Obama's Imaginary Tax Cut
October 29, 2010
Claims that Americans who make less than $200,000 have not, and will not have, any of their taxes increased are not true. And unfortunately, it is likely to become a whole lot worse, says Richard W. Rahn, a senior fellow at the Cato Institute and chairman of the Institute for Global Economic Growth.
- The 111th Congress has already enacted $352 billion in net tax increases.
- The S-Chip bill was funded by an additional $65.5 billion in tobacco tax increases -- these increases are paid primarily by lower-income people.
- Obamacare is funded with a variety of individual and employer mandates, excise tax increases and fees, including a tax on "tanning salons," adding up to $652 billion in tax increases, before deducting $107 billion in "exchange credits" and $37 billion in small-business tax credits; the vast majority of these tax increases fall on middle- and lower-income people.
Politicians are now claiming that they are going to enact the pledged and necessary tax reductions during the upcoming lame-duck session of Congress, but don't count on it, says Rahn.
Restoring all of the tax cuts will not be a simple process, nor one that most of the retiring and defeated members will be able to agree upon readily.
The bottom line is that the exiting Congress may continue to be irresponsible by not doing what is necessary to avoid a huge tax increase in January. Such a tax increase will almost certainly cause a double-dip recession and market chaos. Take heed.
Source: Richard W. Rahn, "Obama's Imaginary Tax Cut," Washington Times, October 25, 2010.
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