Posted on 07/23/2010 3:51:26 AM PDT by IbJensen
Though few are talking about it, the most important political fight to hit Washington is on deck to occupy the next six months of debate: Whether or not to extend the Bush tax cuts, which are set to expire at the end of the year. While it doesn't sound sexy, the ramifications of the decision will be a crucial pivot point for the national economy.
Although the 2001 and 2003 tax cuts were passed with bipartisan support, you can expect class warfare this time around. Liberal Democrats will push to keep the cuts in place only for the middle class, while screaming that Republicans are eternally trying to favor the rich. On the other hand, fiscally conservative Democrats and most Republicans will point out that hiking taxes on the rich will wreak havoc on investment and employment projections. And they're right.
The problem with taxing the supposedly "rich" is that the vast majority of those in the top bracket are owners of small businesses. Because most file as individuals, they are subject to the individual tax rates. According to the Small Business Administration, small businesses represent 99.7% of all employer firms, employ more than half of all private-sector workers and generated 64% of the net new jobs from 1993 to 2008.
At a time when unemployment is a chief concern, dramatically increasing taxes on this segment of the economy would be the worst thing for our jobs outlook. Plus, taking new jobs off the table will hurt only the middle class, already hit hard by the dismal employment picture in the form of sluggish hiring and depressed wages.
When you increase tax rates from existing levels you are, in fact, raising taxes, no matter what politicians would have you believe.
Jennifer Pollom, an analyst with the economic research organization e21, writes: "Marginal and corporate rates have been at current levels for the last 10 years. If these cuts are allowed to expire, tax bills that we all pay each year will be bigger - plain and simple. Some Democrats claim this is not a tax increase and that we are simply allowing the tax rates to 'return' to where they otherwise would have been. But how many families or small business owners with higher tax bills do you think will be convinced and view this as fair? Americans will be paying more in taxes at a time when they can't afford it. Period."
Even worse, the increases won't balance our busted federal budget. Spending is so out of control that raising taxes simply won't garner enough revenue to make a dent in our $1 trillion deficit.
Democrats are demonizing Republicans for wanting to keep the current tax rates low for everyone, insisting that would further add to the deficit. But Democrats have already cherry-picked the tax cuts they like, and through their own budget rules made earlier this year, have ensured that most of the tax extensions won't be offset with cuts to spending elsewhere. Oh, the hypocrisy. Translation: They have already added these costs directly to the deficit although they blame the GOP for something they have already done.
The amount of money that we're really arguing about - the portion of the tax cuts that would go to "the wealthy" that isn't already exempt - is fairly small and would produce genuine economic growth. (In fact, we spend more than that - $83 billion - on the earned income credit for people who don't pay income tax). However, Democrats would rather use it for unemployment benefits and food stamps - two programs that will neither stimulate the economy nor create jobs.
Even if these federal tax rates remain in place - at 18.2% of Gross Domestic Product (where it has been historically) - Americans will be unable to compensate for our unsustainable rate of spending, which has traditionally been around 20% of GDP. It's now approaching 26%. In a few years, it will be even higher.
In the meantime, the oppressive haze of uncertainty is smothering our chances of recovery. Markets love certainty, but Washington is giving them one giant question mark. Businesses and investors are petrified and unsure about the future, so they're hoarding capital and not hiring new employees, thus grinding growth to a halt.
Our economic woes started with a housing crisis, not lower taxes. The Bush tax cuts should be made permanent; if we want to curb our deficit, let's look at our irresponsible spending. Raising taxes will succeed only in fostering a gale-force headwind against any hope for recovery.
It's so easy to hate the evil regime and despise our complicit Congress!
Your not telling them anyhting they dont already know.
Time to wake up,Rush Had it righr A LONG TIME AGO it is intentional,Thats how you make Change remember when Obama Said”I am Building a Foundation”,You have to Knock Down the Building before you build the Foundation
The Daily News was part of the problem, now they’re waking up to the facts????????????
Pathetic.
Americans, wake up, Obama and his Democrat Party want to destroy the American economy and....take the entire country down with it. Obama hates America to his very core. Please get that through your thick skulls. Nothing more to say!!! Just get out and vote on November 2,2010 and destroy the entire Democrat Party!!!
There is one way - and one way, only - to stimulate an economy, and that is to lower taxes and de-regulate businesspeople. Period. End of story.
With Obama at the helm, the US is undoubtedly and with a certainty going to end up like Britain, or, even worse, like China/Russia/Vietnam/Cuba.
The problem is, so-called "liberals" and Democrats - ie. big government socialists - stop reading anything like that statement after "...raise taxes." (sadly not satire)
All the so-called liberals and Democrats seem to be about in the last couple of decades is raising taxes, expanding government, and stripping away more and more of our freedoms and liberties. This trend has accelerated wildly under obama/Reid/Pelosi.
True the msm is doing everything they can to help him looks like cognitive decline is spreading.
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