Obama’s upside-down tax reform

April 14, 2011

Larry Kudlow notices on part of the Obama budget/speech that doesn’t seem to echo Bowles-Simpson:

We thought tax reform meant lowering rates and broadening the base by eliminating or cutting back on various deductions, credits, and loopholes. That’s what the Bowles-Simpson commission proposed. That’s what Paul Ryan and David Camp are working on. And that’s the pro-growth model.

But President Obama unveiled a much different tax-reform vision in his much-anticipated debt speech on Wednesday. He would raise tax rates on upper-income earners and small businesses. He also would eliminate deductions and credits, or so called “tax expenditures.” The president referred to these tax-expenditure reductions as “spending cuts.” In his context, they most certainly are not. They are more tax hikes.

Basically, the president is giving successful earners and small-business filers a double tax hike. That’s what it really is.

Of course, the president’s formula of estimating higher revenues to lower the deficit is completely wrong. The reality is that higher tax rates will slow the economy, inhibit new start-up companies, penalize investors, and may very well lose revenues and increase the deficit. In the latter part of his speech the president did mention some kind of middle-class and corporate tax reform. But he gave no specifics.


We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/

I agree. Obama keeps saying the he (millionaire) doesn’t need a tax cut and Warren Buffet (billionaire) doesn’t need a tax cut. But what he is saying is that he wants to raise the tax rate on people making over 200k each year. I am a surgeon and I make about 300K and I am self employed. If he raises taxes on me and raises the cap on what income gets social security tax then I probably won’t be able to afford my house anymore. It is infuriating to hear people complain that the rich should finally pay taxes when I pay over 100k each year already and 47% of people pay zero.

Posted by ent | Report as abusive

@ent: so what do you do with the other $200K? wich by the way is 5 times my total annual income before ANY taxes are taken and that is actually the largest amount of income i have recieved ever in my life…..normally its more like $30k but with tax deductions and healthcare costs i take home only around $15K-$20K…..im more than sure that you can wait another year to buy that third lexus or humvee so that the average american can have a slightly better life…even with the tax hikes you and the ppl like you are still living it large and your still unsatisfied…the solution to not affording your house is to get a more affordable one (duh)….the solution to not being able to have a new car is to make the one you got last (duh)…the fact is if you continue to expect the lower and working class to continue to pay the majority of the taxes, so you can have your little dinner parties etc, its gonna break us and when the average american is too broke to pay for anything its gonna take the rest of you with us….no one is gonna go out to eat, no one is gonna buy a new car, no one is gonna go to college, and no one is gonna be able to afford healthcare and as a surgeon im sure you will feel that in your wallet much more than a few more dollors, that you would throw away on something thats not neccassary, in taxes

Posted by broken13 | Report as abusive

Dick Morris penned a clever book which outlines his theory, “that we are experiencing Trickle-Up Poverty.”
He feels that current Dem proposals will re-distribute wealth from the upper income earners to supply non-producers with a greater cash flow.

Charming. Whether willing or not, the gov’t has picked the poor as winners and the “rich” as the givers. It is a replay of the Robin Hood Myth.

Posted by richardsong | Report as abusive

Everybody should pay an equal percentage of taxes. If you only bring in a cute little 15k a year then maybe you should take your pell grants and go to school so you can do something useful with your life. Whoever thought penalizing the successful was a good idea was clearly not very successful.

Posted by JKHazen | Report as abusive