President Obama is crisscrossing the country to scare Americans about sequestration. But what are really frightening are the 13 Obama tax hikes that took effect in 2013.
These tax increases, which range from new health-care taxes to a payroll tax hike on workers, will slow the economy. Incoming Heritage Foundation president Jim DeMint has noted that these tax hikes have the potential to cause more harm than the budget cuts that will happen as a result of sequestration:
"The policies the president has in place, especially the tax increases that just got in, are going to hurt our economy, probably actually bring it down.
"The president is desperate to blame it on Republicans. He wants to blame it on a reduction in government spending. But the taxes are taking almost two-and-a-half times more out of the economy than this sequester will."
So how do the tax hikes compare to sequestration? It's a whopping $149.7 billion in taxes vs. $85 billion in spending cuts.
Tax increases take money out of the economy that could have been spent on hiring workers and they change the incentives against productive work and investment, which slows growth over the long term.
We don't expect Obama to mention these tax increases as he campaigns against the sequester. But consider this list of Obama's 13 tax hikes, which that was put together by Curtis Dubay, a senior policy analyst at Heritage:
Tax increases the fiscal cliff deal allowed:
1. Payroll tax: increase in the Social Security portion of the payroll tax from 4.2 percent to 6.2 percent for workers. This hits all Americans earning a paycheck _ not just the "wealthy." For example, The Wall Street Journal calculated that the "typical U.S. family earning $50,000 a year" will lose "an annual income boost of $1,000."
2. Top marginal tax rate: increase from 35 percent to 39.6 percent for taxable incomes over $450,000 ($400,000 for single filers).
3. Phase out of personal exemptions for adjusted gross income (AGI) over $300,000 ($250,000 for single filers).
4. Phase down of itemized deductions for AGI over $300,000 ($250,000 for single filers).
5. Tax rates on investment: increase in the rate on dividends and capital gains from 15 percent to 20 percent for taxable incomes over $450,000 ($400,000 for single filers).
6. Death tax: increase in the rate (on estates larger than $5 million) from 35 percent to 40 percent.
7. Taxes on business investment: expiration of full expensing _ the immediate deduction of capital purchases by businesses.
Health-care tax increases that took effect:
8. Another investment tax increase: 3.8 percent surtax on investment income for taxpayers with taxable income exceeding $250,000 ($200,000 for singles).
9. Another payroll tax hike: 0.9 percent increase in the Hospital Insurance portion of the payroll tax for incomes over $250,000 ($200,000 for single filers).
10. Medical device tax: 2.3 percent excise tax paid by medical device manufacturers and importers on all their sales.
11. Reducing the income tax deduction for individuals' medical expenses.
12. Elimination of the corporate income tax deduction for expenses related to the Medicare Part D subsidy.
13. Limitation of the corporate income tax deduction for compensation that health insurance companies pay to their executives.