Tax and tax — then tax some more

Not a week goes by without Democrats proposing some sort of tax increase. On Tuesday, Reps. David Obey, John Murtha and Jim McGovern demanded an income tax hike, ostensibly to pay for the cost of military operations in Iraq. Under their proposal, households in lower tax brackets would have to hand over an additional 2 percent of their income, while taxpayers at the top of the earning spectrum would be hit with a surcharge of between 12 and 15 percent.

The three congressmen want taxpayers to buy into their party’s line that the American occupation of Iraq, which is costing about $150 billion per year, is “bankrupting” the treasury, and that it’s unfair to pass those costs on to future generations. They’d have the public ignore the more than $2 trillion in other federal spending, and the fact that Democrats are desperate to boost the budgets of social programs and create all-new entitlements for the lower and middle classes.

Make no mistake, if Democrats actually pulled the plug on military operations by cutting off funding, they’d trample one another in a rush to spend the loot elsewhere. Defense spending as a percentage of the overall budget remains much lower than it was 20 or 30 years ago. The proposal from Reps. Obey, Murtha and McGovern is simply a mechanism to give them more spending money for their pet projects, not to pay for a war they don’t support.

Alas, these gentlemen will have to drop their idea into the queue of tax increases proffered by their peers. At the rate Democrats are demanding tax hikes, these guys might not get a hearing until 2009. The short list of bad ideas emanating from the left side of the aisle includes:

— Increasing the top income tax rate from 35 percent to 39.6 percent.

— Reinstating the income tax “marriage penalty,” which forced married middle-class couples filing jointly to pay more taxes than they would have if they filed separately.

— Cutting the per-child tax credit from $1,000 to $500.

— Reinstating the death tax, which finally flatlines in 2009 but will come crawling out of its grave in 2011 without further action from Congress. Democrats also want fewer exemptions granted, which would allow them to pick the pockets of more middle-class cadavers.

— Increasing the capital gains tax rate from 15 percent to between 28 and 35 percent, even though doing so would hinder investment and economic growth, and even though previous increases in the rate have resulted in declining revenues.

— Boosting taxes on private equity and hedge fund managers, thereby making U.S. financial institutions less competitive in the global marketplace.

— Raising federal cigarette taxes by 156 percent, to $1 per pack.

— Sending cigar taxes through the roof, from a 20.7 percent levy on wholesale prices with a 5-cent cap, to a 53 percent rate with a $3 cap.

— Piling higher drilling royalties and higher taxes on oil and gas companies by killing tax breaks that are extended to every other U.S. manufacturer.

— Increasing the federal gasoline tax by between 5 and 50 cents per gallon.

— Creating a tax of $50 per ton of carbon, to be assessed on coal, petroleum products and natural gas.

— Raising income taxes on people who live in houses with more than 3,000 square feet by phasing out their mortgage interest deduction. For example, taxpayers who have borrowed money to buy a house with between 3,400 and 3,599 square feet would be able to deduct only 55 percent of their mortgage interest. Homes with 4,200 square feet or more would not be eligible for a mortgage interest deduction.

— Eliminating the interest deduction for home equity loans.

— Prohibiting donations to cultural institutions and private colleges and universities from being claimed as income tax deductions.

Some of these proposals lack the support of party leaders. Some have been written into bills and passed by lawmakers. None would make it past President Bush’s desk — he has pledged to veto any tax increase put forward by majority Democrats.

That’s little consolation to taxpayers, because Mr. Bush has less than 16 months left in office. Should the Democratic nominee win the 2008 presidential election and find Harry Reid and Nancy Pelosi still at the helm of Congress, there’s no telling how many of these proposals might become law.

For Democrats, it’s not enough that federal tax collections are at a record high, or that budget officials are forecasting annual revenue growth of 4 percent in the years ahead. They want more dough, and they believe they can make everyone pay, manipulating their behaviors along the way, without any consequence to the economy.

Democrats are campaigning on the populist cries that too many Americans are being squeezed by rising energy and housing costs, and that wage increases aren’t keeping up. Then they propose confiscating more household income and imposing taxes that will make energy and housing more expensive.

Democrats reject the tax-and-spend label. But their legislative initiatives give up the game.