This is O trolling, folks - you know, stirring the pot, being the provocateur for the enrapturement of his leftwingnut base, that kind of thing - because he knows there's not the slightest chance in Hades of a GOP Congress gifting him ANOTHER third of a trillion dollars in new taxes.
It's even more obvious from the gory details of his plundering shopping list:
1. Capital Gains Rate Hike: raises capital gains and dividends tax rate from 23.8% today (20% plus 3.8% Obamacare surtax) to 28% (including the Obamacare surtax).
The capital gains tax has not been that high since President Clinton signed a rate cut in 1997. It would represent a massive hike in the rate since Obama took office. When he was sworn in, the rate was 15%. He proposes to nearly double it to 28% in the twilight of his administration.
2. Stealth increase in the death tax rate from 40% to nearly 60%.
Under current law, when you inherit an asset your basis in the asset is the higher of the fair market value at the time of death or the decedent’s original basis. Almost always, the fair market value is higher.
Under the Obama proposal, when you inherit an asset your basis will simply be the decedent’s original basis.
Example: Dad buys a house for $10,000. He dies and leaves it to you. The fair market value on the date of death is $100,000. You sell it for $120,000. Under current law, you have a capital gain of $20,000 (sales price of $120,000 less step up in basis of $100,000). Under the Obama plan, you have a capital gain of $110,000 (sales price of $120,000 less original basis of $10,000).
There are exemptions for most households, but this misses the larger point: the whole reason we have step up in basis is because we have a death tax. If you are going to hold an estate liable for tax, you can’t then hold the estate liable for tax again when the inheritor sells it. This adds yet another redundant layer of tax on savings and investment. It’s a huge tax hike on family farms and small businesses.
It’s like a second death tax (the first one has a top tax rate of 40% and a standard deduction of $5.3 million/$10.6 million for surviving spouses). Conceivably, an accumulated capital gain could face a 40% death tax levy and then a 28% capital gains tax on what is left. Do the math, and that’s an integrated federal tax of just under 60% on inherited capital gains.
3. “Bank Tax”
A new 7 basis point (0.07%) tax on the liabilities (not assets) of the 100 or so U.S. firms with assets over $50 billion. This will obviously be passed along to these firms’ customers and employees, since businesses don’t pay taxes – people do.
4. Tax Increase on Families Saving for College
Under current law, 529 plans work like Roth IRAs: you put money in, and the money grows tax-free for college. Distributions are tax-free provided they are to pay for college.
Under the Obama plan, earnings growth in a 529 plan would no longer be tax-free. Instead, earnings would face taxation upon withdrawal, even if the withdrawal is to pay for college. This was the law prior to 2001.
5. Tax Increases in Retirement Plans and a New Employer Mandate
There would be a new cap in the amount one could accumulate in the aggregate in all IRA and 401(k) type accounts of $3.4 million. After that, you can’t save any more new dollars. The idea is that this is enough to secure a $210,000 annual distribution in retirement, which the government apparently deems “enough” for a retiree.
In addition, all employers with more than ten workers and who do not have a 401(k) type plan would be mandated to set up payroll deduction Traditional IRAs for their employees. Also, part-time workers would have to be covered under retirement plans if they have been working someplace long enough. These two things are a new kind of employer mandate from Obama.
Particularly given that such qualified retirement plans usually have an employer matching contribution. I would be flabbergasted if this Obama scheme doesn't have that requirement.
We already knew that Barack Obama, even assuming that the next two years really are his last two years in office, has been liberated to be "the president he always wanted to be," free of any PR or political constraints, his party already decimated at both the congressional and state governorship and legislative levels. If he is going to go out in two years, he's going to go out in a blaze of Marxist-Alinskyist "glory," and tomorrows SOTU middle finger is redundant proof. And I don't think he's going out at all. Which should make his 2017 SOTU address actually worth watching, especially seeing as how he'll probably decree mandatory universal viewership for it.
Majority Republicans are greeting O's tax hammer with more than a little amusement:
Congress will tell President Barack Obama "no tax increase, Mr. President," for his proposal to raise taxes by $320 billion, Representative Ted Poe told Newsmax TV's "America's Forum" on Monday.
Obama is expected to call on Congress during Tuesday's State of the Union address to raise taxes on capital gains, eliminate a tax break on inheritances, and add fees on financial institutions. The White House said the increased taxes could fund tax credits to the middle class.
As opposed to just leaving that money in the private sector so private companies can grow and, as a byproduct, create jobs for the middle class, removing the "need" for tax credits - jobs that do not currently exist and aren't being created now, and indeed are being destroyed by such recessionary policies landing like a nuclear blast wave on an already depressed U.S. economy. Of course, that would also remove the "need" for Big Government as well, and Obamunists are the ultimate monopolists and moral supremacists, so you can do the math.
"I mean are you kidding me?" the Texas-2 Republican said Monday. "The president wants a tax increase? Americans are already paying too high in taxes percentagewise."
"No new taxes. Not going to happen. The economy is struggling," he said. "No tax increase, Mr. President. I'm sorry, Congress will not pass that."
His majesty knows that, Ted. He's just using the "bully pulpit" to try to pre-empt the GOP Congress from setting the 2016 election cycle's policy agenda. If you guys and gals are preoccupied with trying to block new statist Obama initiatives, you won't have the time or wherewithall to focus on rolling back the ones he's already crammed down our throats. And, this being a presidential election cycle, the 114th Congress's window for that - which would, as a practical matter, also be about setting the 2016 election cycle's policy agenda, since O isn't going to compromise in grand bipartisan fashion on anything - will close by next fall anyway. Which is another thing that made the CRomnibus such a foolish, unforced error.
But then even you still don't appear to fully grasp what's going on here, Ted. Barack Obama won't be setting out the aforequoted Taxageddon as a legislative request to Congress; he will be telling you, and all of us, the next round of Executive Orders he's about to issue. Because taxes MUST be jacked up yet again, "We can't wait," and "If Congress won't act, [Barack Obama] will," with his trusty pen and phone.
If you thought that Obamnesty was his closing act of despotism, you still aren't paying close enough attention.
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