The Obama tax increases

Todd Henderson —  29 July 2010

The biggest and most important issue for the next few months won’t be immigration, the New Black Panthers, or even the war in Afghanistan. Huge tax increases are headed our way, and it raises tough questions. On the one hand, signaling we are serious about deficits is likely a good thing. But, since politicians haven’t been able to reduce spending additional income, assuming more taxes brings more income, cutting spending would be a better course. Having locked ourselves into huge spending, maybe some tax increases are inevitable.

On the other hand, raising taxes in a recession is not a good idea. Taking money out of the economy, routing it through Washington, and then hoping politicians can spend it wisely sounds like the triumph of hope over experience.

Take me. I just calculated my family tax increase at a useful website from the Tax Foundation. If the president and Congress raise taxes as expected, my family will have to pay an additional $10,000 in taxes next year.

To come up with the extra $800 per month, we can cut back on some things. The recent (legal) immigrant from Mexico who cuts our grass will suffer, as will the recent (legal) immigrant from Poland who cleans our house a few times a month. We can cancel our cell phones and some cable channels, as well as take our daughter from her art class at the community art center, but these are only a few hundred dollars per month in total. We’ll have to go to skip going to the movies and eat out less, and think about skipping that vacation to Disney World. What is the theory under which collecting this money in taxes and deciding in Washington how to spend it is superior to our decisions? Maybe we should ask the entrepreneurs we employ and the new arrivals they employ in turn whether they prefer to work for us or get a government handout.

5 responses to The Obama tax increases


    Hmm, according to this site, Obama’s tax plan will lower my taxes by $1000 compared to the “renew Bush tax cuts” option. Not bad.


    I would agree with Todd that the Bush tax cuts weren’t the primary cause of our deficit– the runaway Bush spending was. The war in Iraq, of course, but also the Medicare drug benefit Republicans approved and the sharp increase in discretionary spending we saw during the Bush regime generally.

    I’d also say the economic stimulus bill’s tax cuts were another culprit, since they were the bulk of the stimulus package in 2009. The actual spending part of the package didn’t start hitting until early this spring, timed to coincide with the November 2010 elections. Unfortunately they arrived too late to do much good, certainly not to improve on the useless tax cuts that went first.

    Todd Henderson 29 July 2010 at 9:22 am

    Some facts about the tax burden of the rich:

    According to the IRS web site, the top 1 percent of taxpayers in the U.S. paid 40 percent of the total income taxes last year. In 1986, they paid 25 percent. Wow, those Bush tax cuts were really a windfall.

    For a take down of the myth about the tax cuts causing the deficit, see Brian Riedl’s recent column in the WSJ: “The Bush Tax Cuts and the Deficit Myth.”


    I dunno– I’m single, earn well over $100,000, own no property, have no kids, etc. That is, I’m the poster-child for paying lots of taxes because I have so few deductions. Your website tells me my federal taxes will increase all of $3,550 per year (which is in line with what I’ve seen in tables in the WSJ and elsewhere). I just can’t get too outraged over that. Much earlier in life I was poor and paid little taxes, and I’ll take being wealthy and paying higher taxes over that any day of the week.

    Besides, aren’t we just reverting back to the higher tax rates of the Clinton Administration anyway? I remember all the screaming and naysaying from conservatives back in 1993 when we raised taxes then, predicting the imminent collapse of the republic. We were fine. I suspect we’ll be fine now– or more precisely, we won’t be getting worse because the tax cuts expire. We’ll be getting worse because our aging population will be sucking down Medicare, and we don’t have the political will to address that. But we’d be getting worse because of that regardless of these specific tax cuts and their possible expiration.

    Walter Sobchak 29 July 2010 at 7:47 am

    I am not worried at all. BO solved my tax problem by killing my income.