Tax Hikes Under Any Other Name

Planet Washington, a McClatchy blog, posted a quick note today stating that the Obama administration is planning to pay for its proposed jobs bill entirely by tax increases. The thing to remember here is that companies (or corporations) do not pay taxes–consumers do. Any increase in corporate taxes will be passed on to the American consumer. This will raise prices and fuel inflation, decreasing the amount of money Americans have to spend and slowing down the economy rather than stimulating it. The plan suggested by President Obama will raise taxes on oil and gas companies by approximately $ 40 billion. Those tax increases will be passed on to the American consumer in the form of increased energy prices, which in turn will increase prices across the board. This is not a wise move at this time.

Reuters describes the plan as targeting tax breaks (an expression that probably did better in the focus groups than increasing taxes). The tax breaks being targeted are generally in line with the class warfare that this administration is known for. It is never mentioned that half of all Americans do not pay income tax. None of the tax breaks targeted are aimed at this group.

This is a chart from 2007 from the Journal of the American Enterprise Institute:

Who Pays How Much in Taxes

It seems to me that the problem of taxes is not that the rich are not taxed enough. First of all, the problem is the spending–not the income. Second of all, half the people in America have no interest in whether or not taxes are increased–they do not pay them. Therefore, they do not care if the spending is out of control.

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