The Great Tax Cut Debate
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- Category: Bryan Vinson
- Published on Wednesday, 08 December 2010 13:30
- Written by Bryan Vinson
Finally here we are. The Bush tax cuts have come up for review at the 11th hour as this edition of Congress winds down. We're either going to extend them, end them for those making over $250,000, or end them for everybody if no action is taken. Obama stated repeatedly that the Bush tax cuts only benefited the wealthy, and was somehow responsible for the recession.
The Bush tax cuts were for every income bracket, so it benefited everyone and really had nothing to do with the recession. President Obama wanted to allow the Bush tax cuts to expire for the wealthy when all of them
are set to expire January 2011. However, he is (and we agree on this...) for allowing the cuts for lower tax brackets to continue. (Those cuts aren't referred to as the Bush tax cuts by Obama even though they technically are. Only the wealthy received the "Bush" tax cuts as framed by the President.)
The Bush tax cuts for the upper income brackets would cost the federal government the opportunity to collect 700 billion dollars in revenue over the next few years if allowed to persist. "But aren't you against deficit spending and federal debt?" ask my liberal friends. "How can you be for something that adds 700 billion dollars to the deficit, and only helps the rich?!" Okay, it's a fair question. First, the tax cut extensions are still for all tax brackets so it is not just for the rich. Secondly, if you think about it, how different is extending the tax cuts from something like the liberal defended stimulus in terms of the deficit. Both ideas cost 700 billion dollars, either in spending or lost revenue. Both are government actions designed to help the economy. Leaving money in the hands of the private sector wealthy folks leaves money for them to invest, buy things, or create jobs. It isn't really designed to be a reward for the rich to stuff their pillows with. How many people in the lower brackets create jobs on the scale needed to reverse unemployment? Why are we targeting, specifically, the one group that can?
Well, because the government needs the money. And in the minds of many, a government with more of our money equals a better life for us. Honestly, what will the government do with the 700 billion taken from private sector job creators? If we're lucky they'll throw it at the deficit but would most likely spend it on more programs, stimulus, safety nets and benefits extensions that, while helpful, don't provide an atmosphere conducive to job creation for the economy. Consider that we have had 99 weeks of unemployment benefits, which has helped brace the economy but hasn't increased demand nearly enough to instigate job growth. Oddly, the democrats cite unemployment benefits as a solution to our economic problems, deficit spending or not. Even if they do throw it at the deficit, you still have a stagnant private sector.
In many ways, letting the wealthy get their taxes increased is more about making them pay their fair share then actually improving the economy. Of course the problem is always determining what is fair, and who is determining that benchmark. The IRS broke down taxes paid by earners in 2008. The top 50% of earners in this country paid 97.30% of our federal revenue. The bottom 50% paid only 2.70%. The top 5% of earners would be responsible for a staggering 58.72% of the pie. That's well over half of the taxes paid. The top one-percent are on the hook for a 38.2% slice. It has nothing to do with who is shouldering the tax burden, which is, in reality, the wealthy. The government simply wants more money. Who is it that is running deficits in the trillions?
Let's look at it one more way - Conservatives will tell you that tax cuts help the economy because it encourages growth and investment, while liberals will tell you it favors the rich and causes deficits. (The fact that it has historically increased jobs is always ignored.) Raising taxes will help the economy according to President Obama, because somehow the government taking more money out of the private sector can accomplish this. The President isn't a big fan of carbon. What would he like to do? Raise taxes on carbon to discourage their use. What about soda? The federal government has determined that soda is bad for you and you should no longer drink it. In May 2009, a Senate committee reviewed a possible federal tax on soda to discourage its use. (They really took the time to do this.) Now if you were following that logic, how would you go about encouraging job growth to an already skittish private sector? By raising taxes on job creators?
