Economics prof says deficits heading toward 'banana republic levels'

From worldnetdaily.com

Families learning of $163,000 tax 'bomb'

An economics professor from Stanford is warning Americans soon will discover a $163,000-per-family tax "bomb" inside President Obama's budget plans, which have pushed U.S. deficits toward "banana republic levels."

The alert comes from Michael J. Boskin, who praised some of Obama's economic plans in a Wall Street Journal column but saw red flags waving for other provisions.

Boskin, a fellow at the Hoover Institution who chaired the Council of Economic Advisers under President George H.W. Bush, crunched the numbers and found that while Obama inherited a growing and significant budget deficit, his plans will add $6.5 trillion of debt.

"What does $6.5 trillion of additional debt imply for the typical family? If spread evenly over all those paying income taxes (which under Mr. Obama's plan would shrink to a little over 50 percent of the population), every income-tax paying family would get a tax bill for $163,000," he wrote.

"(In 10 years, interest would bring the total to well over a quarter million dollars, if paid all at once. If paid annually over the succeeding 10 years, the tax hike every year would average almost $34,000.) That's in addition to his explicit tax hikes," wrote Boskin.

"While the future tax time-bomb is pushed beyond Mr. Obama's budget horizon, and future presidents and Congresses will decide how it will be paid, it is likely to be paid by future income tax hikes as these are general fund deficits," he said.

"We can get a rough idea of who is likely to pay them by distributing this $6.5 trillion of future taxes according to the most recent distribution of income-tax burdens. We know the top 1 percent or 5 percent of income-taxpayers pay vastly disproportionate shares of taxes, and much larger shares than their shares of income. But it also turns out that Mr. Obama's massive additional debt implies a tax hike, if paid today, of well over $100,000 for people with incomes of $150,000, far below Mr. Obama's tax-hike cut-off of $250,000. … In other words, a middle-aged two-career couple in New York or California could get a future tax bill as big as their mortgage," he warned.