Here’s the ugly income-tax math. First, Mr. Obama has promised to let the lower Bush tax rates expire after 2010. This would raise the top personal income tax rate to 39.6% from 35%, and the next rate to 36% from 33%. The Bush expiration would also phase out various tax deductions and exemptions, bringing the top marginal rate to as high as 41%.
Then add the Rangel Surtax of one percentage point, starting at $280,000 ($350,000 for couples), plus another percentage point at $400,000 ($500,000 for couples), rising to three points on more than $800,000 ($1 million) in 2011. But wait, there’s more. The surcharge could rise by two more percentage points in 2013 if health-care costs are larger than advertised — which is a near-certainty. Add all of this up and the top marginal tax rate would climb to 46%, which hasn’t been seen in the U.S. since the Reagan tax reform of 1986 cut the top rate to 28% from 50%.
States have also been raising their income tax rates, so in California and New York City the top rate would be around 58%. The Tax Foundation reports that at least half of all states would have combined state-federal tax rates of more than 50%.
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Another implication of the Rangel plan is that America’s successful small businesses would pay higher tax rates than the Fortune 500, and for that matter than most companies around the world. The corporate federal-state tax rate applied to General Electric and Google is about 39% in the U.S., and the business tax rate is about 25% in the OECD countries. So the U.S. would have close to the most punitive taxes on small business income anywhere on the globe.
Of course, that’s all assuming the best about Obama’s plan. It could be even worse (and probably will be).
You want to know why large companies are pulling up roots and moving overseas? This is your answer. We’ve simply made it too expensive — through taxation, regulation, and labor laws — for these companies to operate here in this country. Liberals don’t understand that. They think that businesses exist for charity purposes or something, that business owners will gladly pay higher taxes and higher wages while losing their shirts. It doesn’t work that way.
No sensible business owner is just going to sit by and watch his profits sink, whether it’s from higher taxes, higher labor, higher supply costs, or increased regulation. They’ll find a way to reduce those costs, and usually the easiest and quickest way to do that is either on the backs of their employees or their customers, or both.
Take, for example, what happens when you raise the minimum wage (I know I’ve been over this a bazillion times, but the hippies still don’t get it). I worked in restaurant management for twenty-odd years, so I’ve seen this time and time again. When the minimum wage goes up, owners cut hours and raise prices to compensate. They may fire longer-term employees who make more than the minimum wage and hire cheaper replacements at the new wage. One way or another, the employee and the customer are the ones that feel the pinch, not the business owner.
The same thing goes for whatever lefty nonsense they try and push. Businesses — whether it’s a one-man, mom and pop operation or a billion-dollar-a-year outfit — will not just sit by and watch their profits shrink. They’re capitalists, not Christians. They’re not in the business of charity. Their taxes go up, they pass that on to the consumer. They have to pay a ton of money because of extra regulations, they’ll pass that cost on to you, too. If they’re required to provide health care or higher wages to their employees, then yup, you guessed it, you pay for that in the end.
That’s why Sarah Palin’s op-ed today is driving the left nuts. She hits pretty damn close to the bullseye, here, and the left can’t handle it. They’d rather go back to calling her and her family names, you betcha.
Liberals want to use government to micro-manage every facet of the economy, and it won’t work. It never has, and it never will. If you want to see what government-run ANYTHING does for a country, take a look at the old Soviet Union. Or Cuba. Or North Korea.
Other links aroudn the blogosphere on this subject:
Hot Air
Macsmind
The Strata-Sphere (here, too)
Sister Toldjah
Stop the ACLU
Gateway Pundit
Protein Wisdom
Blue Crab Boulevard
