Why Obama Will Have To Break Promises

Middle-class tax increases might be on their way.

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Clive Crook writes in the FT today about why, despite campaign promises to the contrary, Obama will have to raise taxes on the middle-class at some point:

So the administration’s options are limited. The fiscal gap is so big that closing it will be literally impossible without either broadening the extremely narrow base of the current income tax, or raising other taxes on the middle class, or both.

Crook goes on to say, however, that Obama probably won't make any big changes before reelection. Expect him to look for "smaller, less conspicuous ways" to get more revenue in the interim. One of those ways might be forcing businesses to switch to FIFO accounting. I wrote a longer post on that issue here.

The FIFO issue certainly is "less conspicous" because the general public doesn't understand it, and it's so arcane they probably won't pay attention to it if Obama and Congress take action. So if and when Obama needs to disappoint somebody and raise their taxes, business owners might be the most politically-palatable candidate.