Officially, the CPC calls the plan “The Budget for All” — and it’s all wrong. Sure, the proposal would theoretically cut the deficit from $1.1 trillion (7.0% of GDP) in 2012 to $180 billion (or 0.7% of GDP) in 2022. But the CPC would accomplish this feat entirely through massive and economy-crippling tax increases.I guess they had to wait for Teddy Kennedy to die before they could propose that "wealth tax".
In 2012, the Congressional Budget Office projects Uncle Sam will spend 23.2% of GDP and take in 16.3% of GDP in tax revenue. In 2022, under the liberal CPC plan, spending would be 23.3% of GDP — a bit higher than the CBO forecast for 2012 — and revenue would be a sky-high 22.6% of GDP. In other words, spending would be 0.1 percentage point more and tax revenue would 6.3 points higher, or nearly 40%.
The “Budget for All” contains just about every sort of tax increase imaginable. It would, of course, allow the top-end Bush tax cuts to expire, as well as create five new tax brackets — 45%, 46%, 47%, 48%, and 49% — for “millionaires and billionaires.” In addition, House liberals would break new ground by slapping a European-style wealth tax of 0.5% on fortunes of $10 million or more. The plan also contains a bank tax and a financial transaction tax.
But it’s not just the wealthy and bankers who would get pinched. These Democrats would also raise income taxes on the broad middle. The CPC plan would “allow the 28% and 25% brackets to sunset once the economy is on solid footing, in 2017 and 2019, respectively.” That means higher taxes on families making over $70,000 a year — a big, fat, middle-class tax hike. And some of those families would also be paying more for energy thanks to the carbon tax that’s also in the CPC plan.
Amazing, these progressive Democrats don’t think all those tax hikes will hurt economic growth. Not one bit. Why? First, it’s now the liberal economic consensus that tax rates below 70-80% don’t hurt growth. Second, even if those tax hikes unexpectedly did trim growth a smidgen, they would be more than offset by a new $2 trillion stimulus plan full of such supposedly pro-growth measures as clean energy tax credits, advanced manufacturing tax credits, and a “Child Care Corps.”
This plan does nothing to curb spending and that's where the real problems lie. It's just another economy-crippling money grab by people who know nothing about economics.