Rep. John Boehner's Taxation Blunder
Fiscal Policy: House Majority Leader John Boehner suggested he would be OK with Democratic plans to raise taxes on those with the highest incomes. If he didn't misspeak, it was a huge mistake.
Appearing on CBS' "Face the Nation," Boehner said: "If the only option I have is to vote for those at 250 ($250,000 in income) and below, of course I'm going to do that."
Of course, it won't be the "only option" if Republicans don't allow it. So why give the opposition the idea that you would settle for less even before the negotiating begins? Given the strong position the GOP is in right now, it just seems foolish.
Maybe this is the result of President Obama's increasingly personal attacks against Boehner, who was mentioned 10 times in one presidential speech alone.
To Boehner's credit, after the White House said it "welcomes" Boehner's remarks, he responded that Obama's plan was a "job killer" and accused the White House of provoking "class warfare."
And Senate Minority Leader Mitch McConnell immediately on Monday said he had pledges from every Senate Republican to filibuster any plan to extend Bush's tax cuts to all but the wealthy.
We should also note that Boehner is the lead proponent of a plan to extend all the tax cuts for two years - and to freeze federal spending at its pre-stimulus level of 2008. These are good ideas.
But if Republicans sign off on only a partial extension of the Bush tax cuts, instead of the whole package, they'll regret it.
As we've written before, the top 2% to 3% of income earners that the White House is targeting for higher taxes are the key drivers of the economy. As numerous studies show, they are the most successful entrepreneurs and new-business starters.
Raise taxes on their personal income (work) and their capital gains (investments) and the result will be economic stagnation.
Obama wants taxes to rise for single households earning more than $200,000 a year and for families making more than $250,000. While this might be satisfying for class warriors such as Obama and those who envy the rich, we all should fear what would happen to the economy if the GOP signs on to such a bad idea.
"From the standpoint of long-run economic growth," wrote Heritage Foundation economist Alan Viard this week, "this proposal represents the worst of both worlds."
Why? "Internal Revenue Service data for 2007," Viard wrote, "reveal that households with incomes above $200,000 received 47% of the taxable interest income, 60% of the dividends, and a staggering 84% of the net capital gains reported on tax returns."
The Urban-Brookings Tax Policy Center estimates that 44% of all sole proprietorship income in 2011 will be taxed at higher rates.
In short, the tax hikes will hammer the small-business and investment class that creates 70% of all new jobs.
Among the weakest arguments used by both the White House and Democrats in Congress is that we "can't afford" extending the Bush tax cuts for the highest incomes. This is total nonsense.
The Treasury Department estimates that keeping the Bush cuts in place for 10 years will "cost" $3.7 trillion or thereabouts. If you exclude the highest incomes, that amount falls to $3 trillion.
So Democrats are in effect arguing that the country can "afford" $3 trillion to keep the middle-class tax cuts in place over the decade, but not $3.7 trillion to keep them all.
In fact, extending the tax cuts is only a "cost" to those who would spend your money unwisely on trillions of dollars in stimulus, bailouts, takeovers, and excessive regulation of the economy.
The real "cost" that needs to be trimmed is the $44.8 trillion in added federal spending expected over the next 10 years - which represents an 83% surge from the preceding decade.
That's what Boehner and the GOP should focus on now.
