The federal government is so bankrupt that it must raise taxes dramatically, and this is one easy way to nab dollars from the working poor. The feds also need to cut spending, but the Congress historically hasn’t exhibited much restraint. The key is to raise taxes so rapidly, viciously, and repeatedly that any remaining economic activity cannot move quickly enough to evade taxes. That policy of course will leave America an economic wasteland, but if combined with drastic spending cuts, it could end the crushing federal debt. After repaying the debt, the Congress then could restore economic freedom and lower taxes, provided of course that it also exhibits fiscal restraint almost never characteristic of the Congress.
I am not sure when these tax increases go into effect but my guess is Jan 1st? I pray that the folks who are still working don’t have to come up with additional taxes on April 15th...
Problem with raising taxes to cover budget deficit is that revenue is, in practice, no more than 20% of GDP. You just can’t squeeze more than that out of the economy. We’re at about 18% of GDP now, and would need about 40% to make it work. In other words, we can’t tax our way out of this hole.