Democrats are making increasingly explicit threats about their willingness to let nearly $600 billion worth of tax hikes and spending cuts take effect in January unless Republicans drop their opposition to higher taxes for the nation’s wealthiest households.Emboldened by signs that GOP resistance to new taxes may be weakening, senior Democrats say they are prepared to weather a fiscal event that could plunge the nation back into recession if the new year arrives without an acceptable compromise.
In a speech Monday, Sen. Patty Murray (Wash.), the Senate’s No. 4 Democrat and the leader of the caucus’s campaign arm, plans to make the clearest case yet for going over what some have called the “fiscal cliff.”
“If we can’t get a good deal, a balanced deal that calls on the wealthy to pay their fair share, then I will absolutely continue this debate into 2013,” Murray plans to say, according to excerpts of the speech provided to The Washington Post. . . .
Possibly one of the more interesting points that he links to is from the Tax Foundation:
The president and his economic team tend to dismiss the impact that such as tax hike will have on business activity because only 2 or 3 percent of taxpayers with business income are taxed at the highest rates.While this statistic is true, the more economically meaningful statistic is how much overall business income will be taxed at the highest rates. For example, Treasury data for 2007 indicates that 50 percent of all pass-through income is earned by taxpayers subject to the top two tax brackets of 33 percent and 35 percent. . . .
No matter how you cut the data, the fact is that hiking the top individual income tax rates would amount to one of the largest single tax increases on individually owned businesses in modern history and a threat to the long-term economic health of the nation.
“My recommendation is we give the president what he asked for,” Mr. McConnell said. “He wants to have a vote on raising taxes on individuals making over $250,000…That’s a vote we welcome.” Mr. Reid called this an obstructionist stunt, saying that he would be happy to debate the tax issue once the small business jobs bill is done. “The American people should see this,” Mr. Reid said. “Again, again, and again and again—scores of times during the last 18 months—we’re engaged in a filibuster…why shouldn’t we pass the bill that’s before the body today?” This led to a heated back-and-forth between the two leaders. Mr. McConnell professed surprise that Democratic leaders would not vote on Mr. Obama’s proposal. “I’m a little surprised that we’re not willing to give the president what he asked for,” Mr. McConnell said. . . .
Politics, not economics, is driving President Obama's election year strategy to force a battle over his efforts to raise income taxes. So much of Obama's speech Monday focused on his political opponents and the difference between those whom he claims support the middle class and those who support what Obama continually called "the wealthy."
For an administration that last week blamed Fox News for the class warfare rhetoric, Obama's talk today sure contained a lot of such rhetoric.
But contrast Obama's position with that of other prominent Democrats. Just last month, his former chief economic advisor Larry Summers told MSNBC: "The real risk to this economy is on the side of slow down, certainly not on the side of overheating, and that means we've got to make sure that we don't take gasoline out of the tank at the end of this year that's gotta be the top priority." Former Democratic President Bill Clinton made a similar claim warning against tax increases because it is better to "avoid doing anything that would contract the economy now." Under Obama administration pressure both quickly retracted their statements.
Obama seem oblivious to Summers' and Clinton's concerns about the poorly performing economy. . . . .
President Obama's 2013 budget is the gift that keeps on giving—to government. One buried surprise is his proposal to triple the tax rate on corporate dividends, which believe it or not is higher than in his previous budgets.
Mr. Obama is proposing to raise the dividend tax rate to the higher personal income tax rate of 39.6% that will kick in next year. Add in the planned phase-out of deductions and exemptions, and the rate hits 41%. Then add the 3.8% investment tax surcharge in ObamaCare, and the new dividend tax rate in 2013 would be 44.8%—nearly three times today's 15% rate.
Keep in mind that dividends are paid to shareholders only after the corporation pays taxes on its profits. So assuming a maximum 35% corporate tax rate and a 44.8% dividend tax, the total tax on corporate earnings passed through as dividends would be 64.1%. . . .
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