In previous posts we have explained how President Hoover tried to tax and spend and protectionist his way out of a recession that became the Great Depression. Then we explained how FDR and the New Deal continued many of those policies and the result was that unemployment never dropped below 20% until World War II an FDR’s own Treasury Secretary explained how the policy was a failure.
Now Obama wants to raise income taxes and capital gains taxes. Folks, this is a disaster in the making. It is a disincentive for people to invest and it will lower the amount of revenue that will come into the government.
The Obama spin will be that this is just on “the rich”. This is a lie. The tax will hit high wage earners but there aren’t that many of them. The vast majority of those who will be hit by this are Sub. S Corporations. Sub S. Corporations pay the top marginal rate rather than the corporate income tax rate because they are small businesses. Small business does most of the buying and selling and they create 75% of the jobs in this country.
What about the rich? The “rich” like John Kerry and other hyper millionaires/billionaires make money in many ways that are not considered “earned income”. For example: John Kerry made $5,072,000 in 2003 and had a total federal tax burden of 12.34% (See Norton’s First Law).
American small and medium sized businesses pays ridiculously high taxes now and far more than most of the industrialized world. Now Obama wants them to pay 40%. This is a perscription for more unemployment and higher prices for all of us.
Obama’s First Budget Seeks To Trim Deficit
Plan Would Cut War Spending, Increase Taxes on the Wealthy
By Lori Montgomery and Ceci Connolly
Washington Post Staff Writers
Sunday, February 22, 2009; A01
To get there, Obama proposes to cut spending and raise taxes. The savings would come primarily from “winding down the war” in Iraq, a senior administration official said. The budget assumes continued spending on “overseas military contingency operations” throughout Obama’s presidency, the official said, but that number is lower than the nearly $190 billion budgeted for Iraq and Afghanistan last year.
Obama also seeks to increase tax collections, mainly by making good on his promise to eliminate some of the temporary tax cuts enacted in 2001 and 2003. While the budget would keep the breaks that benefit middle-income families, it would eliminate them for wealthy taxpayers, defined as families earning more than $250,000 a year. Those tax breaks would be permitted to expire on schedule in 2011. That means the top tax rate would rise from 35 percent to 39.6 percent, the tax on capital gains would jump to 20 percent from 15 percent for wealthy filers and the tax on estates worth more than $3.5 million would be maintained at the current rate of 45 percent.
Obama also proposes “a fairly aggressive effort on tax enforcement” that would target corporate loopholes, the official said. And Obama’s budget seeks to tax the earnings of hedge fund managers as normal income rather than at the lower 15 percent capital gains rate.