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Cato Institute Senior Fellow Dr. Daniel J. Mitchell doesn’t buy it, saying it will be the middle class who will take the “collateral damage” and will end up paying for healthcare and all of President Barack Obama’s new spending.
In an interview with Moneynews.com’s Dan Mangru, Mitchell said that there aren’t enough rich people in America to finance big government and that small business owners will bear the brunt of Obama’s new tax hikes.
Mitchell states that taxing the rich will “hurt our economy and make America less competitive.”
He goes on to state that taxing the rich is code for going after investors and entrepreneurs, which will make America less productive and shift jobs to China and India.
Mitchell said that if Obama wants to expand government control over every sector of our economy, including bailouts and creating government run healthcare, “he has to tax the middle class to make government bigger.”
The legislation even anticipates this likelihood by automatically raising the surtax on those with incomes between $350,000 and $1 million in the event that savings targets are not achieved.
It's important to remember that the 5.4% surtax will come on top of the already scheduled rise in the top federal income tax rate to 39.6% from 35% at the end of next year.
Thus, beginning in 2011, the top federal income tax rate will be 45% if the Democratic proposal is enacted.
The real problem is that higher tax rates will encourage the wealthy to spend more of their time and resources engaging in tax avoidance rather than making money.
For example, back in 1989 the Joint Committee on Taxation (JCT) was asked to estimate the revenue effect of raising the top rate to 100% on all incomes over $200,000. It dutifully calculated that this measure would raise $204 billion in 1990, $232 billion in 1991, $263 billion in 1992, and $299 billion in 1993. Of course, the true revenue yield would have been closer to zero since no one would have realized any taxable income over $200,000 if they didn't have to.
You are a completely naive if you think that Obama will STOP at raising 5.4% on tax from the rich. When you add up what you are about to be taxed on top of what you are currently taxed, you are broke.
The author of this article also stated
I remain convinced that just down the road major tax increases will be needed to avoid national bankruptcy. When that day comes, it will be harder for Democrats to go back to the same well and demand that all the burden fall upon the wealthy, especially if it is clear by then that the surtax didn't raise nearly as much revenue as expected. Congress will have no choice except to look for ways to tax people who have much more limited opportunities for tax avoidance: those who have only wage income, which means the middle class.
It's the truth !
Last edited by NEPatriot; 07-18-2009 at 12:01 PM..
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