Obama’s Coming Tax Hikes Will Cripple the Economy

Aside from worsening the deficits Republicans always complain about, extending the Bush tax cuts would neither create new jobs nor spur an economic recovery. Clinton made nearly 23 million new jobs with top margin at 39.6% and the capital gains tax at 20%. Bush lowered both and was the only president to have lost a net number of jobs during his entire time in office. He had negative real federal tax revenue growth, slow average annual GDP growth and the median national income declined from nearly $52,000/year to $50,303/year. More tax cuts for the rich would not lead to a recovery. There are fears of deflation and continued stagnation. Consequently, more investment is being drawn to the bond market. Roff clearly never studied economics.

Still, keeping the Bush tax cuts for the middle class (though small) would still benefit the rich most of all even if the top margin was allowed to reset to the pre-2001 rate.

"...recent estimates from the Joint Committee on Taxation show that extending just the middle-class tax cuts would provide more than $6,300 in tax cuts to households with incomes above $200,000, on average, compared to $1,132 in tax cuts for households with incomes between $50,000 and $75,000."

http://www.cbpp.org/files/8-13-10tax.pdf

Business aren't reinvesting the substantial sums they now have. One analyst asserts;

"Allowing the Bush-era tax cuts to expire will remove a massive boon for America's rich, which benefitted the most from Republican policies over the last decade. Reinstatement of the Estate Tax, the Alternative Minimum Tax and the return of pre-Bush income tax levels for the richest Americans (among other tax changes) will result in an increase of more than $217 billion in tax revenues for 2010 and 2011. The expirations will then contribute another $1.25 trillion from 2012 through 2015, and an additional $2.2 trillion from 2016 to 2020...Business apologists will no doubt complain that the restoration of pre-Bush tax levels will stifle business initiative, investment in the economy and future growth. They argue that only by pushing tax cuts for business and the rich can economic recovery occur. These claims are difficult to take seriously considering that American corporations have returned to pre-2008 profit levels, while systematically refusing to invest in the economic growth needed to decrease unemployment from near historic highs...Amid all the suffering, corporate America is sitting pretty today. They've been hoarding money for some time now, refusing to reinvest in productive economic activities. Robert C. Pozen, a lecturer of business at Harvard University, warns, "because of high unemployment, management is using its leverage to get more hours out of workers ... what's worrisome is that American business has gotten use to being a lot leaner and it could take a while before they start hiring again."

http://www.truth-out.org/the-coming-tax-war-how-letting-bush-tax-cuts-expire-could-end-economic-crisis62154

steve of IL 8:50PM August 13, 2010

I think the answer to the question of why 50% or Americans pay no Federal income tax is incredibly relevant to this discussion. It has come to a point where a very small minority of taxpayers is asked to shoulder an increasing amount of tax burden. Not only is that simply not fair - it will accomplish nothing as the revenues gained don't compare with our out-of-control spending in recent years.

Most of the "real" people in the middle of this mess are the upper-middle class working people who have been successful. These people are by no means "rich", though ever-growing populist sentiment against them feels that they need to be discriminated against. Even though there are a substantial number of Americans that earn easily $75K a year pay no taxes - we still ask those earning $250K-$500K-$750K to pay easily half or more of their income to tax. These are not Wall St. bankers, CEO's, or Bernie Madoff's with 7 or 8 figure incomes. These are moderately successful individuals. They are certainly not rich - not if you even had a clue of the taxes they already pay. It is always easy to impose burdens to others as long as it doesn't affect yourself.

This is all about fairness, along with the government's willingness to cut back along with increasing taxes. The bottom line is that the Obama tax proposal would have very little support if ALL Americans were to be taxed at pre-Bush levels. It was fair then, why not now? Increasing taxes on the people who earn over $250K is popular because they represent only 2 or 3% of Americans. They are way outnumbered. But is this fair? Are people going to support this because "it doesn't involve me?"

We opt to hammer on the "rich" - most of which are not rich at all. We leave half the taxpayers with no burden at all. We will continue to spend this new revenue - and therefore it accomplishes very little. We have no tax "plan" - just a politically motivated proposal to appear to be working to make things better at the expense of a few votes.

If you want to be fair and actually accomplish something, I suggest we eliminate the Bush tax cuts on everyone - back to 2001 taxation levels. This will increase revenues about $3.1T over 10 years (vs. $700B if only the "wealthy" are involved). We must concurrently cut back immensely on spending - all to eliminate the deficit in 10 years or less. Anything less will be a travesty and more political games at other's expense.

Jon of CA 6:07PM August 13, 2010

Roff.You are so WRONG. Its the tax cuts and cut in services for the middle class that the almighty Ronald Reagan started that has us in this hole. He did more to deliver our fate into the hands of wall street and Texas than any democrat thieve.So give me a break.

ronald richard gagnon of CA 3:50PM August 13, 2010