Wednesday, March 31, 2010

Financing ObamaCare: taxes and more taxes

When the Democrats have too much power, they always overdue taxation to the point where they decrease investment and jobs, thereby decreasing revenues. Stifled businesses don't generate much tax revenue:

The Rich Can't Pay for ObamaCare
The president intends to squeeze an extra $1.2 trillion over 10 years from a tiny sliver of taxpayers who already pay more than half of all individual taxes. It won't work.
President Barack Obama's new health-care legislation aims to raise $210 billion over 10 years to pay for the extensive new entitlements. How? By slapping a 3.8% "Medicare tax" on interest and rental income, dividends and capital gains of couples earning more than $250,000, or singles with more than $200,000.

The president also hopes to raise $364 billion over 10 years from the same taxpayers by raising the top two tax rates to 36%-39.6% from 33%-35%, plus another $105 billion by raising the tax on dividends and capital gains to 20% from 15%, and another $500 billion by capping and phasing out exemptions and deductions.

Add it up and the government is counting on squeezing an extra $1.2 trillion over 10 years from a tiny sliver of taxpayers who already pay more than half of all individual taxes.

It won't work. It never works.

The maximum tax rate fell to 28% in 1988-90 from 50% in 1986, yet individual income tax receipts rose to 8.3% of GDP in 1989 from 7.9% in 1986. The top tax rate rose to 31% in 1991 and revenue fell to 7.6% of GDP in 1992. The top tax rate was increased to 39.6% in 1993, along with numerous major revenue enhancers such as raising the taxable portion of Social Security to 85% of benefits from 50% for seniors who saved or kept working. Yet individual tax revenues were only 7.8% of GDP in 1993, 8.1% in 1994, and did not get back to the 1989 level until 1995.

Punitive tax rates on high-income individuals do not increase revenue. Successful people are not docile sheep just waiting to be shorn.

From past experience, these are just a few of the ways that taxpayers will react to the Obama administration's tax plans:

Read the whole thing for the details. If you kill the goose that lays the golden eggs, there is no more eggs.

If they cut taxes they would actually stimulate the economy and increase tax revenue. They know this, but they want to increase government control more than anything else. They don't want to fix the system, they want to overload it and wreck it, so they can replace it with something else. The more crises they create, the more government they will offer as a solution, when actually it's the problem.

As Margaret Thatcher said, Socialism always fails, because the socialists inevitably run out of other people's money to spend. But many of our socialists also want to deliberately ruin our financial and governmental systems, in order to claim that "capitalism has failed", so they can proceed with their restrictive and controlling Big Government agenda. But it is they who are failing; failing US. We must vote them out before the damage they do is too great.

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