Last week, President Obama signed into law several hundred billions of dollars in new stimulus spending.  This week, we’re going to learn how he proposes to pay for it.  And as I have long predicted, the bill is coming due…and you and me are going to be asked to pick it up.

Obama plans to raise taxes.

http://www.washingtonpost.com/wp-dyn/content/article/2009/02/21/AR2009022100911_pf.html

Here is how the Washington Post described it:

“Obama also seeks to increase tax collections, mainly by making good on his promise to eliminate some of the temporary tax cuts enacted in 2001 and 2003. While the budget would keep the breaks that benefit middle-income families, it would eliminate them for wealthy taxpayers, defined as families earning more than $250,000 a year. Those tax breaks would be permitted to expire on schedule in 2011. That means the top tax rate would rise from 35 percent to 39.6 percent, the tax on capital gains would jump to 20 percent from 15 percent for wealthy filers and the tax on estates worth more than $3..5 million would be maintained at the current rate of 45 percent.”

My question is: does Obama really believe his own rhetoric about how bad this economy is?  If so, then why is planning to raise taxes? In times of economic stress, we need economic incentives to get businesses moving again.  Raising the capital gains tax, for example, does just the opposite since it says to a business owner that he will have to pay a higher rate for any capital gains he he gets for that year.

I’m all in favor of tax reform.  But this is not it.  We need tax policy that encourages growth, not one that discourages growth.

-Randy Hill