This article documents the, as of today status, of Obama’s tax promises broken. The cruel one that was discussed this evening was the VAT tax, Value Added Tax, as seen in Europe, that starts off as a 5% tax on everything and you don’t see it in the price of goods and services, but it is there, then after a year or so, it goes up to 10% and eventually levels off at 20%. It cannot go higher because the tipping point or the ability of a economic viability for families to continue making mortgage payments and car payments become impossible. This tax is stifling and average people don’t see it, but the economy becomes slave to it and growth all but disappears. Business large and small experience lackluster performance. Governments that establish this tax on top of all other taxes are rarely held accountable because it becomes ingrained in the legislative budgets and legislators simply cannot part with the revenue once it is in place. Kind of like a drug or opiate for lawmakers who cannot live without it. This is what Obama is all about, total socialism or worse. Why anyone would ever trust this President from this point forward is beyond my comprehension. The combination of the potential of government run healthcare along with all of the planned increased taxes, and now a VAT tax should be keeping all of us awake from this point forward.
The latest on government run healthcare is a real barn burner. The latest plan by Obama and his crass operatives in Congress (Reid and Pelosi) will be to come up with a hybrid plan the best in their opinion of the Baucus debacle and Pelosi’s gem, it will become Obama’s plan (remember he promised that) and they will come up with a bill called something other than healthcare, such as a new tax on TARP funded company bonuses, bring it up for a vote, and at the last possible moment, add the hybrid healthcare plan as just an amendment thereby allowing both houses to vote on the plan with a simple majority, and they hope to do this quickly before anyone notices. The healthcare will be the full public option. The wonderful congress members then can say that they voted for a tax bill rather than have to say they voted for the public healthcare plan, which they know will un-elected them in 2012. Someone leaked this plan today, so the talk radio folks have been hitting this hard to put the kibosh on this if possible. The Democrats planned to do this in the middle of the night most likely. Watch the news in the morning to find out if you got your clock cleaned over night.
Jim the Conservative 4counterbalance.wordpress.com
Obama’s ‘Stealth Taxes’ Estimated at Over $1.5 Trillion
Thursday, October 1, 2009 6:10 PM
By: David A. Patten Article Font Size
Taxpayers at all income levels could be hit with over $1.5 trillion in new taxes, fees, and other costs over the next 10 years, despite President Obama’s repeated promises that he would not raise taxes “one dime” on those earning less than $250,000 a year.
Details of several new tax proposals, including some that would disproportionately affect the middle and lower classes, have emerged following Obama’s recent dust-up with host George Stephanopoulos on ABC’s “This Week.” The two locked horns over whether the individual mandate in healthcare reform, which requires individuals either to buy healthcare coverage or face considerable fines, amounts to a tax.
Stephanopoulos suggested that fines levied for not complying with the mandate are a tax. Obama’s response: “But George, you can’t just make up that language and decide that’s called a tax increase…. I absolutely reject that notion.”
Under the Senate finance version of the healthcare reform bill, individuals could be penalized up to $1,900 a year for not buying insurance. That mandate would generate up to $20 billion in new federal revenue, according to the Congressional Budget Office. But is it a tax?
One strong indicator: The mandate would become part of the Internal Revenue Code. Failing to pay the penalty would result in a misdemeanor crime punishable by a $25,000 fine and/or up to a year in jail. Also, both the House and the Senate versions of the bill refer to the mandate fines as a form of “taxes.”
So Stephanopoulos was correct, and Obama was mistaken: The fees assessed as part of the requirement that people purchase insurance coverage are indeed a form of taxes.
Heritage Foundation senior fellow J.D. Foster tells Newsmax that Democrats are searching for “anything to collect revenues” that don’t appear to be taxes.
“The stealth taxes masquerading as fees in the various healthcare reform proposals are just another example of this,” Foster says, “except that they also violate the president’s promise of more transparency in government. And they violate his promise not to raises taxes on the middle class.”
Or as a Wall Street Journal editorial recently declared: “His real problem is that the individual mandate really is a tax. But the president doesn’t want voters to think of it that way, because taxes are unpopular.”
Several other taxes or quasi-taxes are under consideration. Some have been written into proposed legislation, while others are still in the conceptual stage.
So far, Democrats have primarily relied on projected-but-unspecified savings in Medicaid and Medicare to mask the red ink spilling from their proposals. Ultimately, however, balancing the budget will require eliminating government programs or raising taxes. But some de facto taxes hit consumers indirectly.
“If they take your money without your permission, it’s either a tax or a mugger,” Grover Norquist, founder of the anti-tax Americans for Tax Reform organization, tells Newsmax. “You can call it anything you want, but a fee that you have to pay is a tax.”
One tax has already been implemented. In February, Obama signed legislation hiking the federal excise tax on cigarettes by a whopping 156 percent, to $1.01 per pack.
An October 2007 report by Congress’ Joint Committee on Taxation estimated the tobacco tax would generate approximately $7.3 billion per year. The tax disproportionately affects the working poor, because one in four smokers lives below the poverty line according to Americans for Tax Reform.
Other new taxes or “fees” that may be on the table:
Health-Insurance Company Fee. The “Baucus bill” passed by the Senate Finance Committee and parallel initiatives in the House would hit health-insurance providers with an annual fee. Robert Zirkelbach, director of communications for the America’s Health Insurance Plans trade group, tells Newsmax the industry strongly opposes what he sees as a tax.
“New taxes on healthcare coverage will only make coverage less affordable for families and small businesses,” Zirkelbach says. “This is the opposite effect of what health care reform is supposed to accomplish. Unless policymakers focus on the underlying medical cost drivers, healthcare reform will not be sustainable.” Price Tag: Over 10 years, the measure would cost somewhat north of $45 billion, according to the Joint Committee on Taxation.
Energy “Tax.” A U.S. Treasury Department document obtained by the Competitive Enterprise Institute following a Freedom of Information Act request reveals that the administration projected revenues of “$100 to $200 billion annually” from auctioning off the right to emit greenhouse gases – the system known as cap and trade. Some of the funds raised by the administration will go to development of alternative forms of energy and conservation, and other government programs. The Treasury report also projected that, “Economic costs will likely be on the order of 1 percent of GDP, making them equal in scale to all existing environmental regulation.” But once again, can higher fuel costs and other economic impacts legitimately be called a tax?
The Treasury Department said the difference between cap-and-trade proposals, which auction the right to emit greenhouse gases, and a carbon tax on emissions “have blurred.” In April 2008 Peter Orszag, who now serves as Obama’s director of the Office of Management and Budget, testified to Congress that: “Under a cap-and-trade program, firms would not ultimately bear most of the costs of the allowances but instead would pass them along to their customers in the form of higher prices … price increases would be essential to the success of a cap-and-trade program.” Price Tag: At 1 percent of GDP, cap and trade as currently proposed would cost consumers $140 billion per year. The fact that it’s not technically a tax won’t be much consolation. The price tag over 10 years: $1.4 trillion.
Medical Device Fee. The Senate Finance Committee’s healthcare-reform legislation – the so-called “Baucus bill” – proposes a tax on medical devices. Ironically, the “fee” will increase the cost of medical care, which is the very problem healthcare reform is ostensibly meant to redress. Foster warns employers may react to higher insurance costs by cutting workers’ wages. Price Tag: About $30 billion over the next decade, according to the Joint Committee on Taxation.
Fee on Brand-Name Drugs. The Baucus bill would raise $1.7 billion annually by imposing a fee on those who manufacture or import “branded,” i.e., non-generic, drugs. Again, these fees, although not defined as a tax, will increase the cost of healthcare to consumers and insurance companies. According to Douglas W. Elmendorf, director of the Congressional Budget Office, it’s a given that consumers will foot the bill for the various fees in healthcare reform. “Those fees would increase costs for the affected firms,” Elmendorf wrote in a Sept. 22 letter to Senate Finance Committee Chairman Max Baucus, D-Mont., “which would be passed on to purchasers and would ultimately raise insurance premiums by a corresponding amount.” Price Tag: $17.2 billion over 10 years.
The so-called “Bo-Tax.” This proposal would slap a 10 percent excise tax on cosmetic procedures, such as cosmetic implants or Botox injections. Price tag: About $11 billion over the next decade, according to the Joint Committee on Taxation. It remains to be seen whether the Bo-Tax will be included in the final version of the legislation to be voted on by the Senate.
Soda Tax. When CNBC’s John Harwood asked House Speaker Nancy Pelosi in May if Congress would consider levying a “soda tax” to raise money for healthcare reform, she replied “Everything [is] on the table.” Since then, the idea of a soda tax has gained momentum. In September, several leading health experts endorsed a soda tax, saying it would help curb the nation’s growing obesity problem.
Look for the soft-drink companies and the American Beverage Association to fight it. “I have never seen it work where a government tells people what to eat and what to drink,” Coca-Cola CEO Muhtar Kent recently told a Rotary Club audience, according to Bloomberg.com. “If it worked, the Soviet Union would still be around.”
Any tax on soda would encounter tough resistance from lobbyists on Capitol Hill. Both The New York Times and doctors writing in the New England Journal of Medicine have called for a 1-cent-per-ounce tax on soda. The soda tax isn’t in the current versions of the health-care reform legislation, but will probably resurface. In a recent edition of Men’s Health magazine, Obama remarked: “I actually think it’s an idea that we should be exploring.” Price Tag: According to the publisher of the Beverage Digest trade publication, John Sicher, a 1-cent-per-ounce tax would raise $13 billion annually. But any soda tax faces an uphill legislative battle. If it does pass, insiders say, it would almost certainly cost less than a penny an ounce. “I think that a tax by any other name is still a tax,” Sicher tells Newsmax. “If money goes from an individual’s pocket into the public coffers, it sounds like a tax, and therefore it probably is a tax.”
Even without the soda tax, these items add up to a “stealth tax bill” on Americans of over $1.5 trillion over the next 10 years – most of it stemming from the indirect costs of energy cap and trade. Of course, how many of these proposals make their way into law remain to be seen.
There’s one group that won’t be surprised to learn Uncle Sam is reaching deeper and deeper into its citizens’ pockets: Voters. In August, a Gallup poll reported that 68 percent of them believed their federal income taxes would be higher by the time Obama’s first term is completed. Of those, 35 percent expected their taxes to be “a lot higher.”
Similarly, The New York Times stated in a recent editorial: “The question then is not whether taxes must go up, but when, how, and how much.”
By current estimates, the budget deficit will reach $9 trillion in the next 10 years. Most economists consider that level of debt unsustainable.
Norquist says it’s no surprise that those making less than $250,000 will feel the pinch of higher taxes and fees.
“There aren’t enough rich people to fund his fantasies,” Norquist says of Obama. “So he goes to the middle class and loots them. But because he said he wouldn’t, he has to play the game of calling it something else.”
Brad Schiller, a professor of economics at the University of Nevada, Reno, tells Newsmax it would be a mistake to strictly limit the economic discussion to taxes.
“I would say the cost burden on business and households in whatever form is a reduction on their income,” Schiller says. “So we shouldn’t focus exclusively on taxes. We should also look at fees and higher costs.”
Schiller believes the added taxes, fees, and costs discussed so far will not represent a significant drag on the economic recovery in the next four years. In fact he calls them “barnacles on a boat,” pointing out that major programs such as healthcare are phased in over a period of years anyway.
In the longer term, however, he says taking more money from consumers is “worrisome,” because higher taxes and other costs inevitably hurt productivity.
Of more immediate concern, he says, are the higher interest rates that will be triggered by government borrowing and the deficit. Those factors “are going to be what really slows the boat down,” he says. And he expects those factors to begin to come into play next year.
Other changes in the tax code are probably in store as well, and none of them is likely to help the economy. President Obama has called for raising the capital gains tax from 15 percent to 20 percent. He also wants to kill the Bush tax cuts that benefited those in the higher income brackets, who disproportionately shoulder the nation’s tax burden. And Obama wants to eliminate a provision that allows U.S. corporations to defer paying taxes on overseas profits, as long as the money remains offshore. Once those profits return home to the United States, they are subject to the 35 percent U.S. corporate tax rate, one of the highest in the world.
All of those taxes and fees, however, would pale in comparison to a value-added tax (VAT), which would be similar to a national sales tax on consumption.
Value-added taxes are a common feature of the Western European societies that the globalists in the Obama administration appear to admire so much. John Podesta, the co-chairman of Obama’s transition team and founder of the Center for American Progress, recently floated a trial balloon by telling Bloomberg Television that a value-added tax is more plausible than ever before due to the high deficit.
Former Deputy Treasury Secretary Robert Altman suggests the VAT could raise $400 billion per year from taxpayers. And everyone would pay for the tax, regardless of their income bracket.
Comments Reuters columnist James Pethokoukis: “Obama’s campaign promise to not raise taxes on households making less than $250,000 a year was always considered a joke here inside the Beltway…. Maybe it was a joke inside the campaign, too.”
OMB director Orszag recently confirmed that he’s currently looking for additional ways to narrow the budget deficit in the president’s 2011 budget.
Does that mean the administration would consider imposing new taxes on those earning less than $250,000 a year?
The Wall Street Journal asked Orszag that question. He replied: “We’re in the midst of putting together the 2011 budget, and we’ll have more to say about that later.”
Orszag’s response led the Journal to advise its readers: “Hide the children.”
© 2009 Newsmax. All rights reserved.
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