What is a budget? According to Wikipedia, it is a financial plan and a list of all planned expenses and revenues. It is a plan for saving, borrowing and spending. I think President Obama missed the part about planned expenses and skipped right to the part about revenues in his proposed budget for fiscal 2013. Obviously, I haven’t had time to read the entire plan, but I was cued into part of it by Mike in his comment on yesterday’s post. He started me thinking about the proposed budget and I went looking for some details. What I found confirms what Mike laid out in his comment and while I am relatively sure Obama’s plan will never see the light of day and reach his desk, it gives me great reason for concern. His heart is most certainly not in the right place. Here are some of the details, from Fox News.
Though Republicans already are mounting a vigorous campaign against the proposal, many of the tax provisions still could become law unless Congress takes action to stop them.
At the top of that list is the expiration of the tax cuts approved during the George W. Bush administration. They’re scheduled to expire at the end of 2012, and the White House estimates that letting them lapse, at least for households making more than $250,000, could pump $968 billion into the federal coffers over the next decade.
Allowing those rates to expire, as Obama’s budget proposes and as current law would allow absent intervention, would mean the following changes:
– For households making more than $250,000 and individuals making more than $200,000, the top income tax rate would rise from 35 percent to 39.6 percent.
– For those same households, the top rate on qualified dividends would rise from 15 percent to 39.6 percent.
– The top rate on long-term capital gains would rise from 15 percent to 20 percent.
– The estate tax, known disparagingly as the “death tax,” would rise to 45 percent from 35 percent.
Please note, the above items are only as a result of allowing the Bush tax cuts to expire. They are only the tip of the iceberg, but they give an inkling of exactly where Obama would like to go with this. Considering the rest of his proposal is a fearful proposition.
The hike in investment income tax for top earners, though, would be compounded by another surcharge included in the federal health care overhaul. That 3.8 percent surtax would bring the top dividend rate to 43.4 percent. The top capital gains rate would, likewise, be 23.8 percent.
Along the same lines, the budget plan would make sure hedge fund managers and others pay an ordinary income tax rate for what’s known as “carried interest” — or profits, in the investment world — instead of the 15 percent rate. That’s projected to bring in another $13 billion over the next decade.
Aside from those changes, the budget calls for implementing the so-called Buffett Rule. This would ensure that every household making more than $1 million pays at least 30 percent of their income in taxes.
The budget also cuts the value of itemized deductions to a 28 percent rate for households making more than $250,000. That would cover popular deductions like the mortgage interest deduction and charitable deductions — and it’s projected to raise $584 billion over 10 years.
The bulk of the changes are aimed at upper-income earners. The budget, for instance, reprises an older plan to end preferential treatment for corporate jet owners. It also calls for ending oil and gas company tax “preferences,” projected to raise $41 billion.
Let me skip right to the end of the quote to start my comments. Don’t you just love the way President Obama always manages to include oil and gas company tax preferences in any discussion about taxes. First of all, most of the tax preferences he is talking about are not preferences that go only to oil and gas companies. Instead, they are deductions that are given to all companies that are doing business. Deductions for things like equipment expenses, etc. These are not special deductions aimed only at oil and gas companies. For the President to insist they are and to make this claim is an outright falsehood.
Looking at the rest of the items makes it fairly clear who is the target of the Obama budget train. Again, I suspect this budget will never see the light of day and thank God for that. It would be a disaster of major proportions, which we can ill afford at this time. The President has a one-track mind when it comes to taxes. Raise them first and if there is any doubt, raise them again. As with the most liberal of his party, their first answer to any problem is always to raise taxes. Never mind the long-term effect it will have on our country. Raise taxes and ask questions later. Yeah, that’s just what we need.