America has long doubted the sincerity of much of what politicians say. The current spate of indictments and investigations of senators and congressmen from both parties is not helping either.
I am a car dealer turned politician, so I have multiple experiences of being in professions that are not at the top of the charts in public esteem. I guess I should try being a lawyer next.
But there is one time you can always take a politician at his or her word. That is when they tell you that they want to raise your taxes.
There is a crescendo of Democrats in Washington calling for many, many tax increases. It is coming from Speaker Nancy Pelosi and Senate Majority Leader Harry Reid on down.
Believe them. They really mean it.
So here is a list of some of the proposals that are getting the greatest support from Democrats. Some of these increases have already passed the House, Senate or both.
You should know that President Bush has already vetoed or will veto all of these tax increases, in all likelihood. Therefore, I do not expect your taxes will go up (or down for that matter) in 2008.
But if Democrats were to hold the Senate (almost a sure thing) and House (very possible) and capture the White House (50-50), then it will be Katy bar the door. Taxes, particularly on the readers of the Business Journal, will be increased dramatically, probably in the range of 25% to 30% over what most of you are paying now.
Here are some of the proposals being pushed by the Democratic leadership:
– Eliminate the alternative minimum tax and replace it with a surcharge of 4.6% on incomes more than $150,000 (single) or $200,000 (joint). This, coupled with the proposed increase of the regular tax rate schedule in 2010, will move from a top income tax rate of 35% to a new top rate of 44.2%. Some deductions will be scaled back as well at these same income levels.
– At least triple taxes on all tobacco including a tax of $3 per cigar.
– Eliminate the 5% to 15% rates on dividend income and return dividend income in 2010 to regular rates. That would effectively move the top rate on dividend income from 15% to 44.2%.
– Return the capital gains tax from the 5% to 15% rates to the 20% rate that existed prior to 2003, or perhaps to 25%. There is a separate proposal to eliminate any preference at all for capital gains taxes that would make them subject to the full top tax rate (maybe 44.2%) for incomes more than $500,000.
– As you probably know, the death tax is scheduled to drop a little in 2009 and then disappear in 2010, and then return to a $1 million exemption with a 55% rate in 2011 and after. This tax schedule will likely be changed before 2010. Although there are no specific proposals from the Democratic leadership at this point, Pelosi has been quoted as saying that she did not believe that estates worth more than $3.5 million deserved any tax breaks.
– Make income from the carried interest income of private equity firms and hedge fund subject to the full income tax rates (again, perhaps 44.2%) and not the 15% capital gains rate.
– Eliminate the use of last in, first out accounting for inventories. This is a big increase to car dealers and other businesses with large inventories. They would have to switch methods immediately but would pay the additional tax over eight years.
– Eliminate the use of capital gains rates for private equity partnerships that go public.
– Effectively prohibit deferred compensation arrangements for more than $1 million and increase taxes on those less than $1 million. This would subject any deferred compensation plan of more than $1 million to immediate ordinary income taxation plus a 20% surcharge.
– Eliminate depletion allowances and other deductions for domestically produced oil and gas and add a tax on any oil and gas exploration or development on federal land or waters in the Gulf of Mexico.
– Increase taxes on U.S. subsidiaries of foreign companies.
– An unspecified universal income tax surcharge as a “war tax” to make the public “feel pain” as long as the war in Iraq continues.
– A proposal to lower the corporate income tax rate from 35% to 30.5% but to completely offset all “lost revenue” with the elimination of dozens of deductions and credits. This will result in tax decreases for some corporations that don’t utilize those credits now, and tax increases for others that do.
– Return the “marriage penalty” to the tax system.
If Pelosi and her team had their way, they would not do some of the above,they would do all of the above. And what would they do with all this money? You can bet on that too. They will spend every penny on more government power and control of our lives.
Campbell is a Republican congressman representing the 48th District covering Newport Beach, Irvine and other cities.
