Perspective: The threat of severe tax increases tomorrow is keeping unemployment high today

Ryan Streeter
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Obamanomics has been a disaster, and it's making things worse. As I noted this morning, one of the four main problems with Obamanomics that Martin Feldstein described yesterday has to do with taxes.

It's worth stopping to reflect on this issue.

Uncertainty about taxes just two years down the road, when the Bush tax cut extension ends, has harmful economic effects today as small businesses adopt hiring freezes and entrepreneurs sit on cash rather than deploying it in ways that create jobs.

Much of this has to do with taxes on the "rich," who as we all know are those individuals earning more than $200,000 or households earning more than $250,000 - which includes a good many entrepreneurs, new businesses, and small businesses that do not pay the corporate tax rate. If Obama wins in 2012, he will surely veto any bill that extends current tax rates for this group.

Republicans should move beyond defending this class in general, and start laying out in specific terms what kinds of tax increases they are facing in 2013. Remember, this includes a lot of people who would - if they could - create jobs for others through entrepreneurial activity.

So let's take a look at the numbers, and let them sink in. Peter Ferrara provides details at the American Spectator of the full effect of the tax cut expiration and the new taxes in ObamaCare:

These taxpayers would see their income tax rates jump by nearly 20%, the capital gains tax rate increase by nearly 60%, the total tax rate on corporate dividends increase by nearly three times, their Medicare payroll tax rate increase by 62%, and the death tax rise from the grave with a 55% rate. This would go way beyond the outdated Obama talking point about returning to the Clinton tax rates, adding up to a top federal tax rate of 44.8% on wage income alone, besides all the tax increases on capital income, on the way up to a 62% top federal tax rate.

Comments

[Matthew Reynolds]

In the USA they should make the Bush tax cuts permanent to remove economic uncertainty that is holding back economic growth.To drive down gasoline prices they should drill for oil at home.They should set business free to be dynamic and generate jobs by not only stopping any new French style rules but by scrapping & streamlining federal regulations.To restore economic confidence insofar as the fiscal deficit is concerned you could legally limit the size of the federal government while bringing in a balanced budget amendment and a line item veto to empower a president to strike pork barrel spending from a bill that congress has passed.As taxpayers & business face horrific costs from Obamacare that should be ended.Entitlements,Medicare & Medicade will bankrupt the USA very soon if not overhauled as Paul Ryan recommends.To spur growth extend free trade to South America so that alliances can be built up with beneficial economic co-operation.The federal payroll should be cut in size year on year for five or six years until the budget is in balance with whole departments phased out.If you want tens of millions of jobs in the USA then woo investors with zero tax rates on capital gains & dividends and the end of corporate income tax.

It is not rocket science as regards what needs doing to fix the US economy.Trouble is that Obama & his crew are either incompetent to the nth degree.Or Glen Beck is right that the left bring in job destroying policies in the hope of over-burdening welfare states so that capitalism is destroyed.I personally agree with Glen as he gets lots of important stuff right !