How The Obama Tax Hikes Affect Your Bottom Line

From The Heritage Foundation:

How the Obama Tax Hikes Affect Your Bottom Line


September 21, 2010
By Bethany Murphy



In 1819 Chief Justice John Marshall stated, “An unlimited power to tax involves, necessarily, a power to destroy; because there is a limit beyond which no institution and no property can bear taxation.”



With the Obama tax hikes, we are fast approaching that limit.



The Heritage Foundation’s Center for Data Analysis has compiled statistics demonstrating the catastrophic implications of this tax increase as the economy struggles to recover. In 2011, the first year of the new tax rates, the tax hikes will result in an estimated 238,000 fewer jobs and $40 billion less in total GDP. Fast forward to 2016, five years after the tax hikes: there will be over 800,000 jobs lost and a $135 billion loss to GDP in that year alone.



The Obama tax hikes will not just hurt the “wealthy,” as progressives would have you believe. The new tax rates will have a ripple effect throughout the entire economy.



Mississippi, which has the lowest average household income in America, will lose 5,911 jobs annually, and each household will have $1,818 less in personal disposable income.

Maryland, which has the highest-earning households in the United States, will lose an average of 13,983 jobs annually and will have $6,848 less in personal disposable income.

The Heritage Foundation has also measured the impact of the Obama tax hikes on individual states and Congressional districts. Find out how the tax hikes affect you and your family on Heritage.org.



Liberals often call the Obama tax hikes an end to “the Bush tax cuts for the wealthy.” This is a fallacy that the Left has created in order to disguise the truth: taxes are increasing for the people and businesses that are creating jobs during a massive recession



In a piece on National Review Online’s The Corner, Heritage’s JD Foster explains:



More importantly for getting the economy kick-started, those higher rates will fall on the gazelles, those small businesses ready and able to grow rapidly — if they have the incentives, and if they have the cash. Higher tax rates on the gazelles, those small businesses that really matter to job creation, weaken incentives and drain cashflow. Higher tax rates on the gazelles are a real kick in the teeth.



“The average non-farm small business filing through the individual income tax code would see a tax increase of about $3,500,” the Center for Data Analysis report found. “Not only successful businesses would be hurt, although they would be hurt the most. Even firms with losses could face a tax increase, for example on capital gains, dividend, or carry-over income.”



Most economists agree with the Heritage Foundation’s findings. In a new poll conducted by CNNMoney.com, 60 percent of economists favor a continuation of tax rates as they currently stand.



Sen. Joe Lieberman (ID-CT) put it well in a speech to the Stamford Chamber of Commerce: “The surest way for Congress to help bring about a double-dip recession is to allow taxes to be raised on anyone during this uncertain economy we are struggling through.”



Heritage’s Center for Data Analysis has proven that “if the price of capital and labor increases through a tax increase, the pace of economic activity will slow down.”



They suggest another plan, whereby Congress will not raise taxes but will instead rein in its overspending to offset the enormous deficits their liberal policies have created.



Tune in tomorrow for a Heritage webcast featuring Mitt Romney

Wednesday, September 22 at 3:45 p.m. Eastern – Mitt Romney, former Governor of Massachusetts and now a political commentator, will deliver remarks on the current political climate and conservative prospects this Fall during an event hosted by the Southern California Committee for Heritage.



Watch the event live online on MyHeritage.org.



> Heritage Work of Note

Over 200 years ago, the Founders used a number of principles, such as liberty and private property, upon which to base the new American nation. These principles, however, do not merely reside in the realm of political theory. They also have real impact on everyday Americans day in and day out. A new video, produced by Heritage’s B. Kenneth Simon Center for American Studies, shows how Americans still hold to those fundamental truths. Watch the video.

The Obama Administration has been feverishly working to overturn the new Arizona law that enforces federal immigration statutes. In a surprising turn, the President has now decided to tattle on the bad behavior of Arizona to the United Nations. “Apparently the federal government can’t handle this dispute alone. It needs to elevate it to the world stage, encouraging international criticism of the offending state,” writes Heritage President Ed Feulner.

In the 1960s, America began fighting the “War on Poverty.” Tens of trillions of taxpayer dollars later, poverty rates have continued to climb. In particular, child poverty has grown. This, reports Robert Rector, a Heritage expert who helped craft the 1996 welfare reforms, is mostly because government policy has ignored and even exacerbated its principal cause: “the absence of married fathers in the home.”

In 1995, Congress passed a law that limited funding for abortions in military hospitals. However, this policy may be changing. “The Obama Administration has encouraged, if not led, efforts to weaken several longtime congressional limitations on abortion funding, backtracking under pressure when higher stakes (e.g., passage of Obamacare) warranted,” writes Heritage expert Chuck Donovan. A defense bill amendment proposed by Sen. Roland Burris (D-IL) would permit “pre-paid” abortions in U.S. military hospitals.

We have all seen those road signs proclaiming how the American Recovery and Reinvestment Act — the “stimulus” — has benefited this country. They are so prevalent that one Congressman asked for an estimate of how much those signs cost the American public. Heritage’s Tina Korbe reports that the truth remains elusive: “More than a month past deadline, the Recovery Accountability and Transparency Board finally responded to Rep. Darrell Issa’s (R-Calif.) June 24 request for an estimate of the total cost of stimulus road signs -- but failed to provide a comprehensive estimate.”

> In Other News

According to a Bloomberg survey, Brazil, China, and India have surpassed the United States as the countries of choice for investors.

The Senate voted not to consider the pending defense authorization bill. The Left had loaded up the bill with legislation to advance their pet causes.

A new analysis concludes that the recession ended in June 2009. The White House and its allies in Congress have nonetheless persisted in spending taxpayer money to boost the economy.

China has requested that the United States not become involved in a disagreement with Japan over its claims to the South China Sea.

Police have arrested several grossly overpaid Bell, Calif. city officials on corruption charges.

A new bill would give the federal government the power to disable piracy web sites by blocking their domain registrations.

Bethany Murphy is a writer for MyHeritage.org—a website for members and supporters of The Heritage Foundation. Nathaniel Ward; Amanda Reinecker and Andrew Vitaliti, a Heritage intern, contributed to this report.