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Return of the Tax Increase Mousetrap

How does Barack Obama plan to pay for his latest $450 billion “stimulus” package?  With tax increases, of course.  They’re designed to begin snapping shut like mousetraps as soon as he’s safely re-elected.  Business Insider lets the cat out of the bag:

White House Office of Management and Budget Director Jack Lew outlined President Barack Obama’s plan to pay for his $447 billion jobs plan — mostly through tax increases.

Lew said itemized tax deductions and exemptions for those making more than $200,000, and families earning more than $250,000 would be cut — raising about $400 billion to pay for Obama’s jobs plan over 10 years.

A change to bring more hedge fund earnings under normal tax rules as opposed to carried interest rates would raise another $18 billion.

The new tax rules would not take effect until January 2013, Lew said. Obama is not offering any spending cuts to pay for the jobs plan.

The rest of the total would be raised by cutting subsidies for the oil and gas industries to bring in another $40 billion, and change the depreciation rules for corporate jets. All told, Obama would cut $467 billion to pay for his plan.

Remember, under current Democrat Party ideology, someone who makes “more than $200,000” is a “millionaire,” so Obama wasn’t exactly lying when he talked about limiting his greed to “raising taxes on millionaires and billionaires.”  At this point, the Democrat attitude is that if you don’t speak their special language, it’s your fault for misunderstanding them.

But wait a second… didn’t the President just tell us, this very day, that his “American Jobs Act” is fully paid for?  Why, yes, he did.  From his Rose Garden address this morning:

And the American Jobs Act is not going to add to the debt — it’s fully paid for. I want to repeat that. It is fully paid for.  It’s not going to add a dime to the deficit. Next week, I’m laying out my plan not only to pay for this jobs bill but also to bring down the deficit further. It’s a plan that lives by the same rules that families do: We’ve got to cut out things that we can’t afford to do in order to afford the things that we really need. It’s a plan that says everybody — including the wealthiest Americans and biggest corporations — have to pay their fair share.

How can something be “fully paid for” if you have to confiscate the property of free people, for years to come, in order to finance it?  You can only make that logic work if you believe all property belongs to the State.  Most of us would interpret the concept of “fully paid for” as involving money in the bank, to pay for something we’re about to purchase. 

In Washington, it’s the other way around: bills are passed to create programs, which accumulate defensive layers of dependency, obliging the people of tomorrow to pay “inescapable” tax increases.  That’s how the mousetrap strategy of government growth works.  “Pass this bill” right now.  Shut up and pay your taxes later.  The tax credits Obama offers will go away – those who try to keep them will inevitably be hectored for their greed – but his tax hikes will last forever.

In the course of demanding the extension of his Social Security payroll tax cut this morning, President Obama explicitly stated that ending this tax cut would be the equivalent of a tax increase:

This bill will help hundreds of thousands of disadvantaged young people find summer jobs next year — jobs that will help set the direction for their entire lives. And the American Jobs Act would prevent taxes from going up for middle-class families. If Congress does not act, just about every family in America will pay more taxes next year. And that would be a self-inflicted wound that our economy just can’t afford right now. So let’s pass this bill and give the typical working family a $1,500 tax cut instead.

The exact same logic applies to the other “tax expenditures” (i.e. deductions and tax cuts) Obama wants to end, in order to grab money for his agenda.  Under the exact same logic, ending $40 billion in “subsidies for oil and gas” will raise taxes on oil and gas by $40 billion… much of which will find its way to the pump as higher prices for both businesses and individuals. 

These tax hikes will come on top of the enormous tax increase scheduled to hit the private sector when the Bush tax cuts expire at the end of 2012.  Those won’t affect just “millionaires and billionaires,” or people who make $200,000 per year.  Efforts to extend the Bush tax rates will be denounced as “irresponsible” increases to the national debt – language Democrats reserve solely for tax cuts and military spending.  Another mousetrap will click shut.

Of course, these Obama tax increases won’t bring in anything like the $400 billion he projects.  Learn this lesson well: static analysis is always wrong.  Avoidance of the higher tax rates will reduce revenue collected, at a stiff penalty to our Gross Domestic Product.  When that happens, even higher taxes will be touted as the only “responsible” way to contain the damage to our national debt… perhaps coupled with more stimulus spending, to lessen the unemployment impact of reduced GDP growth.

Also, remember the way the Super Committee works.  If they can’t come up with the assigned $1.5 trillion in deficit reduction, automatic spending cuts kick in, biting into both our military readiness and social programs.  Intransigent Democrats on the Committee will surely demand more tax increases to reach the $1.5 trillion target number.  By refusing to insist on the Cut, Cap, and Balance Act, congressional Republicans helped set up another tax-increasing mousetrap.

It’s remarkable that in a time of great public resistance to madcap government spending, Obama’s proposals leave the government larger than ever.  Even his “tax credit” ideas will require more bureaucracy.  He wants to give out $4000 tax credits to businesses who hire the long-term unemployed.  Do you suppose there would be a lot of fraudulent claims for a bonanza like that?  Won’t it take a lot of manpower to verify that only businesses who exhibit the proper centrally-planned behavior collect their credits – and won’t it be necessary to make sure they don’t hire a bunch of long-term unemployed, grab their credits, and then fire those people as quickly as possible?  How long do you have to keep these folks on the payroll to get your four thousand bucks, and how will compliance be verified?

When the economy is doing well, we’re told we must “invest” in social programs.  When it’s doing poorly, we are told we must submit to greater government control.  The federal leviathan bloats until its bulk can no longer be sustained… then lectures us about our moral obligation to continue feeding it.  It’s a great racket.  It’s the kind of thinking that got us to a $16 trillion national debt.  It’s the game that must end now, if systemic collapse is to be avoided.

Written By

John Hayward began his blogging career as a guest writer at Hot Air under the pen name "Doctor Zero," producing a collection of essays entitled Doctor Zero: Year One. He is a great admirer of free-market thinkers such as Arthur Laffer, Milton Friedman, and Thomas Sowell. He writes both political and cultural commentary, including book and movie reviews. An avid fan of horror and fantasy fiction, he has produced an e-book collection of short horror stories entitled Persistent Dread. John is a former staff writer for Human Events. He is a regular guest on the Rusty Humphries radio show, and has appeared on numerous other local and national radio programs, including G. Gordon Liddy, BattleLine, and Dennis Miller.

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