Vote Democrat for Higher Taxes

by Sal on October 29, 2007

in Election 2008,Politics

When I was six, I remember my parents following the 1984 Presidential Election.  My mother had gotten two bumper stickers, one red one that just had the words “Reagan” on it, and a blue one that said, “Vote Mondale for Higher Taxes.”  Even at six, I instinctively knew that higher taxes were a bad thing.   The bumper sticker above should be reissued as “Vote Democrat for Higher Taxes.” 

If anyone thought that the Democrats would not raise taxes this time around, think again.  Chairman of the House Ways and Means committee, Charles Rangel, a close ally of SWMNBN, introduced what he termed “the mother of all tax reforms.”  I call it “the mother of all heists.”  The Democrats here are trying to steal more money from the middle class under the guise of “taxing the rich.” 

Under Rangel’s plan, he would repeal the Alternative Minimum Tax.  This tax was enacted in 1969 to get about 155 rich families who were not paying any taxes to pay some taxes.  Now, due to the fact that it was never adjusted for inflation, over 21 million families are subject to this tax, costing them an average of $2,000 extra in taxes per year.  On its face, this proposal is a good idea.  The AMT was a mistake and is causing much hardship for the middle class.  If the tax bill ended here, it would be a good thing.  However, the Democrats insist on paying for this tax cut, not by cutting spending, but by raising taxes elsewhere. 

The first area of tax increase is the Bush tax cuts.  The Democrats plan to let these expire in 2010, and not renew them.  This will have the effect of: 

  • Raising the marginal tax rates from 10 to 15% for low-income familes, 25% to 28%, 28% to 30%,  to 33% to 36%, and 35% to 39.6%.  
  • Reinstate the marriage penalty, resulting in married couples paying more than their fair share. 
  • Taxpayers with children will lose 50% of their child tax credit
  • Taxes on dividends and capital gains will increase, thereby slowing investment. 
  • The death tax will return. 

The Bush tax cuts spurred the economy in one of the most sustained periods of steady economic growth in memory.  Unlike the tech bubble of the 90s, the growth (with the exception of the housing sector) has been real, sustained, and long-term.  Raising taxes by letting these cuts expire will devastate the economy. 

But letting the Bush cuts expire is not enough for Charlie Rangel.  No, he wants to go further and raise taxes even more.  First, he wants to raise taxes on managers of hedge funds and venture capital firms, and others who manage investment funds.  All this will serve to do is cause the managers of these funds to raise their cut of the profits to cover the tax, taking investment income away from the middle class. 

Finally, in the most egregious tax hike of all, Rangel wants to impose a 4% “surcharge” on the “wealthy”.  He defines wealthy as any individual making $150,000 or more, or a married couple making $200,000 or more (another marriage penalty), and an increase of 4.8% on those who make more than $500,000/yr.  Now, I know in some parts of the country, 150k or 200k seem like a lot, but on the coasts (New England, New York, California) where the cost of living is high, these salaries are not out of the ordinary at all.  Additionally, this surcharge would be made not against taxable income, but Adjusted Gross Income (the income on a tax return before any deductions are made).  This would have the net effect of basically cancelling out most deductions that individuals can make.  The bill also would begin a phase-out of personal exemptions and itemized deductions, making the average tax bill far higher than in the past. 

In total, Rangel’s tax bill would raise taxes to the tune of 3.5 trillion, the largest tax hike in history.  The effective top marginal rate would be 48% for individuals making over 500,000.  This bill effectively wipes out both the Bush and Reagan tax cuts, seriously endangering the last 25+ years of economic prosperity.  This is what Americans have to look forward to if they hand the government to the Democrats next year.  Be prepared to pay, and pay big. 

 Update:  The RNC is fighting back (courtesy of Michelle Malkin). 

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