AMERICAN ISSUES PROJECT

The Taxman Cometh, Again And Again

If you heard it once during the 2008 presidential campaign, you heard it a thousand times: Barack Obama will not raise taxes on anyone making less than $250,000 a year.

Obama made the pledge most emphatically in New Hampshire, where people live free and die knowing they paid low taxes. "I can make a firm pledge," he said last September. "Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes."

A majority of voters either believed that pledge, or didn't care that Obama was inviting them to read his lips, because they sent him to the White House and gave liberals control of Congress to boot. Now the taxman is in town, and he will be knocking on taxpayers' doors again and again.

He has already staked his first claim. Congress passed, and Obama signed into law, a bill that increased tobacco taxes to help fund the State Children's Health Insurance Program.

The new rates, including some increases of more than 2,000 percent, took effect April 1. Cigarette smokers now pay $1.01 per pack in federal taxes, up from 39 cents. Smokers who prefer small cigars pay the same $1.01 rate, but they previously paid a mere 4 cents. Roll-your-own-tobacco fans have to pull $23.68 out of their wallets for each pound instead of $1.10.

The law, endorsed by Obama just days after his inauguration, reminded the country that while liberals love to talk about taxing the rich, they are just as eager to tax the poor.

The other problem with tobacco taxes is their punitive nature. The short-term impact is a revenue gain, an estimated $33 billion over 4-1/2 years for S-CHIP, but the long-term goal is to force people to quit using tobacco. When that time comes, the taxman will be back for another deposit from smoking and nonsmoking taxpayers alike.

Not that he needs lost revenue as an excuse to raise more of it. The taxman is always looking for ways to keep busy, like charging motorists by the mile instead of by the gallon to keep the highway fund flush with money.

Transportation Secretary Ray LaHood, a former Republican congressman from Illinois, floated that trial balloon in February. He also hinted that higher tolls on highways and bridges, the kind of proposal that LaHood called "thinking outside the box on how we fund our infrastructure in America," are an option.

Both ideas would hit the “less than $250,000” demographic that Obama vowed to exempt from new taxes. That might explain why LaHood's spokeswoman promptly insisted that the mileage tax "will not be Obama administration policy."

Her insistence hasn't kept others from pushing the idea, however, and Obama has a track record of recanting or waffling on his no-tax pledges when his political allies provide cover. The White House's recent equivocation on whether Obama would support a plan to tax employee health benefits proves that Obama is open to any tax that may seem politically feasible.

He adamantly opposed Republican John McCain's plan for such a tax during last year's campaign, but the White House has refused to take a firm stand against it as long as Democrats in Congress are considering the option.

While Democrats now appear to be backing away from a health benefits tax, and shifting attention toward the rich, don't be surprised if the proposal resurfaces -- or if the push for a government-run healthcare system leads to taxes on alcohol and sugar-heavy drinks, or $1,000 fines (read: tax) on people who don't buy health insurance.

The taxman would have some hefty bills to pay under the system. That's why the phrase "nothing is off the table" -- code for "we're going to tax you one way or another" -- already is trite in the healthcare debate.

The other taxing item on the policy agenda is climate change. The global warming debate showcases the taxman's ability to discreetly take money from unwitting taxpayers.

The plan to impose a "cap and trade" system to limit carbon emissions, passed by the House last month, has earned the derisive nickname "cap and tax" because of how much money it would cost in the form of higher electricity rates, the classic hidden tax. Cost predictions range from $1,500 a year to $3,100 or more.

Another hidden tax is on the horizon, too. Obama's anti-pollution regulations for vehicles would boost the average price tag by $1,300.

The taxman is so obsessed with money that he even wants to take it from people whom the law currently considers criminals -- Internet gamblers.

All of the taxes mentioned above would hit the poor as well as the rich, and sometimes hit the poor harder, but the taxman does still have his sights set on deeper pockets. Last week, the Cato Institute recapped the numerous tax ideas floated by Obama and his allies, and the list includes higher income taxes and fewer deductions for the richest Americans.

The taxman definitely subscribes to the Mikulski Principle of taxation as defined by Cato: "Let's go and get it from those who've got it." And that means everyone.


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