The Simpson-Bowles-Obama debt commission released version 2.0 of their tax increase blueprint. It’s identical to the tax hike released in November’s “chairman’s mark.” Below are the salient details:
Massive and Permanent New Levels of Taxation:
The plan scores out as a 9-year net tax hike of $1.133 trillion
The plan seeks to raise the federal tax burden permanently to 21 percent of GDP, up from the half-century average of 18 percent of GDP. Federal taxes have never been this high.
Creates a tax-hike “trigger” in law. Tax hikes would be automatic after 2013 unless the Simpson-Bowles-Obama tax plan is implemented. There is no spending cut trigger.
Support for this net tax hike plan violates the Taxpayer Protection Pledge which has been signed by over 235 congressmen and 41 senators.
What Are the Tax Hikes, and What Will They Cost Taxpayers?
Personal Income Tax Hikes (Net tax hike of $785 billion plus bracket creep of $96 billion):
Broadens tax base by eliminating deductions and credits, and lowers tax rates (but not enough to avoid a net tax hike). Falsely calls these tax hikes “spending cuts.”
Introduces partial “bracket creep” by slowing down inflation index of tax brackets.
Raises the capital gains and dividends tax rate from 15 to 23 percent.
Social Security Tax Hike (Net tax hike of $138 billion):
12.4 percentage point Social Security tax currently applies to first $100,000 of wages and net self-employment income. This would rise to the first $150,000 of such income.
Gas Tax Hike (Net tax hike of $114 billion):
$0.15 hike in the federal gas tax, creating a new federal gas tax of $0.334 per gallon.
This gas tax hike is $156 per year for a 20-gallon tank filled weekly.
Death Tax:
Creates a permanent death tax with a top rate of 45 percent and a $3.5 million exemption.
There is no death tax in 2010.
Corporate Income Tax Hikes (Net tax hike included in personal income tax hikes):
Barely lowers highest corporate rate in the developed world, from 40 to about 32 percent (including state corporate taxes). That merely moves us from worst in the developed world to fourth-worst, better only than Japan, France, and Belgium.
By getting rid of many energy-specific tax deductions (LIFO accounting, Sec. 199 deduction, MACRS depreciation, etc.) this corporate tax hike should hit energy consumers and investors hardest of all.
DW Description: Chris Langan is known to have the highest IQ in the world, somewhere between 195 and 210. To give you an idea of what this means, the average...