President Obama’s budget is built on a massive tax hike on upper income families. From the Washington Post:
Individuals who earn more than $200,000 a year and families who make more than $250,000 would also lose the tax cuts enacted during the Bush administration, meaning their top income tax rate would rise to 39.6 percent from 35 percent, their investment income would be taxed at 20 percent rather than 15 percent and their deductions for mortgage interest, state and local taxes and charitable contributions would be reduced.
The attack on the mortgage interest rate deduction and the charitable deduction are simply hidden ways to increase the top rate beyond that of the Clinton years, but by using the deception, the Obama plan would devastate churches and charities that depend on the generosity of their highest income donors while also slamming the value of homes by reducing their value to borrowers.
I have argued with the FairTax advocates for years that their plan was a dangerous one because it struck at these two deductions which undergird so much of the American safety net and Americans’ wealth. If President Obama wants to raise rates above 39.6 percent, he should do so openly and honestly, and without doing enormous damage to the not-for-profit and housing sectors.
Democrats who vote for this scheme are voting against every church in the land and against the equity every American has in their home. Radical plans like this one make academics happy and voters angry. Very angry.
The GOP must immediately make clear that it will do all it can to defend churches and homeowners against this assault, and they must identify the 50 Democrats must vulnerable in 2010 and begin a very detailed web-based watch on what they say and do on these issues. It will be easy to explain why the plan assaults churches, synagogues, veterans’ organizations, childrens’s hospitals, private schools and not-for-profits of all sorts, and only slightly more difficult to explain that destroying part of the appeal of a home purchase hammers the entire housing market –from entry level to mansion– but these arguments have to be made again and again.
It is a radical plan, and no amount of smoke will cover that fact. Today’s Wall Street Journal editorial quickly covers the enormous, permanent expanision of government the budget proposes. President Obama did not push these radical ideas on the campaign trail, nor did any Democrat I am aware of. The Republicans and moderate Democrats have to stand up and refuse this invitation to fundamentally alter the American economy and its deeply embedded values of giving and home ownership.