Tax And Burn

Apparently, the details of Obama's budget and tax plans are starting to hit the street. To pay for all of this massive spending, it is his intention to allow the tax cuts for the rich ($250,000 and upward) and for businesses and corporations to rise to pre-Bush tax levels. In those tax brackets, it assumed that the two highest tax brackets will be allowed to rise from the current 33 and 35 percent to 36 and 39.6 percent, respectively. Additionally, there will be a return to the 28% tax rates, from the current 15% and 20%, for dividends and capital gains.

While raising the tax rate on individuals and businesses by an extra 3% or 4.6% might not seem like a big thing, it all has to be put in the broader context of things.

First, these aren't the only taxes that are being raised. All across this country, the city, county, and local taxes are also being raised as taxing entities try to struggle to meet expenses in this failing economy. If I'm a small business owner in California and I am lucky enough to be still doing well, I just got hit will additional taxes for income, vehicle ownership, real estate, etc. It his highly possible that any profitable business in California will easily be paying 62% (or more) in total taxation when you add up the state, county, and federal taxes for income, for Federal AMT taxes, for federal gasoline taxes, state vehicle registration, sales taxes, real estate taxes, and so on. So, a company making, say, $500,000 in income will pay at least $310,000 when all the taxes are added up.

That $310,000 could have been used to pay 10 people a salary of $31,000. It could have been used for lower pricing. It certainly won't be available for any business expansion. California has already seen the loss of businesses in their state due to both regulation and taxes. Currently, they get 50% of their taxes from 1 percent of the taxable population; or, from about 144,000 taxpayers. My guess is that their tax base will continue to shrink as individuals and businesses accelerate their moving to other states. Eventually, California will just become a state of have-not's while all those who are "have's" will have completely moved elsewhere to avoid all the taxing and regulation.

At a time when we are in a serious economic downturn, increased taxing is just going to force individuals and businesses to look elsewhere to live and operate. Europe has had this problem for years. The wealthy keep moving out of places like France and England to worldwide locations that are less socialist and less tax crazy. For years, France has been losing its millionaires at a rate of one per day(See Full Story). All that does is shrink their tax base so that the tax burden on the remaining citizenry just gets heavier and heavier. That's one of the downsides of being such a socialist country.

In this country, taxes have resulted in the loss of much of our manufacturing base to places like China. You find the wealthy moving to other countries that have lower tax rates. That trend will just continue to increase as taxes rise to meet the financial demands of an increasingly socialist society. We will literally be taxed to death and will burn in doing so.

Obama isn't just another "tax 'n spend" Democrat. He's a spend and, then, tax Democrat.