President Obama wants to raise taxes using executive action. Buoyed by his “successful” deployment of the executive order to grant amnesty to close 5 million illegal immigrants, President Obama now wants to take on taxes. According to Press Secretary Josh Earnest, President Obama has corralled his team to examine ways in which he can use his executive action to increase tax revenue. The Press Secretary’s remarks were in response to Senator Bernie Sanders (D-Vermont) calling upon President Obama to raise $100 billion in taxes through IRS executive action.
Bernie Sanders outlined recommendations for raising taxes through IRS executive action in a letter he sent to Treasury Secretary Jack Lew. The letter specified ways to remove corporate loopholes which could be plugged without approval from Congress. For example, Sanders recommended changing the “check the box “rules which enable multinational corporations to block profits from taxation. He also recommends eliminating the tax break for carried interest. President Obama is more focused on raising corporate tax rates so that he can invest in liberal sponsored infrastructure projects, such as mass transit. With a corporate tax rate as high as 39.1%, the U.S. already has the highest corporate tax rates in the free world.
The President wants to give the IRS more ability to reclassify independent contractors as employees. By doing this, President Obama widens the pool of potential recipients for ObamaCare, as ObamaCare is for employees, not contractors. The President also wants to impose new reporting requirements on businesses. Businesses which purchase goods or services from an independent contractor for $600 or more are required to provide the tax payer’s ID number and verify the number with the IRS. If the number is not verified, the business will be required to withhold 15-35% of the payment and send it to the IRS. This requirement will inevitably triple a business’s reporting activity.
President Obama is also imposing new restrictions on individuals including limiting the amount of money which individuals are permitted to include in tax free savings account. President Obama wants to limit tax free retirement savings to an amount sufficient to generate an annual maximum payout of $210,000 a year, beginning at age 62. In some instances this may not be enough for retirees, particularly those in big cities, to live on. Furthermore, why is the President setting a maximum on retirement savings payouts? The President also wants to eliminate tax donations for donations affiliated with sports tickets purchases. For universities, ticket purchases from alumni and other donors represent a huge slice of their revenue. Under the current scenario, if your donation is connected with tickets, you can only deduct 80% of your donation. With Obama’s proposal, no portion of the donation will be tax deductible.
Once again, we have a situation where President Obama is pushing the boundaries of his authority to enact policy which is not good for our country. The IRS executive order is a flawed policy. Raising our already stratospheric corporate tax rate will stifle corporate profit, limiting the funds that they have available for research & development and technology. Creating programs which reduce retirement savings and limit tax deductions for donors are also bad ideas. People should have incentives to save. Furthermore, one of the reasons donors give is they want the tax deduction. If you take that away, you discourage charitable giving. Why is Obama proposing this latest executive order? Well he obviously needs the funds to pay for his last one. Granting amnesty to close to 5 million illegal immigrants carries a price tag of adding $8.8 billion to the deficit over the next ten years. As citizens, we need to “just say no” to this theft of our wallets and our liberties.
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