During the 2008 US Presidential campaign, and after he was elected, President Obama repeated his mantra of “Your taxes won’t increase one dime” for families making less than $250,000 a year (or individuals making 200,000 or less). Obama was able to ride a populist wave against those that have, as well the negative sentiment against Republicans due to the Bush years, to win the presidency. However, examining the "Not A Dime" tax pledge shows that it was, at worst, a lie, or, at best, an insane promise.
I shall now go over some of the ways in which everyone's taxes will go up.
1. Cap and Trade tax
Cap and trade has been the subject of much debate, at least on the blogsphere. President Obama's Cap and Trade policy in his budget calls for over 650 billion in revenues from Cap and Trade (Although Jason Furman, deputy director of the National Economic Council, said that figure is actually much higher, anywhere between 1.3 to 2 trillion). Expect higher energy costs, and not to just the rich.
Here's a preview of what could come from Cap and Trade:
1. North Dakota: Utilities say cap-and-trade means higher rates
2. Louisiana: Obama's new energy tax hits Louisiana the hardest
2. Cigarette Tax
President Obama, in February of this year, signed into law a federal hike on cigarettes. This hike, a doubling of the tax, is expecting to help fund health care for children (You are your brother's keeper after all. Sorry Cain).
Oh yeah, this won't affect anyone making less than $250,000 a year though. Wait, no, I lied. Sorry.
3. Inflation:
Federal spending has not stopped since the majority of voters in this country elected Barack Obama (Thank you, Mr. Bush). In fact, spending has gotten much, much worse. When federal spending increases this much then inflation is always a real possible. Richard W. Rahn, Chairman of the Institute for Global Economic Growth and a contributor at The Cato Institute, breaks down why a big inflation rate just might be around the corner:
"Return of Money Snatchers?"
An increase in government spending must be financed by increasing taxation, or increasing government borrowing, or creating more money by the central bank (the Federal Reserve), or all of the above. Increasing taxation or government borrowing does not directly increase inflation, but if the central bank creates new money faster than goods and services are increased, inflation will result.
Keep an eye on the printing press.
4. Federal Income Tax?:
Perhaps some of you are saying to yourself "Hayek, Obama was clearly talking about Federal Income tax during his campaign and when he addressed the congress". Well let's assume for a moment that he was just referring to Income Tax. An editorial titled "Who Pays Taxes" appeared in the Washington Post this month, a paper with a liberal reputation. The editorial stated the following:
President Obama has promised that taxes will not be increased for families making under $250,000. That is a promise that will probably have to be dropped down the road. There just isn't enough revenue to be found above that figure unless we create a system so lopsided that voters would always want more government spending because it would come at such a low price.
The commonly used political definition of "rich" has crept up in recent years from $100,000 to $250,000. Either that definition is going to have to change again, or we will have to come to terms with the fact that the middle class will have to face higher tax burdens, too
Nice to see that the label "rich" keeps getting lower, and lower, and....
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