12.20.2012 13

The Cost of Obama’s ‘No Compromise’ Class Warfare

ObamaBy Howard Rich — No matter what happens between now and January 1 upper-income earners in America — including tens of thousands of small business owners — will be saddled with sizable tax increases in the coming year.  No amount of negotiating in advance of the so-called “fiscal cliff” will change that.

Why not?  Because U.S. President Barack Obama simply refuses to negotiate — effectively threatening all Americans with tax hikes in an effort to further his radical redistribution of wealth from private sector “makers” to bureaucratic “takers.”

Armed with polling data showing his equivocating rivals in the Republican Party bearing the blame for any fall over the “cliff,” Obama has vowed to reject any proposal that does not include upper-income tax hikes.  This means he gets to hold lower- and middle-income earners hostage to his class warfare demands — secure in the knowledge he won’t be held responsible for the fallout.

“The fiscal cliff allows Democrats that rare political opportunity to do something that they want to do — something that is politically unpopular — while letting somebody else pay the political price,” U.S. Rep. Mick Mulvaney (R-S.C.) recently observed.

Of course it’s the actual price of Obama’s recalcitrance that’s far more frightening to consider.  Thanks to his refusal to negotiate, individuals making more than $200,000 annually (and families making more than $250,000 annually) will see their tax rates climb from 33 to 36 percent on January 1.  Additionally any income above $390,050 will see a rate increase from 35 to 39.6 percent.  Combined, these tax hikes will siphon an estimated $1 trillion from the private sector over the coming decade, according to Obama’s Treasury Secretary Tim Geithner.

Absent a change of heart by Obama there’s nothing anyone can do to keep these tax increases from taking effect.  The only question now is whether lower brackets will also see an increase.

Of course this $1 trillion tax hike is only part of the equation.  Every bit as menacing to the U.S. economy is the onset of Obamacare — which will drain another $1 trillion in taxes from the private sector over the coming decade.

“Welcome to the other cliff,” writes Michael Tanner of The Cato Institute in describing the impact of these Obamacare taxes, which include a 0.9 percent Medicare payroll hike and a 3.8 percent tax increase on investment income — both levied on individuals earning more than $200,000 and families earning more than $250,000.

“At a time when the economy desperately needs more risk-taking and investment, we are about to make it harder for entrepreneurs to put their capital to work,” Tanner notes, adding that “this tax will also fall heavily on many small businesses.”

According to the U.S. Joint Committee on Taxation, nearly 1 million people who report business income on their taxes fall into Obama’s “upper-income” definition.  And while those 1 million people represent just 3.5 percent of America’s population — they shoulder 53 percent of its business income tax burden.  Also, individuals who report business income on their returns create an estimated 54 percent of America’s jobs, according to a recent Ernst and Young report.

Not only that these business owners are already paying their “fair share” — and then some.

“The U.S. has the most progressive income tax burden of any industrialized nation,” the nonpartisan Tax Foundation recently concluded, noting that the “top ten percent of U.S. taxpayers pay a larger share of the income tax burden than do their counterparts in any other industrialized country, including traditionally ‘high-tax’ countries such as France, Italy and Sweden.”

Assuming these small business owners have anything left to pass onto their heirs when they die, Obama is ready to pounce on that money too.  Currently estates valued at $5.1 million or less are exempted from the federal government’s “death tax” — while those above $5.1 million are taxed at 35 percent.  Barring a fiscal cliff deal prior to January 1, though, any estate valued at $1 million or more will be taxed at 55 percent.

This increase — which would be applied to money that’s been taxed once (and in some cases twice) already — would drain an additional $532 billion from the economy over the coming decade.  It would also create yet another compelling disincentive to wealth creation in our country.

The tax hikes associated with the fiscal cliff and Obamacare represent a brutal one-two punch for small businesses — and will cost our economy at least 200,000 jobs next year according to the Congressional Budget Office.  And for what purpose?  Obama says his plan will slash deficits, but according to the Senate Budget Committee, 75 percent of the money collected from his fiscal cliff “revenue enhancements” will go toward new spending — not deficit reduction.

Such is the reality — and the cost — of the class war Obama has “won.”  The losers?  American jobs, innovation and prosperity.

The author is chairman of Americans for Limited Government.

  • ray13666

    This is what happens when amatuer community organizers are elected into office and bring a bunch of amatuers into the administration. The blind leading the blind voted into office by the blind, racially charged that do not have a clue what they are voting for. What a mess this country is in and it is EVERYONES fault on both sides of the aisle including us taxpayers for letting this get so out of hand. The only solution available is to vote most of them out of Congress and the Senate and put in people who are fiscally responsible as a first step. 2nd step would be for term limits. 3rd step would be for campaign spending reform – over 2 billion spent on the last presidential campaign, what a damn waste of money which basically benefited the liberal media with more funds.

  • undunder

    The Time mag man of the year is more a maggot of the year. The very site of him, one time novelty black president, now has come to induce projectile vomiting. He grows more disgusting and despicable by the day. He is not king. He barely passes for statesman. A true leader unites; not divides. A true leader is more concerned about those he leads than himself. A true leader seeks what is best for the country he leads, not the votes he bribes. A true leader inspires those he leads to do better, be better, and a want the betterment of others. Obama aspires to be the ruler over the Welfare States of America. He is close. He prefers to pay Americans to be ignorant, unemployed, and unquestioning in exchange for the promise to “make the rich pay” in order to subsidize his promise of life choices without consequences. You don’t wanna work – no problem, vote for obama and he will take care of you – cradle to grave.

  • del

    amen!……needs to be ousted as fast as possible

  • Greg137

    IMPEACH Obama! Nuff said..

  • Does a Communist negotiate? No, a Communist dictates.

  • What a bunch of nonsense. You guys recycle this garbage as if it was new, and hadn’t been debunked countless times before. First, the inheritance tax is not taxing the same money twice. it was never earned by the heirs so it hasn’t been taxed when it accrues to them. they didn’t even earn it. why should we be so happy to enrich people through no effort of their own? isn’t a million tax free enough? the person that dies isn’t paying any tax on it; they’re dead. Second, yes, i must get a crying towel for those high income people who will have to pay the same taxes they paid back in the clinton years when things were even better than they are now. These guys are not creating jobs now, what makes you think they’re going to create them if they pay a few percent more in their marginal rates? Most of these people can afford it better than anyone else. Third, as for inflexibility, he’s already raised the income level to 400,000/year, so you are just lying. Really – is this supposed to be journalism? it’s just propaganda. Like senator kyle – “this is not intended to be factual information.” You need a disclaimer like that.

  • pduffy

    Barry knows that there are not enough ‘rich’ to vote him or his people out, so he is safe attacking them politcially. Barry is therefore, anti-God because God said, “You shall do no injustice in judgment. You shall not be partial to the poor, nor honor the person of the mighty. In righteousness you shall judge your neighbor.” (Lev 19:15).
    But we all know that Barry has blasphemed the word of God by ridiculing Leviticus in the past, so why would he care about being ‘partial to the poor’? They can vote him into power as often as they wish.

  • Don

    Barrack Obama does owe a lot of thanks to the poor and middle class that voted for him but they are going to feel betrayed but they were warned that the super “PIMP” Barrack Obama was going to screw the poor and Middle class people more than what he will do to the rich. The increased taxes on the poor and middle class will put them out on the street corner jest like the “PIMP” does to all of the girls that he befriends then kicks them out on the street to work for them. The “PIMPS” then beat and or do anything when his people do not bring him a lot of money and that is what makes Barrack Obama the super “PIMP”.

  • Buz

    You fail to mention the fact that the money inherited is from after tax dollars earned and accumulated by the person who died. Sound like you have a Phd in B.S.1f.

  • Gmann22

    Obama says the Congress doesn’t listen to him. Well, he doesn’t respect anyone who disagrees with him. It’s his way or the highway. It is so amazing that so many people are fooled by him and he got back into office. He didn’t own up to taking the blame for Libya, and after Hurricane Sandy, everybody forgot about it. Then this horrible massacre happened in CT. and Libya is long forgotten. Four Americans died and it’s swept under the rug. Now he tries to take advantage of this tragedy (Ct.) and said we should put things in perspective and compromise. Compromise to him means “Do as I say.” Meanwhile, he’s off to Hawaii.

  • We have an imperial president…

  • I continue to truly wonder why obama could even win re-election but this is such a sad turn in America. I cannot watch him at all either, he makes me ill and angry.

  • Perhaps if Obama and Reid chose to make a real budget and get that passed, maybe raising some taxes could be accepted. At this time, however, no one should be forced to pay any taxes until we can see clearly where our money goes.

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