Holes in the Case for Keeping Bush Tax Cuts for the Rich

The senator’s plan would add $3 trillion to the national debt. Some conservative he is.

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Sen. Chuck Grassley is a pretty good guy. And until I read his op-ed a bit more closely, he almost persuaded me that for a couple of years, until hiring accelerates, we should let the rich folks keep their Bush tax cuts.

[See who supports Grassley.]

The question is job creation. Grassley notes correctly that the figure that Democrats toss around--that only 2 to 3 percent of small businesses generate jobs--hides the real issue. A few of those firms blossom, and do a lot of hiring as they grow. And in some of those small businesses, as they move, say, from backyard metal fabrication shops to booming metal fabrication companies, the owners keep filing their taxes as individuals. If we let the Bush tax cuts expire, the senator says, those folks won't hire as many new employees.

[Read the U.S. News op-ed debate: Should All the Bush-Era Tax Cuts Be Extended?]

The theory is good. As a small businessman who would find it a lot easier to hire a couple of researchers to slog through archives and libraries on my next book, yes, I will pay attention to my bottom line, and bottom lines include taxes. The good Lord has chosen to test my character by making me work extremely hard all my life, and never hit $250,000 a year (per household, where taxes would begin to inch up), but there is always the chance I could emerge as the next J. K. Rowling (for what is America, if not a place to dream!) and start worrying about the higher tax brackets.

What Grassley doesn't give us are facts. Exactly how many small business owners file as individuals and yet hire a significant number of new employees? How many are just partners in high-grossing partnerships that don't generate new jobs? At what point do small businesses typically incorporate? If we raise the threshold to, say, $300,000 per household, would we exempt the folks we need to encourage? How much would that cost? What about the other "middle class" tax cuts that President Obama wants to preserve, which will apply to everyone--even those making more than $250,000 a year--and the business and research credits? Won't they compensate the real job creators?

But most of all, Chuck, why for the sake of a few hard working men and women that we probably can figure out a way to reward should we extend those tax breaks to all the rich--to all the corporate executives, Wall Street speculators, athletes, entertainment celebrities, and benefactors of inherited fortunes who earn beaucoup dollars a year, and create no jobs at all, and are just going to salt the money away in banks that are already swollen with cash and refusing to loan it and create jobs?

Until I get the answers to those questions, I'm not persuaded. Grassley's argument looks like a smokescreen. And it would add $3 trillion to the national debt. Some conservative.

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