Thursday, March 5, 2009

How Do I Tax Thee? Let Me Count Five More Ways

President Obama’s FY 2009 budget puts federal outlays at 27.7% of GDP, up sharply from the FY 2008 estimate of 21.0%. With receipts of 15.4% of GDP, the budget deficit is estimated at 12.3% of GDP. Thereafter, spending and deficits are projected to decline.

Obama’s plans for health reform, indefinitely extending the “Making Work Pay” tax credit, and numerous other measures that advance his agenda of bigger government are likely to keep spending well above recent levels of 21-22%. At some point, rising interest rates will limit the amount of new debt the federal government will be able to market, which means that new and higher taxes will be required.

I previously blogged five fresh sources of federal revenue. To that list let me add five more:

(1) Poll taxes on adults. Poll taxes were a principal source of revenue in the American colonies. Although regressive in nature, the need for additional revenue makes this an appealing source of revenue. To ease the sting, poverty-level households can be exempted from the tax.

(2) Higher excises on alcoholic beverages.

(3) New and/or higher royalties on natural resource extraction and pipeline deliveries.

(4) Sumptuary taxes on clothing, cosmetics, jewelry, and other luxuries.

(5) Federal tax on ATM withdrawals.

Ridiculous? Wait and see.

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