Obama’s Plan for Tax Hikes … on All of Us
Politics is always a game of give and take, and the difficulty of achieving a legislative victory that actually advances conservative objectives is an age old one. In 2010, President Obama extended the 2001 and 2003 tax cuts for all income earners, including the top three percent. That decision definitely displeased his liberal base, but now he says he is prepared to veto legislation to prevent Taxmaggedon and sequestration unless his demand to raise taxes on upper income earners is agreed to. Basically, he is threatening a $500 billion tax increase just 18 days before the election.
If Mitt Romney wins the election, Republicans will have an opportunity to get off the ropes and resist such tax hikes while pursuing real reform. On the other hand, President Obama “may finally be able to dictate the terms of a bipartisan debt-reduction deal” if he wins reelection.
According to the Washington Post, Speaker of the House John Boehner “recently ruled out the idea [of raising the top rates], and senior GOP aides say letting the top rate rise, even briefly, above 35 percent is a line party leaders cannot cross.”
If the Republicans plan to stand firm in their resistance to tax hikes, so too will the liberal Democrats in their desire for Obama to keep his promise to raise tax rates. Case in point:
“Last week, Sen. Charles E. Schumer (D-N.Y.) planted a flag firmly for returning the top rate to 39.6 percent, arguing that Obama has made higher taxes for the rich a centerpiece of his reelection campaign and that polls show the public overwhelmingly supports the Democratic position.
‘We have worked very hard to separate tax breaks for the rich from tax breaks for the middle class, on both ends of Pennsylvania Avenue,’ said Schumer, the No. 3 Democrat in the Senate. ‘The fact that we’re winning on this issue is a sea change.’”
How could the Democrats’ and Republicans’ staunch positions be reconciled? The simple answer is that one side will cave. If Republicans cave, it will mean massive tax hikes. If Democrats cave, it will mean the status quo.
As we have said before, comprehensive tax reform must be done in a revenue neutral manner. One GOP tax aide noted, “once tax rates rise, any move to lower them again would increase the budget deficit, creating procedural as well as political problems.” But this is simply of procedural issue, not grounded on any sort of conservative principle. Conservatives should not accept the argument that reversing a devastating $500 billion tax hike will “increase the budget deficit.”
The term economics comes from the Greek oikonomia, which means “household management” or “housekeeping.” All of the folks who are not on the Hill or in the White House have to push our elected officials to get our fiscal house in order. The first step to doing that is understanding that taxing our way to prosperity and surpluses is simply not possible.