James Pethokoukis

Politics and policy from inside Washington

Is Obama planning a $3 trillion income tax increase?

November 17, 2009

Did I just see a trial balloon launched? Over at a Wall Street Journal conference, Christina Romer, chairman of President Obama’s Council of Economic Advisers had this to say about deficit reduction:

But the chairman of the president’s Council of Economic Advisers admitted that health reform and a growing economy isn’t enough to bring down the deficit. She did mention one other place that revenue could come from: letting the Bush tax cuts expire.

Me: Since Obama already wants to get rid of the income and capital gains tax cuts for wealthier Americans that expire at the end of 2010, clearly what Romer is referring to is the rest of the 2001 and 2003 Bush tax cuts. Letting all the 2001 cuts — rate reductions, child tax credit marriage penalty relief — expire would raise tax revenues by $2.5 trillion through 2019. (These CBO numbers assume no negative economic feedback impact from higher taxes.) And letting the 2003 tax cuts on capital gains and dividends expire would be tantamount to a $350 billion tax increase through 2019. And none of this includes possible plans for a VAT that could raise $400 billion a year more to close the huge projected gap — maybe 7 percentage points — between spending as a percentage of GDP and revenues as a percentage of GDP.

Comments

One of Obama’s most memorable campaign promises was to not raise taxes on people making less than $250,000 a year. Despite having taxes in the health care plan, the administration is quick to say they are not tax increases. I think he would let all of the tax cuts expire if it was a day after winning re-election, but not before.

 

“(These CBO numbers assume no negative economic feedback impact from higher taxes.)”

Oh, yeah? Buncha economic idiots.

Increase taxes like this and watch me and millions of others tell Obama to stuff it, as we stop generating taxable activity.

I can coast for a couple years. Can Obama’s revenues take the hit?

Posted by Chester White | Report as abusive
 

If taxes go up in 2010, it will be because of a law written by a Republican Congress and signed by George Bush. Let’s not let that fact get in the way of blaming Obama and the Democrats.

Posted by Blame the Democrats! | Report as abusive
 

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