Obama's Tax Plan Does Not Compute

The Morning Bell, The Heritage Foundation: According to the non-partisan Annenberg Political Fact Check , Sen. Barack Obama’s tax plan would increase gross tax receipts by $103.3 billion in 2011 alone. That number by itself would make it the largest single-year tax increase in American history since World War II, and measured as a percentage of gross national product, it would be the fifth-largest tax increase since 1943. Even with these record-breaking levels of taxing, Obama still would not be able to cover all of his promised increases in domestic spending. Commenting on Obama’s tax and spending plans, Clinton-era Office of Management and Budget official Idabel Sawhill tells the Los Angeles Times: “I don’t think it all adds up.”

The Obama campaign claims its economic plan calls for only an additional $130 billion a year in increased domestic spending. But according to Sen. Wayne Allard (R-Co.), who sponsored an amendment to this year’s budget resolution that included all 111 Obama campaign promises for new domestic spending, the price tag is closer to $300 billion per year and $1.4 trillion over five years. (Obama ended up voting against his own platform.) . . .

Obama claims that by ending the Iraq war he will save $90 billion a year. But that was before his recent evolution on the issue. Despite whatever promises he makes to his supporters on his campaign website, he recently told America’s Servicemen and Women in Military Times that he would “draw down in a deliberate fashion in consultation with the Iraqi government, at a pace that is determined in consultation with General Petraeus.” . . . Heritage scholar Stuart Butler adds: “You cannot justify a longer-term commitment to a program based on a one-time saving on the war in Iraq.”

Obama also claims he will save $80 billion a year by closing tax loopholes. But the non-partisan Tax Policy Center says it could not confirm the projected savings. What we do know is that Obama has promised not to lower our corporate tax rate, which is the second highest in the world. Instead of simplifying the tax code, Obama wants to further complicate it by creating a “Patriot Employer Act,” which would lead to new loopholes for companies with businesses overseas to exploit.

Even if Obama does manage to pay for his spending, there is little reason to believe it will help the economy. For example, he has also promised to spend $60 billion on infrastructure that he claims will create 2 million new jobs. But studies show that infrastructure spending creates very few jobs, and that those jobs it does create are offset by losses elsewhere in the economy due to decreased private consumption and investment . Instead, what our economy needs is increased energy production, reduced barriers to trade and a less punitive simpler tax code. . . . [Read More]

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