President Barack Obama is demanding yet more tax increases, shortly after using his clout to win Senate approval of $620 billion in new taxes over the next 10 years.
“Tonight’s agreement ensures that, going forward, we will continue to reduce the deficit through a combination of new spending cuts and new revenues from the wealthiest Americans,” he said in a 2:30 a.m. “victory” statement, following the Senate vote in the wee hours of New Year’s Day.
“The agreement leaves substantial scope for reducing tax expenditures for high-income households,” during any future debates over tax and reform of entitlement programs, the administration said in second “fact sheet” statement, released at 11:22 a.m.
The House has yet to approve the Obama-Senate deal, which stops scheduled “fiscal cliff” tax increases for all Americans except the most successful investors and entrepreneurs.
Obama will demand the extra taxes during a much-expected debate over national tax reform, said the fact sheet, titled “The Tax Agreement: A Victory for Middle-Class Families & the Economy.”
Republican leaders and free-market groups are pressing for tax reform that could boost investment in the economy, and partially offset expected curbs on fast-growing federal spending.
During Obama’s two terms, his spending policies are expected to balloon the federal government’s debt by $10 trillion, to roughly $20 trillion.
If interest rates rise to five percent, interest payments on $20 trillion would reach $1 trillion per year in 2016, or roughly one third of all federal tax revenue in 2012.
The White House victory statements suggested it would participate in entitlement reforms and in a revamp of the income tax code that would reform “corporate taxes to broaden the base and cut the rate to make America more competitive.”
The administration’s demand for “reducing tax expenditures” is progressive shorthand for extending tax laws to incomes and investments not covered by current taxes.
Although vague, it could include demands for new taxes on middle-class mainstays like charitable giving, home mortgages, and income from investments, and further extend the power or influence of government officials and political progressives over Americans’ personal and business preferences.
But Obama and other progressives likely will not seek to “reduce tax expenditures” on activities backed by their favored special-interest groups.
Those sectors include green-tech investments, donations to liberal political causes, income from municipal bonds, tuition payments to universities and profits from Hollywood productions, all of which now are fully or partially exempted from routine business and personal taxes.