House Panel Votes Huge $500 Billion Tax Increase; Networks Couldn't Care Less
Neither NBC’s Today nor ABC’s Good Morning America mentioned the tax increases $544 billion price tag, as each newscast folded the development into larger pieces on President Obama’s push for health care “reform.”
ABC’s Deborah Roberts first gave a mere two sentences to the CBO report that contradicts White House claims that Obama’s plan would save money. She then mentioned the big tax increase: “Meantime, a House committee approved billions in new taxes on the wealthy to pay for the reforms.”
Over on NBC’s Today, Natalie Morales, in introducing a longer report by correspondent Savannah Guthrie, mentioned that “During the night, the House Ways and Means committee voted to increase taxes on higher income earners as part of a health care reform bill.”
MRC’s Geoff Dickens noted that neither the Guthrie piece nor a subsequent segment with NBC’s David Gregory on health care specifically mentioned the tax increase, although Gregory dwelled on the “sentimental” push on Capitol Hill to quickly ram through a health care bill in the next few weeks as an homage to ailing liberal Senator Ted Kennedy:
MATT LAUER: This, this August deadline is looming and it's a tough one to meet but, but you think there could be what I think you called it, “The Ted Kennedy Factor” here. What's that going to be?
GREGORY: Well, look, Ted Kennedy is a driving force behind this legislation. He's worked with the White House. He's talking to all sides in this debate. All sides in the debate say, “If he were here, perhaps it would be a better bill. We'd get it a little bit faster.” So he's involved. And I think there is a factor here. He wants this. The President wants it. I think there's gonna be certainly a sentimental favorite in terms of getting this legislation done. This is gonna go down to the wire in terms of whether there are Democratic votes. Right now, the Republicans are squarely against it. Maybe some of that opposition falls. It all depends on how close they get to making it look like it's inevitable. And this is really do or die time.
As for the taxes, today’s Wall Street Journal notes that the taxes in the House health care bill (which would still, the Journal says, leave the scheme $300 billion short), coupled with tax changes already incorporated in President Obama’s budget proposals, would propel top tax rates in the U.S. to levels higher in most European countries, including France and Sweden, as the accompanying chart shows.
“With the economy still far from a healthy recovery, and the federal fisc already nearly $2 trillion in deficit, Democrats want to ram through one of the greatest raids on private income and business in American history,” the Journal’s editors marveled.
An excerpt from Friday’s Wall Street Journal editorial, “A Reckless Congress”:
Say this about the 1,018-page health-care bill that House Democrats unveiled this week and that President Obama heartily endorsed: It finally reveals at least some of the price of the reckless ambitions of our current government. With huge majorities and a President in a rush to outrun the declining popularity of his agenda, Democrats are bidding to impose an unrepealable European-style welfare state in a matter of weeks.
Mr. Obama's February budget provided the outline, but the House bill now fills in the details. To wit, tax increases that would take U.S. rates higher even than most of Europe. Yet even those increases aren't nearly enough to finance the $1 trillion in new spending, which itself is surely a low-ball estimate....
The [House health care] bill's main financing comes from another tax increase on top of the increase already scheduled for 2011 under Mr. Obama's budget. The surtax starts at one percentage point for adjusted gross income above $350,000 in 2011, rising to two points in 2013; a 1.5 point surtax at incomes above $500,000, rising to three in 2013; and a whopping 5.4 percentage points in 2011 and beyond on incomes above $1 million.
This would raise the top marginal federal tax rate back to roughly 47% or 48%, if you include the Medicare tax and the phase-out of certain deductions and exemptions. With the current top rate at 35%, this would be the largest rate increase outside the Great Depression or world wars.
The average U.S. top combined state-federal marginal tax rate would hit about 52%. This would be higher than in all but three (Denmark, Sweden, Belgium) of the 30 countries measured by the OECD. According to the nearby table compiled by the Heritage Foundation, taxpayers in at least five U.S. states would pay higher marginal rates even than Sweden. South Korea, which Democrats worry is stealing American jobs, would be able to grab even more as its highest rate is a far more competitive 38.5%.
House Democrats say they deserve credit for being honest about the tax increases needed to fund their ambitions. But then they also claim that this surtax would raise $544 billion in new revenue over 10 years. America's millionaires aren't that stupid; far fewer of them will pay these rates for very long, if at all. They will find ways to shelter income, either by investing differently or simply working less. Small businesses that pay at the individual rate will shift to pay the 35% corporate rate. When the revenue doesn't materialize, Democrats will move to soak the middle class with a European-style value-added tax....
The most remarkable quality of this health-care exercise is its reckless disregard for economic and fiscal reality. With the economy still far from a healthy recovery, and the federal fisc already nearly $2 trillion in deficit, Democrats want to ram through one of the greatest raids on private income and business in American history. The world is looking on, agog, and wondering why the United States seems intent on jumping off this cliff.