Finally, when tax revenues from the rich begin to decline, Congress begins to look for other sources of revenue to tap into because they have spent the money before the first dollar of new taxes comes in. And there will never be a discussion about cutting programs, rolling back benefits, or slowing spending, especially with Democrats in control of both houses of Congress. The result is that when the rich begin to shift their income to reduce their tax liability and tax revenues begin to slow, Congress must go back to the tax base of last resort — the middle class. Then the tax increases won’t be so stealthy.
Before believing Obama’s campaign ads promising you how he and the Democrat-controlled Congress only want to tax the rich, remember that earlier this year Democrats — including Obama and Biden — were pushing a budget proposal that would have increased taxes for individuals making $31,850 and couples making $63,700 — hardly the rich.
With that in mind, do you really trust Obama and his Democratic pals in Congress when they say that they have honestly given up on tax increases for the middle class? And let us not forget that Obama has stated repeatedly during the campaign that he intends to raise the capital gains tax, which sounds like something that will only affect the rich until you want to sell your house.
Meanwhile, the Bush tax cuts have saved middle-class families nearly $2,000 annually — tax cuts that McCain-Palin supports extending, but Obama-Biden intends to roll back in 2010 if they are elected.
We only need to look at the last Democrat elected to the presidency as a cautionary tale about believing their trickle-up tax promises. Bill Clinton also promised middle-class voters that he would cut taxes, and in fact he won the 1992 election by chastising President George H.W. Bush for violation of his “no new taxes” pledge. Once safely in office, however, Clinton passed the largest tax increase in the history of mankind (the deciding vote in the Senate cast by Vice President Al Gore, supported by Joe Biden) and began hiking gas taxes (a tax increase that not a single Republican in Congress voted for). And to make it even worse, Clinton imposed his tax increases retroactively, hitting middle-class families even harder.
In the end, no one escapes tax increases. But when it comes to tax increases targeted at the rich, invariably the middle class and the poor end up holding the bag. Another Harvard man, President John Kennedy, understood this and enacted tax cuts which spurred economic growth and increased tax revenues. “A rising tide lifts all boats,” Kennedy repeatedly said. However, this is heresy for the Democratic Party today.
Obama’s trickle-up tax increases are a fairy tale that can only be told before the election. Once elected as president, Obama will have to quickly break the bad news to the American people that he was only kidding about his gravity-defying tax increases only on the rich. This is especially true after the bailout announcements this past week (Fannie Mae, Freddie Mac, AIG, and no doubt more coming taxpayers’ way). And those tax cuts he is currently promising middle-class voters in battleground states, like Ohio, Pennsylvania, Michigan, and Iowa? Well, you can expect your tax rebate check from his new Treasury secretary, Bigfoot.