President Obama and Democrats in congress are once again trying to sell America on tax increases. All of our problems will be solved if the “rich” would just pay more in taxes. We’ve been down this road before with disastrous results.
Senate Democrats want to institute a 3% surtax on all income over $1 million. For his part, President Obama wants to raise taxes on all American households making over $250,000 per year, and eliminate the income ceiling on the Social Security tax, which would add an additional 10% to the top tax rate.
After you add up all of the tax increases on small businesses and job producers, including Obamacare’s 0.9% surtax on individuals making $200,000 and couples making $250,000, as well as state income taxes, the top tax rate in America will soar above 60%. In fact, the Wall Street Journal’s Stephen Moore tabs it at 62% should Obama and Democrats get their way.
All of this marks somewhat of a shift in tactics from the Democrats. As Peter Orszag, President Obama’s former director of the Office of Management and Budget, recently told the New York Times, the surtax on millionaires “is an idea that has been discussed in Democratic policy circles,” but ultimately is was outweighed by “economic concerns that marginal tax rates could creep over the 60% range” in certain areas of the country.
What was once considered so economically disastrous that it had to be relegated to closed door Democratic meetings has now become a very public policy goal. History shows us why Democrats would do better to keep such crazy talk to themselves.
In 1932, President Herbert Hoover raised the top tax rate from 25% to 63% purportedly to balance the budget and restore Americans’ confidence in the economy, much as Obama and the Democrats claim today. However, Hoover’s tax hike caused the economy to tank even further by killing private investment and job creation. To add insult to injury, the federal deficit didn’t even shrink, it grew, because there was less income to tax.
You may recall that the top rate under President Jimmy Carter was 70% and once again, joblessness and poverty reined supreme.
It’s also worth noting that during the Carter administration, on average, 23% of Americans did not pay federal income taxes, either because they had too little income, or because their deductions cancelled out their liability.
Today, the percentage of Americans not paying federal income taxes has more than doubled to 47%. All the more reason that Obama and the Democrats should be looking to distribute our collective tax burden more fairly and equitably, not demand more money from those who are single-handedly holding down the fort.
According to an IBOPE Zogby International poll, just 16% of all Americans think Obama and the Democrats should let the Bush tax cuts expire, including just 14% of voters from Red states, 18% from Blue states, and 15% from battleground “Green” states. Moreover, a plurality of voters from Red (41%), Blue (31%) and Green (40%) states all think that the Bush tax cuts should be extended for all taxpayers.
Clearly, most Americans aren’t buying what the Democrats are selling. They know that the “soak the rich” strategy is not some new theory in need of testing, rather it’s a path we know leads to ruin because it’s lead us there before.