He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under the first President Bush. He is a graduate of Harvard College and Harvard Law School. He is author of The Obamacare Disaster, from the Heartland Institute, and President Obama's Tax Piracy, and his latest book: America's Ticking Bankruptcy Bomb: How the Looming Debt Crisis Threatens the American Dream-and How We Can Turn the Tide Before It's Too Late.
Latest posts by Peter Ferrara (see all)
- Just As With Reagan, Getting Tax Reform Right Today Is Key To Booming Economy - April 17, 2017
- Closing The Deal With Conservatives On Obamacare - March 24, 2017
- Senator Warren’s ‘Trust The IRS’ Bill - March 21, 2017
When he was asking for our vote in 2008, then candidate Barack Obama famously promised the American people, “I can make a firm pledge. Under my plan no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.”
But as the Supreme Court has now authoritatively ruled, the Obamacare individual mandate, requiring workers to purchase the health insurance the government specifies each family must buy, is a tax. And that tax applies to the middle class and working people.
CBO estimates that health insurance will cost $15,000 per year on average for families soon after Obamacare is fully implemented, rising rapidly from there. That is the individual mandate tax on the middle class and working people.
Of course, Obamacare includes a whole new entitlement program (just what we need) providing health insurance welfare for families making up to $88,000 a year to start, rising to over $100,000 a year after a few years. With that welfare, the net cost to families at different income levels is limited to 2 percent of income for people at 133 percent of poverty up to 9.8 percent of income for people at 400 percent of poverty. But that in itself is still like a new payroll tax, or income tax surcharge.
Moreover, taxpayers pay for the health insurance welfare as well. So the entire cost of the individual mandate tax is still $15,000 per year for families to start, and rising rapidly. That adds up to the largest tax increase on the middle class in world history.
On July 9, President Obama proposed to extend for one year the Bush tax cuts for the middle class, defined as singles making less than $200,000 per year, and couples making less than $250,000 per year, but to let the tax cuts for those earning above those thresholds expire now. A caller to a national radio show recently said the proposal meant Obama was looking out for the middle class. But if Obama is looking out for the middle class, why is he proposing to extend their Bush tax cuts for only one year? This is the first time Obama is implying that maybe the Bush tax cuts for the middle class may not become permanent either.
And then who passed those middle class tax cuts in the first place that Obama is proposing to extend? That would be President Bush and the then Congressional majority Republicans, with almost every Democrat opposing the relief. But Obama and his Che Guevara Democrats have been telling us for 4 years that Bush and the Republicans only cut taxes for the rich. Even according to CBO, the Bush middle class tax cuts Obama wants to extend dwarf the Bush tax cuts for “the rich” Obama does not want to extend.
Obama elaborated on July 9, “We need policies that grow and strengthen the middle class – policies that help create jobs, …that encourage businesses to start up and create jobs right here in the United States.” But the Obama policies already enacted under current law would raise the top tax rates on Jan. 1 for almost every federal tax for the nation’s job creators, investors and small businesses, with the expiration of the Bush tax cuts and the Obamacare tax increases becoming effective.
As a result, the top two income tax rates would increase by nearly 20%, the capital gains tax rate would increase nearly 60%, the tax on dividends would nearly triple, the Medicare payroll tax rate would increase by 62% for these disfavored taxpayers, and the death tax rate would rise from the grave with a 57% increase in the top rate.
This would all be on top of the highest corporate income tax rate in the industrialized world at nearly 40% when state taxes are counted. That leaves American businesses uncompetitive in the global economy. Yet under Obama, there is no relief in sight. Instead he has spent the past two years barnstorming the country for still more tax increases. His proposed Buffet Rule would increase the current capital gains tax rate by 100%, leaving America saddled with the fourth highest cap gains rate in the industrialized world.
As the Wall Street Journal explained on July 10, what “Mr. Obama is demanding [are] tax increases, not tax cuts, and large increases at that.” How do those tax increases strengthen the middle class, and encourage businesses to start up and create jobs right here in the United States? They do just the opposite. Obama’s rhetoric is just more Calculated Deception, designed to fool the gullible.
By sharp contrast, the Republican House majority has already passed the permanent extension of the Bush tax cuts for everyone. That includes the middle class tax cuts that the Republicans originally enacted that Obama proposes to extend for only one year, as well as the Bush tax cuts for the nation’s job creators, investors, and small businesses. So who is really looking out for the middle class?
It is the middle class and working people that will be hurt the most by Obama’s comprehensive tax rate increases already enacted into current law. Those steep rate increases will slash incentives for the capital investment essential to creating new jobs and increasing wages. If those tax rate increases push the weak economy back into recession next year, as I and many others have predicted, the unemployment rate will soar back into double digits, and wages and income will decline further. Poverty will accelerate to new all-time records. How does that strengthen the middle class?