THE HIGH COST OF LIBERALISM
August 25, 2009
Which tax increases do the current administration and Congress intend to enact? There are more than a dozen, all of which would negatively affect our economy, says Pete du Pont, the former governor of Delaware and current Board Chairman of the National Center for Policy Analysis (NCPA).
- One has already been signed into law by President Obama: an increase in the tax on tobacco, to $1.01 a pack of cigarettes from 39 cents, and to as much as 40 cents a cigar from a nickel -- increases of 159 percent and 700 percent, respectively (this is expected to bring in $8 billion a year).
- Next up is a possible increase in alcohol, beer and wine taxes, raising about another $6 billion annually, and perhaps another $5 billion a year on sugary drinks will be enacted.
Then come a series of substantial tax increases that are on the Washington agenda that, if enacted, will create real problems for our country's economy, says du Pont.
First, allowing the expiration of the previous Bush administration tax cuts at the end of 2010:
- These reductions increased government tax receipts by $785 billion (just as the Kennedy and Reagan tax cuts increased tax revenues) and gave us eight million new jobs over a 52-month period.
- The cuts go away if Congress does nothing, raising tax rates on the top earners will to 39.6 percent from 35 percent, and on the next-highest bracket to 36 percent from 33 percent.
- The Joint Committee on Taxation estimates that 55 percent of these tax increases will come from small-business income.
Next comes Rep. Charles Rangel's additional tax increases, a part of the House health care bill:
- The House Ways and Means chairman calls for a 1 percent surtax on couples with more than $350,000 in income, 1.5 percent on incomes more than $500,000, and 5.4 percent on incomes more than $1 million.
- The extra tax would kick in at lower levels for unmarried taxpayers and if the promised health care cost savings don't materialize, the surtaxes would automatically double.
The House health care bill contains several tax increases that would hit couples earning under $250,000 a year, contrary to President Obama's promises:
- $8.2 billion of tax increases for people using health savings accounts or other tax-free savings to purchase over-the-counter drugs.
- A "Comparative Effectiveness Research Tax" of $2 billion on all private and "public option" insurance, plus up to 8 percent paid by employers -- mostly small businesses -- that don't offer health insurance.
- There is even a proposed tax on individuals who do not have health insurance.
Source: Pete du Pont, "The High Cost of Liberalism; Taxes too high? You ain't seen nothing yet," OpinionJournal.com, August 24, 2009.
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