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Obama Calls for Highest Sustained Taxation in U.S. History

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Photo Credit: AP

Photo Credit: AP

In the budget proposal he presented to Congress last month, President Barack Obama called for what would be the highest level of sustained taxation ever imposed on the American people, according to the analysis published last week by the Congressional Budget Office.

Under Obama’s proposal, taxes would rise from 17.6 percent of Gross Domestic Product in 2014 to 19.2 percent in 2024. During the ten years from 2015 to 2024, federal taxation would average 18.7 percent GDP.

America has never been subjected to a ten-year stretch of taxation at that level.

HIGHEST SUSTAINED TAXES-NEW-CHART-1

In the twelve fiscal years preceding the Japanese attack on Pearl Harbor (1930 through 1941), federal taxation averaged 5.3 percent of GDP.

In the five fiscal years encompassing U.S. involvement in World War II (1942 through 1946), federal taxation averaged 16.1 percent of GDP.

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Senate Democrats Would Increase Taxes — And The National Debt

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Photo Credit: Cliff Owen

Before Wednesday it had been more than 1,400 days since Senate Democrats had produced a federal budget. After only a few hours of Senate Budget Committee testimony, it quickly became apparent why they waited so long.

Now that Obamacare has become law, it is impossible for Democrats to put together a tax-and-spending plan that does not increase taxes by hundreds of billions of dollars yet still add trillions to the national debt.

The Democrats are so eager to raise both taxes and spending that the budget plan they submitted yesterday for the next fiscal year increases spending this year by $46 billion. Then they hike spending another $116 billion next year on their way to a 60 percent increase over the next 10 years.

To put that in perspective, the budget submitted Tuesday by House Budget Chairman Paul Ryan, R-Wis., increases spending by just 40 percent over that same time frame. The Ryan budget, which returns federal spending to its post-World War II historical average, calls for outlays of $41.5 trillion over 10 years. That’s $4.9 trillion less than the Democratic total of $46.4 trillion.

In addition to historically high government spending, the Democratic budget also raises taxes by $1 trillion starting immediately. Thanks to the weakest economic recovery since World War II, federal taxes as a percentage of GDP are still below historic norms. But as the economy improves, Democrats steadily ramp up the government tax burden, reaching a high of 19.8 percent in 2023. Only once since World War II — right before the tech bubble collapsed in 2000 — has the nation’s tax burden ever been that high.

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Video: Sperling Says GOP Will Cave On Taxes After Seeing ‘Pain’ Caused By Sequester

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Photo Credit: KAZVorpalA senior White House official says congressional Republicans who see the damage caused by billions in automatic spending cuts will eventually agree to raise taxes.

Gene Sperling, director of the National Economic Council and assistant to the president for economic policy, said that Republicans will eventually “choose bipartisan compromise over an ideological position,” on Sunday on ABC’s “This Week.”

“As this pain starts to gradually spread to communities” hit by $85 billion in cuts “more Republican colleagues who are concerned about this harm to their constituents will choose bipartisan compromise on revenue raising tax reform with serious entitlement reform,” said Sperling.

“They’ll choose this bipartisan compromise over what is an ideological position that every single penny of deficit reduction going forward must be on the middle class or seniors or children, and that there can’t be one penny that comes from closing loopholes or tax expenditures,” he added.

The automatic across-the-board cuts took effect on Friday after congressional leaders and President Obama were unable to broker a last-minute replacement deal. Democrats are calling for new tax revenues in any deal to replace the sequester, while Republicans insist that only other targeted cuts and entitlement reforms be included.

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Rich Hollywood Movie Producers Love Subsidies (That Would Pay For Teachers, Firefighters, And Police Officers)

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Photo Credit: Dreamworks At the Democratic National Convention last year, actress Eva Longoria called for higher taxes on America’s rich. Her take: “The Eva Longoria who worked at Wendy’s flipping burgers—she needed a tax break. But the Eva Longoria who works on movie sets does not.”

Actually, nowadays an Eva Longoria who flipped burgers would probably qualify for the Earned Income Tax Credit and get a check from the government rather than pay taxes. It’s the movie set where she works these days that may well be getting the tax break.

With campaign season over, you’re not likely to hear stars bringing up taxes at this weekend’s Academy Awards show. But the tax man ought to come out and take a bow anyway. Of the nine “Best Picture” nominees in 2012, for example, five were filmed on location in states where the production company received financial incentives, including “The Help” (in Mississippi) and “Moneyball” (in California). Virginia gave $3.5 million to this year’s Oscar-nominated “Lincoln.”

Such state incentives are widespread, and often substantial, but they don’t do much to attract jobs. About $1.5 billion in tax credits and exemptions, grants, waived fees and other financial inducements went to the film industry in 2010, according to data analyzed by the Center on Budget and Policy Priorities. Politicians like to offer this largess because they get photo-ops with celebrities, but the economic payoff is minuscule. George Mason University’s Adam Thierer has called this “a growing cronyism fiasco” and noted that the number of states involved skyrocketed to 45 in 2009 from five in 2002.

In its 2012 study “State Film Studies: Not Much Bang For Too Many Bucks,” the Center on Budget and Policy Priorities found that film-related jobs tend to go to out-of-staters who jet in, then leave. “The revenue generated by economic activity induced by film subsidies,” the study notes, “falls far short of the subsidies’ direct costs to the state. To balance its budget, the state must therefore cut spending or raise revenues elsewhere, dampening the subsidies’ positive economic impact.”

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