Raises taxes during an economic downturn: Proposes hundreds and hundreds of billions of dollars in new taxes at the worst possible time, while the economy is already weakened, unemployment is on the rise, and families are struggling to make ends meet.
Raises taxes during an economic downturn: Proposes hundreds and hundreds of billions of dollars in new taxes at the worst possible time, while the economy is already weakened, unemployment is on the rise, and families are struggling to make ends meet. Even Christina Romer, the Chair of the President’s Council of Economic Advisors, has argued that “tax increases are highly contractionary.” The tax hikes included in this budget proposal will only prolong the recession.
Raises taxes on energy: Assumes $646 billion in new revenue from auctions of greenhouse gas emissions permits under an untested, growth-choking, and likely ineffective “tax and trade” (i.e., “cap and trade”) program. While experts across the spectrum state the unilateral “tax and trade” program envisioned by the Administration would have no measurable effect on global temperatures, it would impose enormous tax increases on the energy that fuels our cars, lights and heats our homes, powers our assembly lines, and ensures a stable, affordable food supply.
Raises taxes on small businesses, the engines of job creation: Targets small businesses – the engines of job creation in our country – for unwarranted tax increases by raising marginal income tax rates from 33% to 36% and from 35% to 39.6%. Small businesses employ about half of all private-sector workers and have created nearly 80% of the new jobs in the U.S. in recent years. According to IRS data from 2006, 60% of net small business income was earned by taxpayers with at least $200,000 of income. Imposing higher taxes on hundreds of thousands of these “mom and pop” businesses is hardly the way to encourage job creation during these challenging economic times.
Raises taxes on investments instead of encouraging economic growth: Discourages critical investments in our economy by raising the top tax rate on capital gains and dividends by one-third. To help steady our economy and calm the capital markets, we should be encouraging the long-term investments that lead to job creation by preserving lower tax rates on investment capital.
Limits Tax Incentives for Charitable Giving: Restores and expands pre-2001 provisions – known as the Personal Exemption Phase-out and the Pease Limitation – that act as stealth increases in marginal tax rates by limiting the value of deductions and exemptions. This harms philanthropic organizations, like the Red Cross, Habitat for Humanity and soup kitchens, when their services are needed most, as it reduces the value of the charitable deduction for affected taxpayers.
Increases dependence on foreign oil: Imposes punitive new taxes on domestic energy production, encouraging U.S. companies to move jobs overseas and increasing our overall dependence on foreign energy supplies. These tax increases on U.S. energy producers – combined with the Administration’s flawed “tax and trade” proposal – may leave Americans yearning for the days of $4.00 per gallon gas.
Resurrects the Death Tax: Allows the death tax to spring back to life in 2010 by preventing the estate tax repeal from taking effect as scheduled under current law.
Imposes new marriage penalties: Establishes significant new marriage penalties by failing to set the income level at which married couples pay higher taxes at twice the level at which those higher taxes apply to singles. Specifically, the budget imposes higher taxes on singles earning over $200,000, while imposing higher taxes on joint filers earning over $250,000 (rather than over $400,000, the level that would actually be required to avoid marriage penalties). The budget’s new marriage penalties are contained in its proposals for higher marginal tax rates, higher rates on dividends and capital gains, and its quicker phase-outs of itemized deductions and personal exemptions.
Reduces Economic Competitiveness: Appears to substantially limit “deferral,” an aspect of the current tax code that permits American companies with operations around the world to compete against their international counterparts on a level playing field. The budget’s $210 billion tax increase on the international activity of these U.S. businesses threatens high-paying jobs here in the U.S. and creates incentives for these companies to be gobbled up by foreign competitors.
Disguises spending as tax cuts and “spreads the wealth” on retirement savings: Purports to provide $326 billion in “tax relief” that is, in reality, new federal spending. The budget extends and expands various refundable tax credits, which are actually cash transfer payments to individuals who, in many cases, do not pay any income or payroll taxes. Of particular note, the budget makes the current “saver’s credit” refundable and provides “a 50-percent match on the first $1,000 of retirement savings for families that earn less than $65,000.”
Selectively enforces PAYGO: Makes House Democrats’ inconsistent track record on PAYGO enforcement look downright principled. On the one hand, the Obama Budget assumes – quite appropriately, but much to the Blue Dogs’ chagrin – that most of the 2001 and 2003 tax cuts and the annual AMT patch will be extended without the need for corresponding revenue offsets. Indeed, the President should be commended for recognizing the folly of requiring tax increases in order to extend tax relief in those instances. On the other hand, it is baffling to see that the budget still clings to PAYGO with respect to extensions of certain other tax provisions, such as the R&D credit.
Misses an opportunity to ensure Social Security’s future: Asserts that the “President is committed to ensuring that Social Security is solvent and viable for the American people, now and in the future,” yet his budget proposes no significant steps towards achieving this goal.
Increases health care spending dramatically: Proposes a $634 billion “down payment” on health care “reform,” with total expenditures expected to exceed $1 trillion. Per capita health care costs in the U.S. are already twice as high as those in Canada and two and one half times higher than those in the UK. Throwing in an additional $1 trillion is unlikely to improve care or make it more affordable for American families.
Diverting Medicare dollars away from seniors: Proposes billions of dollars of Medicare cuts, some of which take away seniors’ choices. Moreover, these Medicare savings wouldn’t be used to provide better benefits to other seniors but would be used to offset unrelated health care reform. Regardless of the importance of health reform, the Medicare trust fund is not a piggy-bank that should be tapped for that purpose.
