Democrat Tax Increase Ideas: Drip, Drip, Drip

One of the things ATR has been harping on all year has been the Congressional Democrat "tax hike of the week." It seems like every week, they come out with another idea on how to raise taxes.

Today, the Wall Street Journal takes a stab at compiling them (subscription required). While theirs is an heroic effort, it falls short of a total list of all the ways Democrats have thought of to raise taxes this year.


Below is my attempt at a full list:

1. At the beginning of Congress this year, Speaker Pelosi said that she would target those making more than $250,000 per year (presumably, married couples making this income) for tax hikes.
   
2. Less than a month into their new majority, the Democrats passed (with some GOP help) the first tax increase since 1993. This tax increase (some provisions of which violate the Taxpayer Protection Pledge) was on energy companies. Guess whose bill that will come out of?
   
3. I'll be charitable and put all of the private equity tax hike ideas in one basket. S. 1624 would tax publicly-traded investment partnerships as if they were corporations. H.R. 2834 would tax capital gains received by the investment manager (called "carried interest") at 35%, rather than 15%.
   
4. John Edwards has come out for a top capital gains rate of 28%. Senator Ron Wyden has done him one better, saying that the top rate on capital gains and dividends (which are themselves actually double taxes) should be 35%.
   
5. Just this past week, the Democrat House passed a bill that raises taxes on U.S. subsidiary corporations of foreign companies. This Pledge-violating vote was to pay for more food stamp money.
   
6. In order to pay for nearly-full AMT repeal, the Democrats have come out with no shortage of ideas to raise taxes (why fixing an AMT mistake needs to be paid for is beyond me). Such ideas have included curtailing the state and local income and sales tax deduction, imposing a 4% AGI "surtax" on high income earners, taxing capital gains and dividends at AMT rates for those taxpayers, and probably a few others that I have forgotten.
   
7. Rhetorically, Democrats have reserved a lot of their vitriol for international taxpayers. They want to repeal the 911 exclusion which allows Americans to shelter lots of earned income from double taxation, and they want to repeal many of the international corporate provisions of FSC-ETI.

The WSJ is correct to point out that these tax increases have some rather bizarre timing. Tax receipts should hit 18.8% of GDP this year, well above the historical average of 18.2% and beginning to approach the 20.9% of GDP post-War record achieved in 2001.

The deficit is currently projected to come in at 1.5% of GDP, and could come in closer to 1% of GDP this year. In all likelihood, the deficit will be gone about the same time President Bush will be.

Meanwhile, Americans are being set up by the Democrats for massive tax hikes, even without respect to the ones described above. By wanting the tax cuts to expire in 2011, they are calling for tax revenues to hit 19.8% of GDP in 2012.

So why are the Democrats looking for all this extra money? Simple--they want to spend it. They're passing appropriations bills that far exceed the President's request. They want a program intended for poor kids--S-CHIP--to cover 25 year olds making $36,000 per year. They want a bloated Farm Bill. The list goes on.