July 25, 2011

Boehner’s $800 Billion: NOT a Tax Increase

Filed under: Economy,Taxes & Government — Tom @ 9:00 am

From a Washington Times columnist, whose primary fire is focused on Barack Obama (“Is Obama a pathological liar?”; bolds are mine):

“The White House had already agreed to a lower revenue number — to be generated through economic growth and a more efficient tax code — and then it tried to change the terms of the deal after taking heat from Democrats on Capitol Hill,” our insider said.

The negotiations just before breakdown called for $800 billion in new “revenues” (henceforth, we’ll call those “taxes”), but after the supposedly bipartisan plan came out — and bowing to the powerful liberal bloc on Capitol Hill — Mr. Obama demanded another $400 billion in new taxes: a 50 percent increase.

The columnist, whose full name as far as I can immediately tell is “Curl,” was very sloppy in making the $800 billion look like new “taxes.” But at least he/she appears to get it. Unfortunately, many others on the center-right won’t, and won’t even try.

What Boehner wanted before “negotiations” (i.e., talking to Barack “Brick Wall” Obama) broke down is a series of downward changes to marginal rates in the tax code offset by unnamed other changes which would have been scored as revenue-neutral by the Congressional Budget Office but whose incentive effects would increase collections in the real dynamic world by $800 billion over 10 years, because they would stimulate something real — economic growth and jobs.

But that apparently wasn’t enough for Obama, who wanted actual tax increases hard-wired into the tax code — whereas Boehner had none.

As he characterizes it, Boehner was correct in telling Fox News on Sunday that his design is NOT a tax increase. “Curl” awkwardly appears to characterize it as such. Untold others on the center-right will more directly say the same thing. Sadly, there are too many people who seem to be a lot more interested in beating up on the Speaker to generate reads and site traffic than they are in understanding and communicating substance, and who are all too willing to believe reports making him look bad from a media establishment whose mission it is to make him look bad. How many times in the past week did the press say a deal was close when it wasn’t?

If/when Boehner sells out, I’ll let him have it with both barrels. As of late last night, it hasn’t happened yet. If it does, some of those on the center-right who should and do know better will have to look in the mirror to find where some of the blame lies.

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UPDATE: Seriously, using the benchmarks some people are applying to Boehner, both the Reagan and Bush tax cuts, which also involved and resulted in increasing collections “through economic growth and a more efficient tax code,” were really “tax increases.” Zheesh.

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3 Comments

  1. I think the real issue is, is there another trillion dollars in business profits out there that could possibly be taken and how much would be left after it was? Somehow I don’t think there is a trillion in actual profits that could be subject to taxation without driving prices up. Just because the GDP is $15 trillion doesn’t mean it’s 100% profit as liberals sometimes pretend it to be. Obama can literally raise business taxes all he wants but if he is already collecting all there is, then no more can be gotten. And you can bet every corporation will restructure their earnings to avoid any tax increase as it is.

    Comment by dscott — July 25, 2011 @ 10:23 pm

  2. #1, if the culture of fear and fright (and — added later — the related regulatory hyperzealousness) went away, C-Corp tax collections could double in 2 years to about $400 billion, or just above the $370 bil peak in 2007. That’s $200 billion alone.

    Non-withheld receipts could also go up by about $200 billion if the culture of fear went away. In fiscal 2008 (before refunds) it peaked at $486 billion. It might hit $325 billion this year. That’s another $160 billion.

    Get the unemployment rate down another two points and you get another $150 billion or so in payroll-releated FIT and FICA. Restore the 2% SocSec employee tax cut and you’ve got another $120 billion.

    That’s $630 billion, which gets within $100 billion of balancing the budget if you cut spending back to 2008 levels (2007′s spending level should be the goal, in which case there would be a surplus of about $150 bil).

    But the fear won’t go away until Obama either goes away or is totally marginalized. The chances of the latter are almost zero, because the press will never let it happen.

    Do what Boehner suggests AND get the fear factor out of the way, and you’re talking serious surpluses.

    Comment by TBlumer — July 25, 2011 @ 10:31 pm

  3. #2, I believe Obama is staking out his position the way he is because Reid proposed a plan which is essentially a clean debt ceiling increase. His cuts are totally phony with no tax increase, which is Obama’s original demand to increase the debt limit and let him spend with abandon. That is why Obama broke the deal by insisting on an extra $400 billion, he didn’t want the $800 billion in the manner Boehner proposed because that would validate Bush’s and Reagan’s tax cut of marginal rates to spike the economy. He basically is fooling people into believing Reid’s plan is in the middle when in fact, its nowhere near it.

    Obama’s entire rhetoric has been demonizing the tax cut, he can’t now sign on to a tax cut when he and the lib spin machine told their followers tax cuts for the rich lowers collections (which it didn’t) and lose all credibility with them.

    Comment by dscott — July 26, 2011 @ 4:22 am

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