In 2013 and 2014 Americans will see a reduction in their income. The reason is Obama and the Democrats want higher taxes. They claim higher taxes are necessary to reduce the debt. Despite this claim, Treasury Secretary Geithner today, November 19, talked about raising the debt ceiling. You only raise the debt ceiling to spend more money not lower the debt. Higher taxes in a bad economy leads to a decrease in consumer spending and doesn’t solve the debt situation. Franklin Roosevelt did it in the 1930’s and just created more debt, higher unemployment and prolonged the “Great Depression.” So, Obama and the Democrats have not learned from their own party’s mistakes.
The first thing that Obama wants is to eliminate the Bush tax cuts which means a tax increase for the middle class. According to the Congressional Budget Office (CBO), the elimination of the Bush tax cuts will impact negatively lower and middle income families. The CBO estimates that the average American middle class household will see taxes go up as high as $4,138.
Also, the elimination of the Bush tax cuts means certain tax deductions will disappear. Married couples filing a joint return will pay higher taxes than if they were single filing separate returns. There is a good possibility the child tax credit will decrease from $1000 to $500 per child. A family with four children would only have a $2000 deduction under Obama’s tax plan rather than the higher rate of $4000 under the Bush tax cuts.
Dividend income taxes will increase which will especially hit retirees who depend upon stock dividends to supplement their pensions and Social Security. The anticipated capital gains tax will impact small businesses. For example, when a business buys a piece of equipment like a washing machine for a laundromat the profits made from a business will face higher taxes. The problem for the middle and lower classes is that businesses normally just pass on the higher taxes to the customers by increasing the prices of their goods or services. Oops, more money out of the consumers’ pockets.
There is also the hidden tax of inflation. Inflation is a general rise in prices which we are experiencing now. When the government prints up too much money, like it is doing under Bernacke, inflation is the result. Again businesses increase their prices to compensate for their higher costs and pass it on to consumers. The lower and middle classes will feel the pinch the most because every commodity will cost more.
In 2014 there will be 28 new taxes associated with ObamaCare. You buy health insurance or pay the penalty. Either way, it will create a further drain on the lower and middle class pockedbooks.
Already companies have announced they will not be investing in growing their businesses because of Obama’s economic policies and ObamaCare. This means the unemployment rate will likely increase as companies try to contain costs. Moreover, over two dozen companies announced last week they will not cut wages but will cut the hours of their employees to circumvent the 30 hour rule in ObamaCare. ObamaCare defines full-time employment as working over 30 hours per week. Cutting the hours below 30 hours means that workers will become part-time employees have to seek a second job to earn a full-time salary. Not a good situation!
Finally, higher taxes in a weak economy forces the wise person to save more. This leads to less spending which leads to declining profits for small businesses which leads to laying off workers, etc. It is the repeat of the disasters cycle created in the depression and will not solve this nation’s economic woes. When will the Democrats learn from history?