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Wednesday, November 14, 2012

President Obama Calls for $1.6 Trillion Tax Increase

Wall Street Journal:  Obama Sets Steep Tax Target: President to Seek $1.6 Trillion More in Revenue, Double Level From 2011 Talks:

President Barack Obama will begin budget negotiations with congressional leaders Friday by calling for $1.6 trillion in additional tax revenue over the next decade, far more than Republicans are likely to accept and double the $800 billion discussed in talks with GOP leaders during the summer of 2011. ...

Kevin Smith, a spokesman for House Speaker John Boehner (R., Ohio), dismissed the president's opening position for the negotiations. He said Mr. Boehner's proposal to revamp the tax code and entitlement programs is "consistent with the president's call for a 'balanced' approach." ...

In negotiations between Messrs. Boehner and Obama in mid-2011, the two sides neared agreement on a plan to cut the deficit by $4 trillion over 10 years, including $800 billion in new revenue. The deal fell apart after Mr. Obama asked to raise the revenue component to $1.2 trillion, and to this day each side blames the other for the collapse. Based on that history, some senior GOP aides said they believed a likely compromise would call for about $1 trillion in new tax revenue, possibly from capping deductions for wealthier taxpayers.

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Comments

Uh, didn't Obama just run and win on a platform of raising taxes on the rich to the tune of $80 billion a year? So his plan that would save the middle class lasted all of one week?

Posted by: Ken | Nov 14, 2012 5:45:48 AM

I imagine some sort of compromise will be made. The "Bush Tax Cuts for the rich" will become the "Obama Tax Hikes", whereas, everyone else will be subject to the "Bush Tax Cuts".

Posted by: Prospector | Nov 14, 2012 5:49:53 AM

According to CBO, tax receipts for 2012 was $2.45 T, so do I read this correctly that he is proposing all rates go up by 50% ?!?

Posted by: Michael | Nov 14, 2012 5:56:20 AM

It does not matter anymore how this administration plans to bankrupt us, and it certainly doesn't matter how you vote, as the outcome is preordained. The only way to return to sanity in government today is not to participate. Pay no taxes, buy nothing you can do without. In addition, quit your present job ,(if you have one), and apply for welfare, disability, heating assistance,food stamps, and
whatever the state and federal government provides for the price of purchasing your vote. We can start the revolution as soon as the economy fails.

Posted by: Warlord | Nov 14, 2012 6:02:56 AM

Let all the Bush/Obama tax rates expire.

LiB.

Posted by: Tobias Took | Nov 14, 2012 6:35:07 AM

Obama's proposed revenue increase is too small, not too large. Under the CBO's "alternative fiscal scenario" (which assumes that we do not allow currently scheduled tax increases and spending cuts -- the so-called "fiscal cliff" -- to take effect), deficits over the same 10-year period will total 11 trillion dollars. Obama is therefore proposing that revenues make up less than 15 percent of the solution; the remaining 85 percent will have to come out of spending.

If we allow currently scheduled tax increases and spending cuts to take effect, by contrast, we cut 8 trillion out of the projected 10-year deficit without requiring members of Congress to vote for or against anything. I'm wondering whether, in the long run, the so-called "fiscal cliff" might not be a good thing.

At the very least, we should start using the CBO's baseline scenario (which assumes that we allow currently scheduled tax increases and and spending cuts to take effect) as our baseline for political discourse. So reframed, the Wall Street Journal's headline would read "Obama Proposes $5 Trillion in Tax Cuts."

Posted by: Theodore Seto | Nov 14, 2012 7:30:43 AM

See, this is what's called negotiating. Everyone, except Rep. Boehner it seems, knows that you always ask for way more than you can get. That way as you back down it looks like you're compromising.

Everytime Boehner starts a negotiation, he comes out first with his desired result, and then has to back down from there getting even less than he wants.

It's a shame the President knows this but the Speaker doesn't.

Go figure.

Posted by: Steve | Nov 14, 2012 7:50:50 AM

Boehner should go one further than Obama and the Democrats. Eliminate all deductions for everyone other than the standard deduction and all tax credits other than those by tax treaty, tax benefits and from there tax the investment income of non-profits and foundations.

The country voted for big government, those who voted for it should pay for it. Once the full brunt of the entitlement state hits all taxpayers then the discussion of how much government is wanted and needed will begin.

Posted by: cubanbob | Nov 14, 2012 7:53:37 AM

"...in mid-2011, the two sides neared agreement on a plan [for] $800 billion in new revenue. ... some senior GOP aides said they believed a likely compromise would call for about $1 trillion in new tax revenue"
Looks like the Repub leadership is eager to cave. What a shame.

Posted by: Jim,MtnViewCA,USA | Nov 14, 2012 7:58:21 AM

The cap on deductions for state taxes, property taxes to $17k is an idea worth exploring.

Yes, it hits me a bit. But it just crushes the blue states. Will force them to be more competitive, and in turn drive other states to be lower cost.

Starve the beast..

Posted by: Mark | Nov 14, 2012 8:17:11 AM

cubanbob said, "Once the full brunt of the entitlement state hits all taxpayers...."

The problem is virtually half the people in the country (and especially the scam artists like Miss ObamaPhone in Cleveland) pay no income tax.

They will never feel the pain.

Posted by: koblog | Nov 14, 2012 8:26:53 AM

republicans should double down on Obama. House should pass a bill that says anyone making over $1 m will pay 99% tax with no deductions (even capital gains) against it. Let the libs in California, the rappers and movie stars pay their fair share. WHen the dems balk (and they will) ask them how much more does a person need than a $1 million a year in income. Its for the children. Its for deficit reduction.

After Obama gives a speech on global warming have the hOUse pass a $3 a gallon gas tax to combat global warming.

Anytime Obama opens his mouth against something the House should slap an outrageous tax on whatever he demonized.

Posted by: retired mlitary | Nov 14, 2012 8:44:48 AM

No matter what happens the Media will blame Boehner.

Boehner and the house Republicans were elected too. They should pass a bill that embodies their campaign promises. BO will veto it, and the 1999 rates will go back into effect. The economy will go into recession and revenues will go down. The Media will blame the Republicans, but they will have kept faith with the people who elected them.

If the House Republicans "compromise" with BO, the economy will go into recession and revenues will go down. The media will blame the Republicans, and their constituents feel that they have been betrayed.

It is a lose lose situation, but the less worse course is for the Republicans to stick to their principles. They will at least have some friends when the pooh-pooh comes down.

Posted by: Walter Sobchak | Nov 14, 2012 9:05:20 AM

Given what we know about Hauser's Law, why should we assume that higher tax rates will produce higher tax returns relative to GDP? It's all an exercise in futility.

Even if the observation behind Hauser's Law is faulty, Congress would just spend an increase in spending. Giving extra revenue to the Congress and the President to solve the deficit is like giving extra hard liquor to an alcoholic to cure their hangover.

Posted by: Geoff | Nov 14, 2012 9:23:02 AM

Can we just forget these plans that chart out savings for 10 years? The current Congress can make an agreement for the current Congress. The next one makes its own deal. Two years maximum is all you can promise or plan. Rarely, if ever, does a Congress fulfill the restrictions set by previous Congress. See: Debt Ceiling Limit.

Posted by: Loren | Nov 14, 2012 9:42:36 AM

"The problem is virtually half the people in the country (and especially the scam artists like Miss ObamaPhone in Cleveland) pay no income tax.

They will never feel the pain. "

My thoughts exactly. And when the pain comes, any sort of trickle down effect that comes their way will be blamed on Republicans and they will vote for the Demos who are promising more goodies with no consequences. Until we get serious about having everyone paying some sort of federal income tax with limited deductions there will always be a subset of voters who couldn't care less the size and role of the government.

Posted by: J.R. | Nov 14, 2012 10:14:00 AM

I would rather have a 100% excise tax on income and assets of anyone who in speech or writing supports an income or capital gains tax increase.

Posted by: DonM | Nov 14, 2012 10:40:34 AM

Michael, you are not reading it correctly. The tax increase is over 10 years.

Also, I agree with cubanbob and retired military, the republicans should start trying to pass extremely outrageous bills proposing huge tax increases on the rich. That will surely win them some seats in the Senate and the Presidency next time.

Posted by: the real anon | Nov 14, 2012 11:22:25 AM

WTF!
FORWARD!

Posted by: elkh1 | Nov 14, 2012 1:19:06 PM

the republicans should start trying to pass extremely outrageous bills proposing huge tax increases on the rich (target the super rich who have at least a 100 millions stashed away, like Buffett, Soros, Kaiser, Pelosi, Kerry-Heinz, and Hollywood), no deductions, no earmarks.

Then sit back and enjoy their squeals.

Posted by: elkh1 | Nov 14, 2012 1:22:56 PM

Some comments here can't really be supported. Any debt deal will likely involve a combination of spending cuts and revenue increases. Some revenue increases will no doubt come in the form of eliminating certain deductions, which can best be described as disguised spending and subsidies. Spending cuts are probably going to fall squarely on the poor and middle class. How is this an expansion of the entitlement state? If anything we're shrinking the entitlement state.

Prof. Seto challenge to the baseline/status quo deserves attention. The fiscal cliff is law and should be treated as such.

Posted by: HTA | Nov 15, 2012 12:53:48 PM