As a field artillery officer in the U.S. Army, I learned a thing or two about weaponry. Our success on the battlefields of Desert Storm and Desert Shield depended on choosing the correct artillery for each specific objective, whether it was halting the enemy's forward progress, diminishing the strength of its forces, or completely destroying its capabilities.
Although he has never served his country in uniform, President Barack Obama seems to understand a thing or two about weaponry. The president's weapon of choice is tax policy, and the "enemies" are small businesses, investors, entrepreneurs and corporations deemed "undesirable."
The collateral damage of these policies will spread far and wide into the heartland of America. The middle class will also suffer from the president's tax war. The 160 percent increase in federal cigarette taxes from 2009 will no doubt affect those earning less than $250,000.
Unless changes are made in the tax code, Americans will be bombarded with the heavy artillery of the largest tax increase in the nation's history, causing massive economic injury and destruction.
For starters, if the Bush tax rates are allowed to expire, the current tax brackets of 10 percent to 35 percent will rise to 15 percent to 39.6 percent. The American Opportunity Tax Credit, which includes up to $2,500 per student for qualified college costs, as well as the tax exclusion for forgiven mortgage debt, and tax credit for employer-provided child care are going to affect average, hardworking Americans.
Children who wish to continue the legacy of their parents, will find it increasingly difficult to do so, as the death tax exemption will shrink from $5 million to $1 million.
Investors will be battered with a capital gains tax increase from 15 percent to a maximum of 25 percent. Seniors who rely on their dividend returns will also be hammered.
The president says "everyone must shoulder their fair share." But how does he define "fair" when 47 percent of wage-earning households pay zero federal income taxes, while the top 25 percent pay 87 percent?
The highly touted "Buffet Rule" would raise $30 billion to 40 billion over the next 10 years, while the president's budget would create nearly $7 trillion in new debt. The "Buffet tax" would lower that debt by less than half a percent. This is clearly not sound fiscal policy, it's the misguided policy of "economic fairness."
The president demonstrates little understanding of battlefield strategy. Those who are on the receiving end of an artillery barrage seldom remain in place.
When businesses and individuals are being bombarded with higher tax rates, they will change their behavior. Investors will shift money from taxable to nontaxable investments. Total economic activity slows, as there is less incentive for employees to work extra hours, while smaller potential returns mean investors and venture capitalists are less willing to shoulder risk. All taxpayers have a greater incentive to shield their income.
President Obama is no student of history either, for if he were, he would know revenues increased under Presidents John Kennedy, Ronald Reagan and George W. Bush (at least until the 2007 financial crisis) when tax rates were reduced.
Increasing tax revenue does not appear to be the president's strategic objective. If it were, he would be recommending policies that help increase the revenue base, by optimizing the regulatory and tax environment to encourage businesses to invest, grow and hire. The House of Representatives has passed 27 bills to do just that, but they currently languish on the desk of Majority Leader Harry Reid, who will not bring them up for a vote in the Senate.
President Obama seems determined to punish and wipe out economic success in this country, leveling tax weapons of mass destruction on all taxpayers. This is a battle our nation can ill afford to lose. We must reform our tax code, and we must restore the conditions for economic success for all our citizens. We are truly taxed enough already.