President Obama’s 2013 budget plan calls for a tax hike on the wealthy at the same time spending more funds on capital projects.  You might say that his tax plan is nothing new, but in fact it is.

You see, Obama administrations budget plan has been in constant flux since he took office. Now it has morphed into a monster.

Initially, Obama called for ending the Bush-era tax cuts, that were extended due to public outcry and government backlash.  For 2013, he has once again called for the end to these tax cuts. Next he added a proposal to limit tax deductions to the rich. But I guess that still wasn’t enough revenue to cut the trade deficit.  So he added a proposal limiting tax deductions and tax breaks to the wealthy.

What’s that, still not enough money!

From out of nowhere, Obama proposes that we raise the dividend tax on taxpayers making over $250,000 to almost 40% (up from the current dividend tax rate of 15%) to generate an addition 200 billion dollars to pay down the trade deficit.

What is happening here?  The continuous changes to Obama’s budget plan makes me ask questions about his leadership and competence: Does he just lack business savvy and common sense? Does he have inept and/or inexperienced economic and tax advisors? Does he have competent and expert advisors but doesn’t listen to them due to arrogance? Is he using his tax plan as a presidential election campaign strategy to win the lower and middle class vote?

Oh, I forgot to mention that Obama defends his tax hike plan with the fact that America must cut the trade deficit.  But in the same breath, his budget plan calls for billions in additional spending.  He is proposing spending federal dollars on community colleges, school construction, home energy improvements and a half TRILLION for highways and commuter rail.

Obama’s multi-trillion budget calls for generating $849 billion by expiring the Bush-era tax cuts from taxpayers making over a quarter of a million dollars annually. Another $584 billion by limiting the value of tax deductions and tax breaks to 28%. It also Includes a tax proposal to generate $206 billion by raising the dividend tax rate on wealthy taxpayers to 39.6% from the current dividend tax rate of 15%.

That’s not all! The proposal calls for getting $61 billion from big banks over the next 10 years (to pay off the bailout and help taxpayers in foreclosure), and another $50 billion by raising the tax rate to 30% for anyone earning over $1 million a year. This tax proposal is called the “Buffet rule”.  Finally, Obama plans to raise $41 billion by eliminating tax breaks for oil, gas and coal companies.

Obama says that taxing the wealthy will give lower and middle class taxpayers a chance to succeed; put all Americans on the same level.  Can he actually believe that? Is he so naive as to think that a few extra bucks to middle class taxpayers will mean the difference in getting rich?

Obama’s 2013 budget plan looks, smells like and tastes like a plan for a Socialist society, not once based on Capitalism.  Capitalism means that anyone with the desire to work hard, regardless of income, have a chance to be successful.  We see success stories every single day.  Getting rich is about sacrifice.  While Socialism makes individuals lazy and uninterested, capitalism spurs growth, initiative, creativity and self improvement.

The biggest reason I hate Obama budget proposal is jobs.  Continued taxation of the wealthy and big business will have a direct negative effect on job creation.  Businesses will need to allocate funds to cover the tax hikes, in lieu of creating jobs.

I commend President Obama for thinking about fixing our schools and highways. Sure they will create jobs but they aren’t private sector jobs. That means that the government is footing the bill; it’s a more expensive unemployment plan. What happens when the construction is finished, will unemployment rise again?

I haven’t even touched on the other elephant in the room, ObamaCare.  While the government “experts” estimate it’s cost at $1 trillion over the next decade, you could probably triple that projection.

Instead of taxing the wealthy and big business, President Obama should look back at successful budget plans implemented by other presidents.  President Ronald Reagan’s budget plan brought the country back from the brink of financial ruin WITH tax cuts and government spending.  A budget plan that calls for cutting taxes will just stymie economic growth and prevent job growth.

What is Obama thinking?

It seems out of nowhere, President Obama has made a significant change in his tax plan proposal.  Obama’s 2013 budget year now calls for more taxes on the wealthy, specifically a higher tax on dividends.

His new tax plan calls for an increase of the dividend tax to a maximum of 40% for households earning $250,000 a year.  Coincidentally, that is equal to the higher maximum income tax rate set to go into effect in 2013.

According to the Obama administration, the increase in the dividend tax rate is needed to pay down the federal deficit and to make the tax code more progressive.

“Choices had to be made,” a senior Obama administration told reporters, explaining the bid to raise more than $200 billion over a decade with the steeper dividend taxes on the wealthy.

In addition to an increase in the dividend tax rate, the Obama administration is proposing to raise the current 15% long-term capital gains tax to 20% for the wealthiest Americans.

If you look closely, the Obama tax plan to tax the rich seems like an election year campaign ploy to win the lower and middle class vote.  Fortunately for the wealthy and big corporations, it is extremely unlikely that Obama’s tax provisions will be become law, including his dividend tax increase.

“This is a reversal of what was a very specific policy feature of the first three budgets to keep dividends and capital gains taxed at the same rate,” said Michael Mundaca, a former top Treasury tax official under Obama, now at the accounting firm Ernst & Young.

“Companies may be more likely to retain earnings or seek alternatives ways to distribute their earnings such as by buying back stock,” Mundaca said.

Tax experts believe that big corporations may accelerate 2013 dividend payments into 2012 to dodge tax hikes.

“I wouldn’t be surprised if we see moving all their 2013 dividends into 2012,” Kies said. “A lot of U.S. companies are sitting on cash.”

source: reuters.com

After four consecutive years of one trillion dollar-plus deficits, the U.S. administration predicts a budget deficit drop below 1 trillion.  That’s what President Obama’s budget plan calls for based on his proposed tax and spending policies.

One of the biggest contributors to reducing the deficit calls for a raise in the income tax rate on the wealthy.  The so-called “Buffett Rule” would guarantee that households making more than $1 million a year pay at least 30% of their income in taxes.

This proposal was actually presented by America’s wealthiest businessman, Warren Buffett.  To support this tax proposal, he used the real life example that it’s unfair that he (being a billionaire) pay a lower tax rate than his secretary.

The implementation of the Buffet Tax would raise approximately $1.5 trillion dollars.  Additional sources of revenue to reduce the deficit would come from a tax reform plan that includes the expiration of the Bush Tax and the elimination of various tax preferences.

Will Obama’s tax plan work, or will it backfire?

Maybe the focus of cutting the deficit should be on creating jobs.  New jobs mean more tax revenue and less expenditures to pay the unemployed.