Americans who thought Tax Day was bad this year could find it far worse next year. Tuesday happens to be Tax Freedom Day, the date by which taxpayers have earned enough to pay off Uncle Sam and start earning for themselves. This occasion will fall even later next year if President Obama succeeds in making the tax code more complicated and expensive.
Mr. Obama has invoked Warren Buffett's name at 49 different events since mid-August to justify his tax-raising plans. Despite the all-out White House lobbying effort, the president's allies in the Democratic Senate failed on Monday to get the votes needed to pass the 30 percent tax hike on income over $1 million. Mr. Obama knew this bill was a nonstarter, but doing something concrete about the debt was never his goal. He's trying to paint Republicans as protectors of the wealthy.
Voters should instead pay attention to what will happen to their tax bill in a second term. At his annual press conference on the eve of Tax Day, Americans for Tax Reform President Grover Norquist pointed out that the president's budget creates an additional $6.7 trillion in debt over a decade. The Buffett tax only generates $47 billion over 10 years. "We don't know exactly how he intends to pick our pockets, but he's given us the number," said Mr. Norquist. "He's told us how much he's taking from rich people. He needs to raise $6.653 trillion from middle-income Americans to pay for his bigger government."
The House budget moves in the opposite direction, replacing six income brackets with two at lower 10 percent and 25 percent rates and cut the corporate rate to 25 percent. "Time and time again what we see is Democrats want to raise taxes to get more revenue so they can spend it," said Ways and Means Committee Chairman Dave Camp on Monday. The Michigan Republican's goal is to get "lower rates, simplify the code and have a code that doesn't expire every few minutes causing lots of uncertainty."
Until they have a partner on tax reform in the White House, the best the GOP can do is provide short-term relief. On Thursday, the House will vote on Majority Leader Eric Cantor's bill to give companies with fewer than 500 employees a 20 percent tax cut to spur the economy for the 2012 tax year. For the three-quarters of small businesses who file as individuals, this deduction would encourage them to hire now, despite next year's uncertainty. When current tax rates expire on Dec. 31, Mr. Obama wants to hike taxes on any profit over $200,000 to almost 40 percent.
The one-year deduction would also benefit companies that file corporate taxes. They pay a high of up to 35 percent now, exceeding the developed world's 25 percent average. According to an analysis by Fiscal Associates, the GOP plan would create 194,000 jobs and boost gross domestic product by $112 billion. That prospect gives voters an important choice in November. They can take a path of lower taxes and more growth, or they can make Tax Day 2013 more painful for everyone.
The Washington Times
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