“Taxmageddon” is coming on January 1, 2013. What does that mean? Well, we (US taxpayers) can expect large tax increases. Romina Boccia, James Sherk and Katie Tubb of the Roe Institute at The Heritage Foundation, say:
“The nation is now firmly on track to go over the fiscal cliff in January 2013 unless Washington takes action. The uncertainty leading up to the fiscal cliff – especially Taxmageddon – is already hurting the economy today and, according to projections by the Congressional Budget Office, could send the country back into recession in 2013.”
So, just what is “Taxmageddon?” It is a massive tax increase of $494 billion over what we already pay, the largest tax increase ever! And that’s on top of the $502 billion ObamaCare tax, er, mandate, er, tax coming over the next ten years. The average US household will see a tax increase of $3800 in 2013 alone, with higher tax bites in subsequent years. I’ll never understand how having less to spend will have no effect on the US economy, but, hey, Obama’s economic team, his Council of Economic Advisers (CEA), has known what’s best, in spite of being wrong every time. According to the most recent CEA report:
“… the economy posted its thirteenth straight quarter of positive growth, as real GDP (the total amount of goods and services produced in the country) grew at a 2.0 percent annual rate in the third quarter of this year, according to the ‘advance’ estimate released by the Bureau of Economic Analysis. Over the last thirteen quarters, the economy has expanded by 7.2 percent overall,….”
“Growth” and “expansion” are not the same thing. Other than to make President (for life?) Barack Hussein Obama’s economic policies look good, why were the two (completely different) concepts included? Further, nowhere in the CEA report can I find an explanation of what an “advance estimate” is, or that the advance estimate is typically adjusted downward as complete information becomes available.
Sixty percent of the so-called Bush Tax Cuts went to middle and low income taxpayers (the 52 percent still paying income tax), therefore they will bear the majority of the burden. So much for Obama’s promise to not raise taxes on anyone making under $250,000.
Because of the threat of higher taxes, many businesses are currently making preparations by slowing or stopping job creation. Because Taxmageddon will slow job creation and wage growth, Americans of all income levels will bear the brunt of Taxmageddon. But, hey, Obama’s economic team has everything under control.
Boccia’s, Sherk’s, and Tubb’s recommendation: “Congress and the President should show principled leadership by avoiding tax hikes on all Americans and by offsetting defense sequestration with cuts in spending elsewhere.” Will that recommendation be followed? I doubt it. Obama says he will not sign a “fiscal cliff avoidance deal” unless it calls for tax increases.
What are the consequences of these tax increases? No one knows for certain, but the experiences of two countries, Great Britain and France, can provide some idea of what can happen in the US. After all, rich is rich.
- France: from rt.com, we get this: “The government’s plan to raise the top income tax rate to 75 percent has already sparked rumors in the media that France’s wealthiest people could leave the country to avoid taxes…” [emphasis mine] Also, “… while the business community has also criticized a proposal in the 2013 budget to raise the capital gains tax on equity sales, which they argue will scare away investors and hamper entrepreneurs from developing their businesses.”
- Great Britain: from Red Alert Politics, we get this: “After sticking it to the rich by pushing top tax rates from 40 percent to 50 percent in 2010, Britain lost two-thirds of its millionaires and £7 billion in tax revenue.” Red Alert Politics continues, “… there was ‘considerable behavioral response’ to the tax increase, the report details how the tax hike stunted economic growth, caused substantial (legal) tax avoidance, and likely made the UK ‘a less attractive place to start, finance and grow a business’.”
Can Obama and his minions learn anything from France and Great Britain? Do people who pay taxes leaving France, and the admission by Great Britain’s own government that raising top income tax rates actually reduced revenue and hurt economic growth mean anything? Apparently not. Obama’s ideology of “fairness” and “social/economic justice” trumps economic reality.