap and trade system, electricity rates would necessarily skyrocket… they would have to retrofit their operations. That will cost money. They will pass that money on to consumers.”
An analysis commissioned by the American Council on Capital Formation and the National Association of Manufacturers projected the economic impact of last year’s bill by 2030: 3 to 4 million fewer jobs, $4,022 to $6,752 in lower annual disposable income per household, an annual hit to GDP of between $631 billion and $669 billion, and much higher energy prices — 60 percent to 144 percent higher for gasoline and 77 percent to 129 percent higher for electricity.
The supposed making-work-pay “tax cut” of $400 per worker is supposed to offset the costs of cap-and-trade, but according to the Obama budget, fully $325 billion of the plan’s $770 billion, or 42 percent, would consist of checks sent to people who pay no income tax. That’s welfare, not a tax cut. And it’s far smaller than the cost of the cap-and-trade energy tax.
Income tax hikes
The Obama budget also hikes the top income tax rate to 39.6 percent from 35 percent and takes the 33 percent rate to 36 percent. The budget estimates these hikes total $339 billion taken out of the economy and turned over to government. It also raises the capital gains and dividends taxes for these taxpayers to 20 percent from 15 percent, another $116 billion tax hike.
The budget would also whack higher-income earners by reducing the value of all deductions—mortgage interest, charitable contributions, state-and-local income taxes, etc.—for all taxpayers above the 28 percent bracket. That’s above $171,550 for singles and $208,850 for married filing jointly.
This provision and a provision phasing out the personal exemption take the grand total of tax hikes for high income earners up to an astonishing $953 billion.
You might not make enough money to be directly affected, but that doesn’t mean these hikes won’t hit you. These tax hikes fall directly on small businesses, the vast majority of which are not corporations, but partnerships, proprietorships, and LLCs who pay their taxes on individual income tax forms. Higher taxes on businesses will mean lost jobs, lower wages, and higher prices. This includes, by some estimates, 90 percent of the profits from partnerships and subchapter S corporations and 40 percent of the profits from sole proprietorships.
Death tax
The Obama budget brings back the death tax, currently scheduled for total repeal in 2010—at a confiscatory 45 percent top rate. This is hidden in a footnote in the Obama budget, not included in the policy proposals, or the $1.35 trillion price tag.
Spending and debt
The budget shows spending as a percentage of the economy reaching the historic level of 27.7 percent this year. The deficit as a percent of the economy is scheduled to reach a level unseen at any time in our nation’s history outside of the four peak years of World War II. The biggest difference is that war effort was funded primarily from domestic savings, whereas the current deficit is mostly borrowing from foreign governments. It is now an open question how long this level of borrowing will be sustainable, and the Federal Reserve stands ready to step in and buy Treasuries directly, monetizing this record debt and triggering inflation.