Stealth Taxes:Obama WILL Raise Taxes on Middle Class But Will Call it Something Else

Comments Reuters columnist James Pethokoukis: "Obama's campaign promise to not raise taxes on households making less than $250,000 a year was always considered a joke here inside the Beltway. Maybe it was a joke inside the campaign, too."

President Obama is very serious about keeping to the letter of his pledge not to raise taxes for people who make less than $250,000, so he has fond the perfect way to ensure the implementation of his pledge, semantics. If he calls those taxes something else, its not a tax, after all he is the POTUS, he can do anything he wants right?

We got a preview of his new strategy when OBAMA did his Sunday News shows tour covering of all of the networks ( but Fox). Most of the discussions were  lame as you would expect them to be, with one exception, George Stephanopoulos actually went off script and asked one tough question.

In the Senator Baucus Finance Committee version of the Obamacare bill there is a provision which says that anyone who does not hold insurance will have to pay $3,800 to the government. Stephanopoulos called that a tax increase. The President acted as if Stephanopolos' question is foolish, saying "But George, you can't just make up that language and decide that's called a tax increase"

According to News Max Americans in all tax brackets are about to be hit with over $1.5 trillion dollars over the next decade in new taxes provisions that will take money out of your pockets.

Under the Senate finance version of the healthcare reform bill, individuals could be penalized up to $1,900 a year for not buying insurance. That mandate would generate up to $20 billion in new federal revenue, according to the Congressional Budget Office. But is it a tax?

One strong indicator: The mandate would become part of the Internal Revenue Code. Failing to pay the penalty would result in a misdemeanor crime punishable by a $25,000 fine and/or up to a year in jail. Also, both the House and the Senate versions of the bill refer to the mandate fines as a form of "taxes."

Heritage Foundation senior fellow J.D. Foster tells Newsmax that Democrats are searching for "anything to collect revenues" that don't appear to be taxes.

"The stealth taxes masquerading as fees in the various healthcare reform proposals are just another example of this," Foster says, "except that they also violate the president's promise of more transparency in government. And they violate his promise not to raises taxes on the middle class."

Or as a Wall Street Journal editorial recently declared: "His real problem is that the individual mandate really is a tax. But the president doesn't want voters to think of it that way, because taxes are unpopular."

Several other taxes or quasi-taxes are under consideration. Some have been written into proposed legislation, while others are still in the conceptual stage.

So far, Democrats have primarily relied on projected-but-unspecified savings in Medicaid and Medicare to mask the red ink spilling from their proposals. Ultimately, however, balancing the budget will require eliminating government programs or raising taxes. But some de facto taxes hit consumers indirectly.

"If they take your money without your permission, it's either a tax or a mugger," Grover Norquist, founder of the anti-tax Americans for Tax Reform organization, tells Newsmax. "You can call it anything you want, but a fee that you have to pay is a tax."

One tax has already been implemented. In February, Obama signed legislation hiking the federal excise tax on cigarettes by a whopping 156 percent, to $1.01 per pack.

An October 2007 report by Congress' Joint Committee on Taxation estimated the tobacco tax would generate approximately $7.3 billion per year. The tax disproportionately affects the working poor, because one in four smokers lives below the poverty line according to Americans for Tax Reform.

Other new non-tax taxes being considered by congress include:

• Health-Insurance Company Fee. The "Baucus bill" passed by the Senate Finance Committee and parallel initiatives in the House would hit health-insurance providers with an annual fee. Robert Zirkelbach, director of communications for the America's Health Insurance Plans trade group, tells Newsmax the industry strongly opposes what he sees as a tax.

New taxes on healthcare coverage will only make coverage less affordable for families and small businesses," Zirkelbach says. "This is the opposite effect of what health care reform is supposed to accomplish. Unless policymakers focus on the underlying medical cost drivers, healthcare reform will not be sustainable. Price Tag: Over 10 years, the measure would cost somewhat north of $45 billion, according to the Joint Committee on Taxation.

• Energy "Tax." A U.S. Treasury Department document obtained by the Competitive Enterprise Institute following a Freedom of Information Act request reveals that the administration projected revenues of "$100 to $200 billion annually" from auctioning off the right to emit greenhouse gases the system known as cap and trade. Some of the funds raised by the administration will go to development of alternative forms of energy and conservation, and other government programs. The Treasury report also projected that, "Economic costs will likely be on the order of 1 percent of GDP, making them equal in scale to all existing environmental regulation." But once again, can higher fuel costs and other economic impacts legitimately be called a tax?

The Treasury Department said the difference between cap-and-trade proposals, which auction the right to emit greenhouse gases, and a carbon tax on emissions "have blurred." In April 2008 Peter Orszag, who now serves as Obama's director of the Office of Management and Budget, testified to Congress that: "Under a cap-and-trade program, firms would not ultimately bear most of the costs of the allowances but instead would pass them along to their customers in the form of higher prices  price increases would be essential to the success of a cap-and-trade program." Price Tag: At 1 percent of GDP, cap and trade as currently proposed would cost consumers $140 billion per year. The fact that it's not technically a tax won't be much consolation. The price tag over 10 years: $1.4 trillion.

• Medical Device Fee. The Senate Finance Committee's healthcare-reform legislation  the so-called "Baucus bill"  proposes a tax on medical devices. Ironically, the "fee" will increase the cost of medical care, which is the very problem healthcare reform is ostensibly meant to redress. Foster warns employers may react to higher insurance costs by cutting workers' wages. Price Tag: About $30 billion over the next decade, according to the Joint Committee on Taxation.

• Fee on Brand-Name Drugs. The Baucus bill would raise $1.7 billion annually by imposing a fee on those who manufacture or import "branded," i.e., non-generic, drugs. Again, these fees, although not defined as a tax, will increase the cost of healthcare to consumers and insurance companies. According to Douglas W. Elmendorf, director of the Congressional Budget Office, it's a given that consumers will foot the bill for the various fees in healthcare reform. "Those fees would increase costs for the affected firms," Elmendorf wrote in a Sept. 22 letter to Senate Finance Committee Chairman Max Baucus, D-Mont., "which would be passed on to purchasers and would ultimately raise insurance premiums by a corresponding amount." Price Tag: $17.2 billion over 10 years.

The so-called "Bo-Tax." This proposal would slap a 10 percent excise tax on cosmetic procedures, such as cosmetic implants or Botox injections. Price tag: About $11 billion over the next decade, according to the Joint Committee on Taxation. It remains to be seen whether the Bo-Tax will be included in the final version of the legislation to be voted on by the Senate.

...these items add up to a "stealth tax bill" on Americans of over $1.5 trillion over the next 10 years most of it stemming from the indirect costs of energy cap and trade. Of course, how many of these proposals make their way into law remain to be seen.

Americans are not buying Obama's sleight of hand,  In August, a Gallup poll reported that 68 percent of them believed their federal income taxes would be higher by the time Obama's first term is completed.  The New York Times stated in a recent editorial: "The question then is not whether taxes must go up, but when, how, and how much."

"There aren't enough rich people to fund his fantasies," Norquist says of Obama. "So he goes to the middle class and loots them. But because he said he wouldn't, he has to play the game of calling it something else."

Brad Schiller, a professor of economics at the University of Nevada, Reno, tells Newsmax it would be a mistake to strictly limit the economic discussion to taxes.

"I would say the cost burden on business and households in whatever form is a reduction on their income," Schiller says. "So we shouldn't focus exclusively on taxes. We should also look at fees and higher costs."

Other changes in the tax code are probably in store as well, and none of them is likely to help the economy. President Obama has called for raising the capital gains tax from 15 percent to 20 percent. He also wants to kill the Bush tax cuts that benefited those in the higher income brackets, who disproportionately shoulder the nation's tax burden. And Obama wants to eliminate a provision that allows U.S. corporations to defer paying taxes on overseas profits, as long as the money remains offshore. Once those profits return home to the United States, they are subject to the 35 percent U.S. corporate tax rate, one of the highest in the world.

President Obama is a brilliant wordsmith, he continues to look for ways to weasel out of his no tax pledge. Make no mistake about it, he will raise taxes, but he will also find a way to explain his way out of it.  The man is dishonest to no end.