This is a rush transcript from "The Journal Editorial Report," April 10, 2010. This copy may not be in its final form and may be updated.
STUART VARNEY, GUEST HOST (voice-over): This week on "The Journal Editorial Report," millions of Americans rush to finish their taxes ahead of Wednesday's deadline. But if you think you're paying too much now, just wait until next year. Taxes are going up, and not just for the rich.
Plus, America's second-largest city on the verge of bankruptcy, and Los Angeles is not alone. The growing public pension crisis that threatens to sink cities and states across the country.
And President Obama's disarmament dream. Is his new nuclear doctrine a solid strategy or wishful thinking?
(on camera): Welcome to "The Journal Editorial Report." I'm Stuart Varney, in this week for Paul Gigot.
Are you spending the weekend finishing up your taxes? With April 15 fast approaching, millions of Americans are. And if you think you're paying a lot now, just wait until next year. Taxes are going up, but just not for the rich.
Here with a primer on the coming increases, the Wall Street Journal's very own tax team: columnist and deputy editor Dan Henninger, columnist Mary Anastasia O'Grady, assistant editorial page editor James Freeman and, in Washington, senior economics writer Steve Moore.
Steve, I'm going to start with you. Which taxes are going up January the 1st, and who pays them?
STEVE MOORE, SENIOR ECONOMICS WRITER: Hey, Stuart. Well, I have to confess I'm one of these procrastinators. I still haven't done my taxes yet. But, you know, if you think it's bad this year, you're right. It's going to get a whole lot worse next year because the Bush tax cuts expire. That means that we're going to see an increase in the capital gains tax. We're going to see an increase in the tax on dividends, perhaps a doubling or tripling of that tax. And then we're also talking about higher income tax rates next year. So this is going to be a tough year this year, but I think things get a whole lot worse next year as we see rates across the board increase. And let's not forget, there's also a lot of talk about a value-added tax on top of all of that.
VARNEY: Yeah, well, these taxes that you mention, Steve, are they going to bring in the required amount of revenue to the Treasury?
MOORE: Oh, of course, not. As you know, Stuart, there's something called the Laffer curve, and that's especially true with these investment taxes. I think it's a big mistake to be raising taxes on stocks and investment at the very time we need businesses to be doing more investment. So a lot of economists think we're going to have a pretty good year this year, in 2010, but once those new taxes kick in, in 2011, might cause a double-dip recession.
DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: Well, we didn't even talk about the taxes that have been embedded in the new health-care plan, the Medicare tax, 2.9 percent, has been extended to dividends and capital gains. And on people — individuals making over $200,000, couples over $250,000—there's a surtax of 3.8 percent. All of this to pay for the trillion-dollar health-care plan. But this is over 10 years. The idea that you are going to be able to tax only the quote-unquote "rich," who make more than $200,000, for 10 years, to accumulate enough revenue to pay for what is undoubtedly a health-care plan whose costs have been underestimated, is simply a pipe dream. I think most people in this country understand that the middle class has to participate if you're going to generate enough revenue to support government, and they simply, because of Obama's promise, will not touch that third rail.
VARNEY: But that is a consumption tax, this value-added tax. That's what we're talking about. That's the subliminal message here, isn't it? It's coming, isn't it?
HENNINGER: Well, presumably the deficit commission will put it on the table, but the American people have to decide whether they want that on top of the income-tax system they already have.
JAMES FREEMAN, ASSISTANT EDITORIAL PAGE EDITOR: Well, I just think that you look at the Obama spending plan, and it looks like we're headed toward a VAT required to pay for all of this spending.
FREEMAN: But to strike a little, maybe optimistic note here, I don't think we're destined to higher taxes, because I think Mr. Obama is going to have a problem if the spending splurge continues and we get to the point where he's got to put in a VAT, where we've got to absorb all these new investor taxes, and we're still hanging around at nine percent or 10 percent or eight percent unemployment. That is going to be politically dangerous. And so I think you have a possibility that this could be — this could be reversed.
VARNEY: Mary, are you going to get really radical and suggest — what?