Nearly everyone understands that his taxes just went up.
President Barack Obama won’t admit it, although he must suffer from a guilty conscience. He uncorked a rambling, defensive 17-minute-long answer in response to a question at a town-hall meeting about new taxes in the health-care bill, complaining about a “whole lot of misinformation” without citing any.
In his cascade of words, Obama didn’t get around to mentioning the $500 billion in new taxes during the first 10 years of the health bill. And they are merely a prelude.
It doesn’t take an economist to understand what public debt at Greece-like levels of 90 percent of GDP by 2020 inevitably portends. Nor to realize the effects of the yawning disconnect between federal spending at 24 percent of GDP and revenue at 19 percent of GDP. Nor to understand the most basic of all budgetary concepts — that the bill, after the fizzy party, after all the huzzahs over “making history,” always comes due, and with interest.
This is why the country has a roiling tax revolt prior to the imposition of any significant tax increases. The tea-party movement is an act of pre-emption, based on the simple calculation that higher spending eventually means higher taxes. For all the tsk-tsking about its supposed irresponsibility, the movement is attuned to the future in a way that the president — who hopes to evade or hide the consequences of his budgetary choices for as long as possible — is not.
Obama has always been happy to boast that he’ll let the Bush tax cuts on high-end earners expire at the end of this year. This blow for justice will initially generate all of about $40 billion annually, or only about 5 percent of the cost of Obama’s stimulus bill. Over 10 years, it will raise almost $700 billion, or only enough to cover about half of the budget deficit this year alone.
Obama will need more, and he’s not going to get it all from “the rich.” The left’s image of the U.S. tax code as a predatory tool of the wealthy is a Michael Moore fantasy. The Organization for Economic Cooperation and Development evaluated the household taxes — income taxes, plus social security levies — of developed countries in 2008. It found that the United States “has the most progressive tax system and collects the largest share of taxes from the richest 10 percent of the population.”
The Associated Press reported last week that 47 percent of U.S. households don’t pay federal income taxes at all. Either their incomes are too low, or their liability is wiped out by sundry credits, deductions and exemptions.
“The result,” the AP writes, “is a tax system that exempts almost half the country from paying for programs that benefit everyone, including national defense, public safety, infrastructure and education. It is a system in which the top 10 percent of earners — households making an average of $366,400 in 2006 — paid about 73 percent of the income taxes collected by the federal government.”
To borrow Obama’s phrase from the 2008 campaign, the federal budget already “spreads the wealth around,” thank you very much. A Tax Foundation study finds that “the bottom 60 percent of American families will as a group receive more in government spending than they pay in taxes.”
No wonder Obama has now declared himself “agnostic” on his 2008 blood oath not to raise taxes on households making less than $250,000 (already violated at the margins) and his advisers float a European-style value-added tax, a broad-based tax on consumption. He’ll have to go where the rest of the money is.
“I like to pay taxes,” Oliver Wendell Holmes famously said. “With them I buy civilization.” With ours, we will buy a misbegotten stimulus program, bailouts, runaway entitlements, a costly new health-care program and a federal government where incontinence is a perpetual pre-existing condition. No matter what your tax bill this year, don’t worry — it’ll go higher.
Rich Lowry is a syndicated columnist. He can be reached via e-mail at: [email protected]