Yesterday, I wrote about the large amount of business subsidies in the fiscal-cliff bill. The Washington Examiner’s Tim Carney calculates that the total cost of these credits is $67.7 billion a year. Compare that to what the president is hoping to collect from increasing income taxes on high-income earners: no more than $62 billion in the next year. It looks like the additional tax revenue will go mostly to pay for these big-business subsidies. More troublesome is the fact that according to Carney, these tax extenders may have been added by the White House. He writes:
Senate Republican staffers familiar with the fiscal cliff negotiation told me that the White House insisted on sticking Max Baucus’s raft of tax-break extenders — HR 3521 — into the fiscal cliff legislation. . . .
Think about this: just the business and energy tax extenders reduce federal revenue by $67.7 billion in 2013. The tax hikes on the rich Obama won — higher rates on those over $400,000 and reduced deductions on those over $250,000 — raise $620 billion over a decade. As far as I know, we can safely guess that this would be less than $62 billion in 2013.
Unless I’m missing something, the special-interest tax breaks Obama demanded look to be bigger than the money he raised by taxing the rich. If he had just let all these special tax breaks expire — like wind tax credits, algae subsidies, and railroad track maintenance — it would have raised more revenue than his tax hikes on rich individuals and small businesses.
The whole thing is here.