Talk may be cheap, but the cost to keep promises made by Democratic candidates could top $700 billion and push individual tax rates above 50 percent for the first time since the 1986 Reagan tax reform, fiscal experts warn.
In fact, a Democratic sweep in 2008 could push America’s tax burden up to 7th highest in the developed world, up from 21st place, according to researchers at the nonpartisan Tax Foundation.
“If Democrats control everything after 2008, there will be a substantial tax increase,” Larry Sabato, director of the Center for Politics at the University of Virginia tells Newsmax. “Most or all of the Bush tax cuts will be allowed to expire and tax rates may be increased besides.”
The largest hike in federal spending would come from Democrats’ plans to extend health coverage to 47 million uninsured U.S. residents.
Hillary Clinton’s plan, according to her campaign, would add about $110 billion a year to the federal budget.
Barak Obama’s plan, say Harvard University experts, would cost between $50 billion and $65 billion a year. John Edwards’s health care plan, according to an Emory University study, could run up to $145 billion a year.
Democrats across the board are also pitching college tuition subsidies with an annual price tag of up to $30 billion. And their promises don’t stop there. Most candidates have pledged new programs in federally funded areas such as primary education, roads and bridges, and energy.
All told, the Democratic platform could cost more than $700 billion over four years.
“I have a million ideas,” Clinton tells the Boston Globe, “and the country can’t afford them all.”
On that point, even Clinton’s critics agree with her.
“It is pretty clear that more spending programs have been promised out of repealing the top Bush tax cuts than [the] repeal would be able to fund,” Nate Bailey of the Tax Foundation tells Newsmax. “It’s almost certain that funding all of these proposed programs would require massive tax hikes, the scale of which the U.S. has never seen.
President Bush’s tax cuts of 2001 and 2003, which amount to some $188 billion in tax relief per year, are set to expire beginning in 2010. A Democratically-controlled Congress appears intent on allowing that to happen once the Bush veto threat vanishes, experts note.
Last month, Rep. Charles Rangel, D-N.Y., chairman of the House Ways and Means Committee, offered a taste of what’s to come. Rangel set out a series of tax goals – something he termed “the mother of all tax reforms” – hinged on the expiration of the Bush cuts.
Acknowledging that his plan has no chance as long as Bush is in the White House, Rangel said he’s first going after the unpopular Alternative Minimum Tax – a measure passed in 1969 to ensure the most wealthy would not be entirely insulated from paying taxes.
The AMT has never been tied to inflation. As a result, it now threatens to ensnare some 20 million middle-class taxpayers. In recent years, Congress has enacted annual “patches” to exclude middle-class families.
Rangel backed the patches again this year — offset by higher taxes on hedge-fund and private-equity managers — but said in 2009 he wanted to scrap the AMT entirely in favor of new taxes aimed squarely at the wealthiest Americans
“We should try to look at the disparity that exists between middle income and those that are more fortunate in income and try to spread the tax relief,” Rangel said in a press conference.
Rangel would also like to tack a 4-percent surtax on families making more than $200,000 per year and scale back cuts on capital gains taxes enacted under Bush.
The top Republican on the Ways and Means Committee, Rep. Jim McCrery of Louisiana, recently told Bloomberg News that the combined effect ending the Bush cuts and adding the surtax would result in a $3.5 trillion tax hike over 10 years.
Political commentator and Newsmax columnist Dick Morris, writes that a Democratic sweep would bring “mammoth tax increases” that would “be horrific and probably trigger a recession.”
What some call “horrific,” however, others, like Hillary Clinton, term merely “sacrifice.”
Pushed by Tim Russert at the recent Democratic debate to explain her position on the Rangel tax proposals, Clinton responded that, “we’ve not been asked to sacrifice anything. You know, young men and women wearing the uniform of our country are dying and being maimed. We have the average American family losing a thousand dollars in income, and George Bush and his cronies can’t figure out how they can give even more tax cuts to the wealthiest of Americans.”
When Russert pressed further, implying she had expressed support for Rangel’s 4-percent tax surcharge and his plans for the AMT, she demurred.
“No, I didn’t say that. I said that I’m in favor of doing something about the AMT. How we do it and how we put the package together everybody knows is extremely complicated.
“There are a lot of moving pieces here,” Clinton said. “I’m not going to get committed to a specific approach, but I applaud Chairman Rangel for beginning the conversation.”
Obama, asked a similar question by Russert, spoke of a “10,000-page tax code that is rife with corporate loopholes.”
“There’s a building in the Cayman Islands that supposedly houses 12,000 U.S. corporations, which means it is either the largest building in the world or the biggest tax ripoff in the world, and I think we know which one it is.”
Sabato, author of “A More Perfect Constitution: 23 Proposals to Revitalize Our Constitution,” believes taxes will be a cornerstone of the coming Republican campaign.
“The tax issue is one of the best Republicans will have for 2008,” he tells Newsmax. “It unifies the disparate wings of the GOP, and it targets a very real vulnerability among Democrats. This is one of their few bright spots
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