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Dick Morris Outlines Obama’s Tax Plans

Posted by Larry Doyle on September 21, 2012 3:40 PM |

I will leave it to readers to make their own assessments as to what they think of Dick Morris’ assessment of President Obama’s tax plans. However you lean — and before people unsubscribe from my blog — do yourself the favor of viewing this 4-minute clip.

Regardless of your political persuasion, I think that even a whiff of these tax programs can do nothing  but put a significant dent into the economy while elevating the unemployment rate .

I would imagine tax proposals of these sort would be a cause for a battle royale atop Capitol Hill.  Are these redistribution plans that President  Obama hopes he may have greater flexibility to implement in a second term?

What do I believe should be done?

As laid out a week ago in the WSJ by George Shultz, Michael J. Boskin, John F. Cogan, Allan H. Meltzer, and John B. Taylor (not exactly lightweights) in writing The Magnitude of the Mess We’re In,

Today, government officials are issuing debt to finance pet projects and payoffs to interest groups, not some vital, let alone existential, national purpose.

The problems are close to being unmanageable now. If we stay on the current path, they will wind up being completely unmanageable, culminating in an unwelcome explosion and crisis.

The fixes are blindingly obvious. Economic theory, empirical studies and historical experience teach that the solutions are the lowest possible tax rates on the broadest base, sufficient to fund the necessary functions of government on balance over the business cycle; sound monetary policy; trade liberalization; spending control and entitlement reform; and regulatory, litigation and education reform. The need is clear. Why wait for disaster? The future is now.

The authors are senior fellows at Stanford University’s Hoover Institution. They have served in various federal government policy positions in the Treasury Department, the Office of Management and Budget and the Council of Economic Advisers.

Comments, questions, constructive criticisms encouraged and appreciated.

Navigate accordingly.

Larry Doyle

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I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

 

 

  • Tim

    Get ready because look what is coming right around the bend.

    Sunday will mark the start of the 100-day countdown to “Taxmageddon” – the date the largest tax hikes in the history of America will take effect. They will hit families and small businesses in three great waves on January 1, 2013:

    First Wave: Expiration of 2001 and 2003 Tax Relief
    In 2001 and 2003, the GOP Congress enacted several tax cuts for small business owners, families, and investors (later re-upped by President Obama and Democrat Congress in 2010).

    The following tax hikes will occur on January 1, 2013:
    Personal income tax rates will rise on January 1, 2013. The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which the majority of small business profits are taxed). The lowest rate will rise from 10 to 15 percent.

    All the rates in between will also rise. Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates.

    The full list of marginal rate hikes is below:
    -The 10% bracket rises to a new and expanded 15%
    -The 25% bracket rises to 28%
    -The 28% bracket rises to 31%
    -The 33% bracket rises to 36%
    -The 35% bracket rises to 39.6%

    Higher taxes on marriage and family coming on January 1, 2013. The “marriage penalty” (narrower tax brackets for married couples) will return from the first dollar of taxable income. The child tax credit will be cut in half from $1000 to $500 per child. The standard deduction will no longer be doubled for married couples relative to the single level.

    Middle Class Death Tax returns on January 1, 2013. The death tax is currently 35% with an exemption of $5 million ($10 million for married couples). For those dying on or after January 1 2013, there is a 55 percent top death tax rate on estates over $1 million. A person leaving behind two homes and a retirement account could easily pass along a death tax bill to their loved ones.

    Higher tax rates on savers and investors on January 1, 2013. The capital gains tax will rise from 15 percent this year to 23.8 percent in 2013. The top dividends tax will rise from 15 percent this year to 43.4 percent in 2013. This is because of scheduled rate hikes plus Obamacare’s investment surtax.

    Second Wave: Obamacare Tax Hikes
    There are twenty new or higher taxes in Obamacare. Some have already gone into effect (the tanning tax, the medicine cabinet tax, the HSA withdrawal tax, W-2 health insurance reporting, and the “economic substance doctrine”). Several more will go into effect on January 1, 2013. They include:
    The Obamacare Medical Device Tax begins to be assessed on January 1, 2013. Medical device manufacturers employ 409,000 people in 12,000 plants across the country. This law imposes a new 2.3% excise tax on gross sales – even if the company does not earn a profit in a given year. Exempts items retailing for <$100.

    The Obamacare Medicare Payroll Tax Hike takes effect on January 1, 2013. The Medicare payroll tax is currently 2.9 percent on all wages and self-employment profits. Starting in 2013, wages and profits exceeding $200,000 ($250,000 in the case of married couples) will face a 3.8 percent rate.

    The Obamacare “Special Needs Kids Tax” comes online on January 1, 2013. Imposes a cap on FSAs of $2500 (now unlimited). Indexed to inflation after 2013. There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education. This Obamacare cap harms these families.

    The Obamacare “Haircut” for Medical Itemized Deductions goes into force on January 1, 2013. Currently, those facing high medical expenses are allowed a deduction for medical expenses to the extent that those expenses exceed 7.5 percent of adjusted gross income (AGI). The new provision imposes a threshold of 10 percent of AGI. Waived for 65+ taxpayers in 2013-2016 only.

    Third Wave: The Alternative Minimum Tax and Employer Tax Hikes
    When Americans prepare to file their tax returns in January of 2013, they’ll be in for a nasty surprise—the AMT won’t be held harmless, and many tax relief provisions will have expired. These tax increases will be in force for BOTH 2012 and 2013. The major items include:
    The AMT will ensnare over 31 million families, up from 4 million last year. According to the left-leaning Tax Policy Center, Congress’ failure to index the AMT will lead to an explosion of AMT taxpaying families—rising from 4 million last year to 31 million. These families will have to calculate their tax burdens twice, and pay taxes at the higher level. The AMT was created in 1969 to ensnare a handful of taxpayers.

    Full business expensing will disappear. In 2011, businesses can expense half of their purchases of equipment. Starting on 2013 tax returns, all of it will have to be “depreciated” (slowly deducted over many years).

    Taxes will be raised on all types of businesses. There are literally scores of tax hikes on business that will take place. The biggest is the loss of the “research and experimentation tax credit,” but there are many, many others. Combining high marginal tax rates with the loss of this tax relief will cost jobs.

    Tax Benefits for Education and Teaching Reduced. The deduction for tuition and fees will not be available. Tax credits for education will be limited. Teachers will no longer be able to deduct classroom expenses. Coverdell Education Savings Accounts will be cut. Employer-provided educational assistance is curtailed. The student loan interest deduction will be disallowed for hundreds of thousands of families.

    Charitable Contributions from IRAs no longer allowed. Under current law, a retired person with an IRA can contribute up to $100,000 per year directly to a charity from their IRA. This contribution also counts toward an annual “required minimum distribution.” This ability will no longer be there.

  • Joe

    REDISTRIBUTION..baby!!! Looking to spread the wealth around.

  • Barry

    The one issue is how to engage the voter.

    We have/are losing our democracy/government and the media reports the “news” on the most profitable fashion. (is journalism dead!?!).

    Everything flows from there.

    • LD

      No doubt about it and the political power base KNOWS this and has worked very hard at owning that piece of the process.

      Control the medium and then you can control the message.

      • Barry

        It is so evident watching the conventions and listening to the drivel coming from both candidates mouths (as well as the media).

        The candidates and the talking heads are singing from the big donor hymnals, dividing the electorate to get elected (or get their guy elected) but all the while the influence peddlers have gamed the process (playing all sides against us) so their nests remain feathered. We truly are f-cked.

  • LP

    I had hoped to find an objective commentator in your column. I must ask how you see Dick Morris as anything other than another Sean Hannity or Bill O’reily?

    Is Fox News really a good source for commenting on the economy, in your mind?

    The Hoover foundation is recognized as being right leaning, much as the Cato Institute or Heritage Foundation, both arms of the Koch brothers.

    I do appreciate your past responses, but I really am searching for objective, well thought out conversations on the issues of the day.

    Fox News isn’t it.

    • fred

      LP,

      I had hoped for more from you than a simple dismissal of Dick Morris as a “hack”.

      Unless Mr. Morris mistated the “Obama Plan” tax facts, I think the video clip cut through some of the political rhetoric and presented some of the “pocketbook” reality of the cost of an Obama re-election to the 49%ers.

      Personally, I’d like more information on how these tax dollars will be used to reduce the deficit and similar tax and spending information from the Romney camp.

      American voters deserve no less.

  • Peter S.

    According to the US Government Printing Office, our Tax Code is 13,458 pages in total. The full text of Title 26 of the United States Code (the part written by Congress–available for an additional $179) is a mere 3,387 printed pages, bringing the adjusted gross page count to 16,845.
    I can imagine that more than a couple hundred pages apply to the vast majority of Americans.

    The 16,845 page tax code is the legacy of both democratic and republican presidents.

    The resulting gargantuan tax code begs the question – who benefits from the remaining 16,500 pages of tax codes and resulting loopholes?

    • fred

      Peter,

      In response to your post, if I’m not mistaken Romney wants to lower the rates and broaden the base. According to Morris and w/o facts to the contrary, Obama wants to increase the rates and increase the base.

      If your objective is to simplify the tax code Romney would seem to be the better choice?

      • Peter S.

        Fred, my objective is exactly I stated, who and what entities benefit from the remaining 16,500 pages of the U.S. Tax Code.

        An objective examination may reveal loopholes and unintended consequences that benefit a minority of Americans over the greater American majority.

        I personally believe that a much similar progressive flat tax would be far more equitable, instilling a belief fare play.

        The remaining 16,500 pages only perpetuate the notion that “the fix is in.”

  • fred

    Peter,

    I’ll go a step further, If it doesn’t fit on 1 page it’s too much!

  • anon

    1) No video link to click on. Make your site compatible with Flash Blocker software.

    2) re AMT: and I have to pay the accountant $50 just to do the AMT paperwork, to prove that I’m NOT subject to it…

  • crusader

    Please help Barack spread his thoughts on his faith by sharing this video with your friends: http://www.youtube.com/watch_popup?v=tCAffMSWSzY#t=28

  • Ron Larson

    It astounds me that so much focus is on the POTUS office in regards to tax law. It is your Congressman and Senators who write the lax laws. They are the ones who insert the tax loopholes for their sponsors. The POTUS doesn’t make tax law. He can scream and shout about it. But at the end of the day, it is Congress’s job.

    I think Mr Morris, or anyone else babelling on about Obama’s or Romeny’s tax plans is just a distraction. They are political shills yammering about something that prez has no control over while Congress continues to loot our country and sell us out to the highest bidder.

    Lets put blame where is belongs. At the feet of Congressman who can’t figure out how to do their job.

  • http://hotlink john

    I agree with Fred, I’m for Mitt Rommney.. John,Torrance,Ca






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