While liberals debate a new government-run health care plan, it is important to take note of all the taxes being discussed in Washington right now. Taxes have real economic implications if you are paying the government, then you have less money for your family or your business. Higher taxes mean less investment and fewer jobs as the economy tries to recover from this severe recession. Higher taxes make it harder for our businesses to compete with other countries. There are real consequences, as you will see outlined below.
President Obamas Budget Proposal
The Obama budget raises taxes by $1.4 trillion. Starting in 2011, married taxpayers making over $250,000 would see the marriage penalty return. Federal death taxes would come back to life, even though they were supposed to be eliminated in 2010. President Obama’s budget extends it permanently at 2009 levels a 45 percent rate and $3.5 million exemption. Also in 2011, those making over $250,000 a year will see their tax rate increase from 35% to almost 40%.
The Health Care Surtax
While the Senate health care bill has yet to be released to the public, the House bill contains hefty taxes to pay for the new government-run plan. The bill raises taxes by $591 billion over 10 years by imposing a new “surtax” on top of existing taxes between 1% and 5.4% on singles earning over $280,000, and families earning over $350,000. This money would be redistributed to pay for the massive government health care program.
An Energy Tax
The cap and trade legislation authored by Reps. Henry Waxman (D-CA) and Edward Markey (D-MA) and passed in the House in June is nothing more than a big energy tax that would gravely affect our economy. American families and businesses would be burdened with direct and indirect energy costs, as energy prices will skyrocket as a result of the bill:
- Gasoline prices will rise 58 percent (or $1.38/gallon)
- Natural gas prices will rise 55 percent
- Heating oil prices will rise 56 percent
- Electricity prices will rise 90 percent
Taxes are not the Solution for Our Long-Term Budget Crisis
According to the Congressional Budget Office (CBO), raising federal income tax rates to pay for entitlement programs, such as Social Security, Medicare, and Medicaid, would require all rates to nearly double over the next 40 years. So by the time today’s newborns hit middle age, lower-income earners would be paying a 19 percent rate rather than today’s 10 percent rate. Middle class earners would pay 47 percent, not today’s 25 percent. High earners – be they individuals or corporations – would be paying 66 percent, instead of 35 percent. And that’s before any state taxes or payroll taxes. Clearly, such high tax rates are not feasible. Real reform of Americas deficit problem would require entitlement reform, and cutting spending.