The Tax Man Cometh

Barack Obama campaigned, and his recently released budget purports to reflect, his commitment not to raise taxes on those making below $250,000 per year.

Aside from the fact that his proposed spending spree can't be funded without much higher taxes than the already higher taxes he has proposed, his budget plan DOES include higher taxes on all Americans.

Obama wants to introduce a "cap and trade" system to reduce greenhouse emissions, in which companies buy permits allowing them emit a certain amount of greenhouse gases. The budget plan envisions raising $646 billion from 2012-2019, or $80 billion a year, from this plan. This amount of money may severely understate the taxes that such a tax can raise, since when Congressional Democrats considered such a tax last year, it would raise $300 billion per year.

Companies will have to raise their prices of energy and energy-dependent products (i.e., everything) to offset the higher cost of doing business.

That's effectively a tax increase, akin to a sales tax but hidden from public view because it is built into a business' cost structure.

The hidden part makes it worse, since it is easier for politicians to claim they didn't raise taxes when in fact they did.

Obama's plan contemplates returning most of these revenues to workers through a tax credit, which is the President will claim is a tax reduction, but reflects a continuation of Obama's efforts to call income transfer payments tax cuts.