No New Taxes?
I know, it’s been a long time without hearing from me. Well, I’ve really only been writing weekly columns on www.insidestl.com. In case anyone’s interested, my articles come out each Monday, if you get the time please check out www.insidestl.com, they’re good people for letting me spout off each week. I’m going to put some of my more favorite weekly pieces on the blog in an attempt to catch everyone up with some newer content and will return to posting more regularly. Sorry for being gone for so long and thanks to anyone who has stumbled upon this blog and taken the time to read a little. I’m still working on getting a new site up-and-running and I’ll have it ready in the next two weeks. Thanks again for support…
“I can make a firm pledge, under my plan, no family making under $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains tax, not any of your taxes.” These were Obama’s words from a campaign speech last September. Throughout the election, Obama’s supporters constantly pressed for voters to elect their man if for no other reason than self interest because Obama’s tax plan was guaranteed to put more money into everyone’s pockets. However, last Wednesday, the largest tobacco tax increase in history went into effect raising the federal tax on a pack of cigarettes by almost $0.62 a pack. The tax increase is to fund massive expansion of the SCHIP program which will add over 4 million “children,” many well over the age of 20, to government healthcare. A look at the SCHIP details shows how misleading the debate truly was on this legislation and only reinforces the need for harsher scrutiny before Obama implements his cap-and-trade program which would represent a new significant tax on all American families, regardless of income levels. It’s already been shown that Obama’s campaign promise didn’t apply to anyone who smokes, which is a habit that very disproportionately affects those in lower income levels. The cap-and-trade program, as admitted by Obama himself, will represent new sweeping taxes on every item purchased by all Americans along with any energy they use either in their homes or at the gas pumps for their cars. Even if you don’t smoke, you may want to take a quick look at the recent tax increase because the current budget in front of Congress will include a much higher tax increase targeted at any American family that consumes any form of energy. These definitely don’t align with Obama’s constant promises of not raising “any of your taxes.”
The main problem with the increased tobacco tax in order to fund the SCHIP expansion is the idea that a tax which is meant to discourage people from smoking cannot reasonably be counted on for consistent revenues to fund entitlement programs. What if the tobacco taxes meet their stated goals of lowering the number of smokers? What then becomes the default revenue source for the expanded government healthcare coverage? Punitive tobacco taxes have become socially acceptable sources for government revenue because they are painted as accomplishing two impressive stated goals. The first is to provide incentives for more people to quit smoking. Second, the money raised is going to the noble cause of providing insurance for children not currently covered by government programs nor private policies. Both of these goals have noble intentions. However, the success of the SCHIP funding depends on the failure of the tobacco taxes to accomplish their objectives. Perhaps, even worse is that smoking is a habit which very disproportionately effects those earning lower incomes. An Associated Press article stated that a Gallup survey of 75,000 people last year found that 34% of respondents earning $6,000 to $12,000 were smokers and the rate consistently declined as incomes rose. At the $90,000 a year income level, only about 13% of respondents were smokers. Therefore, the brunt of these tax increases will be borne by those making far less than the $250,000 the level of income which Obama promised last September wouldn’t see tax increases of any kind. Apparently, he was speaking exclusively to nonsmokers.
This brings about the very important question about future funding for the expanded SCHIP program. If the tobacco tax accomplishes its goal of drastically reducing smoking, who will end up paying for expansion of entitlements? The program is based on conflicting goals. Are smokers really expected to quit smoking? Perhaps, they are just expected to continue smoking and heed Joe Biden’s advice during the election that it’s patriotic to pay higher taxes. The answer is obvious that future funding for the SCHIP program will become embedded into every taxpayer’s April 15th bill just as all other government entitlement programs. For now, the idea that the social outcast smokers will bear all of the increased costs seems to be enough to keep most voter concerns limited. Once tobacco revenues are insufficient, what are the next products or groups of citizens who will be targeted with higher taxes to pick up the slack brought on by smokers uncommitted to the cause of funding children’s insurance?
A similar tax proposal that will disproportionately affect those earning below the magic $250,000 level is also getting closer and closer to being reality as Congress reviews Obama’s $3.6 trillion budget. One of Obama’s main revenue streams in his budget comes from the establishment of a market-based cap-and-trade program which essentially taxes carbon emissions. Very few people seemed interested that Obama once sat on the board of the Chicago-based firm which would provide the national trading platform which would trade the lucrative tax credits. Needless to say, this firm stands to redefine obscene profits from running the government-mandated trading markets for carbon credits. Americans should be very concerned about the ramifications of this policy. As noted in a previous article, an interview which was conveniently covered-up by The San Francisco Chronicle before the election quoted Obama explaining that under his cap-and-trade plan, “electricity rates would necessarily skyrocket.” Analysts of the president’s proposal claim that the average families’ energy bills could easily rise by more than $1,000 a year. Unfortunately, these increases don’t adhere to the cut-off for families below the top 5% of wage earners. These rate increases would affect everyone who uses any energy to run their home or drive their car. This means everyone will see their costs rise. On top of the increased energy bills, the cap-and-trade program would raise the prices of anything produced and sold in US markets because companies would have to pass along the cost for increased carbon taxes to consumers through higher prices.
So it seems that Obama’s campaign promise about no tax increases was speaking to a much smaller audience than originally reported. No one making under $250,000 a year will see any of their taxes increase as long as they don’t smoke, use energy, or purchase anything.