It looks like the Obama administration is considering a move to increase taxes to deal with the exploding federal deficits caused by their massive give-aways and bailouts. Their plan would be like throwing a bucket of cold water on the embers of entrepreneurial growth in this struggling economy.
From James Pethokoukis:
From James Pethokoukis:
Since Obama already wants to get rid of the income and capital gains tax cuts for wealthier Americans that expire at the end of 2010, clearly what Romer is referring to is the rest of the 2001 and 2003 Bush tax cuts. Letting all the 2001 cuts -- rate reductions, child tax credit marriage penalty relief -- expire would raise tax revenues by $2.5 trillion through 2019. (These CBO numbers assume no negative economic feedback impact from higher taxes.) And letting the 2003 tax cuts on capital gains and dividends expire would be tantamount to a $350 billion tax increase through 2019. And none of this includes possible plans for a VAT that could raise $400 billion a year more to close the huge projected gap -- maybe 7 percentage points -- between spending as a percentage of GDP and revenues as a percentage of GDP.
It makes me sick to think about a lot of these issues. I feel like at this point we're only able to sit back and watch it all unfold in front of us. Interested to see what happens!