Obama Hood

Here comes the "soak the rich" part of the Obama tax plan:

Feb. 26 (Bloomberg) -- President Barack Obama is proposing the first tax increase on high-income earners in 16 years to help pay for sweeping health-care reforms, asking the U.S. Congress to cap the tax deductions for affluent Americans.

The move would reverse a course set by former President George W. Bush of lowering taxes for high-income people, the cornerstone of his administration’s economic program.

“It’s a clear repudiation of Bush’s policy,” said Peter Morici, an economist at the University of Maryland in College Park. “It’s more Obama Robin Hood.”

Let me stop right here for a moment and correct some lazy writing by the Bloomberg people. Bush's policy was not "tax cuts for high-income people", it was tax cuts for everybody. If you paid federal income taxes, you got a tax cut. Of course higher income people received a greater benefit because they paid more taxes, but it's intellectually lazy writing to claim Bush's policy was aimed only at the rich.

I personally think he went too far by removing millions of people from the tax rolls altogether. It's not healthy for a country to have over 40% of the wage earners getting a free ride from the income tax system while the rest pay all the bills.

Back to the article:

Obama proposes spending $634 billion to overhaul the U.S. health-care system, partly paid for by limiting tax deductions for couples making more than $250,000 a year, an administration official said.

He will seek the money, to be spent over 10 years, in his first budget request to Congress today. About half would come from changes to Medicare, the health plan for the elderly, and the rest from the tax revisions, the official said. Limiting deductions for upper-income taxpayers is projected to generate $318 billion over 10 years, the official said.

The administration also proposes in its budget plan to use revenue from the sale of greenhouse-gas emission permits to help finance a tax credit for some workers and offset higher energy costs for low- and middle-income people.

One correction - the president said that this change would affect those couples making $250,000 or more. However, the top tax rate that this change will effect starts at $208,850. It didn't even take 24 hours for that statement to expire.

If his cap-and-trade carbon program is enacted there won't be lower energy costs for anybody. We'll all get soaked.

And as taxes are increased to people with higher incomes, what incentive will there be to try and make a higher income? When you tax something you get less of that activity, and the folks who make the big money are not going to sit idly by and allow their work to be wasted on federal programs. They will find ways to shelter or hide income. They always do.

If Obama really wanted to spur the economy and pay for all his new programs he would immediately cut tax rates, especially the highest rates, like Kennedy, Reagan and Bush did and he'd have more money flowing into Washington than he would know what to do with. That doesn't interest him, though, because it doesn't meet his definition of "fairness".

How "fair" is it that so few people will end up paying the bill for everyone else?