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OPPOSING VIEW: Don't raise anyone's taxes
Talk about your misplaced concern.
Bush and a Republican-controlled Congress promptly slashed taxes by $2.3 trillion over 10 years, then dramatically increased the rate of federal spending to finance wars in Iraq and Afghanistan, build up an intelligence-industrial complex in response to 9/11, start a costly Medicare prescription benefit and do a hundred other things with little regard for the cost. The Great Recession, the Bush bank rescue and President Obama's stimulus program pushed already-scary deficits to Third World levels.
So with the Bush tax cuts set to expire at year's end, Washington is consumed with debate. Not over how to restore responsibility and salvage the USA's financial future, but over whether the tax cuts should be extended for everyone or just the 96% of taxpayers making less than $200,000.
The disconnect is breathtaking.
Tax-cut supporters routinely decry deficits, but then do the very things that make them worse. Republicans, in particular, have elevated lower taxes to a sort of religious truth — always good, always necessary, always effective. When House Minority Leader John Boehner, R-Ohio, said over the weekend that, if push came to shove, he'd vote to raise taxes on the wealthy, he was roundly denounced by members of his own party.
Americans are "tired of Democrat leaders in Washington pursuing the same government-driven programs that have done nothing but add to the debt," Senate GOP leader Mitch McConnell, R-Ky., declared Monday as he announced legislation to keep the tax cuts for everyone. Never mind his own votes creating the debt, or that he's offering no way to pay for them.
Meanwhile, congressional Democrats who also claim to be worried about the deficit have begun abandoning Obama. He wants to keep the tax cuts for most Americans but let rates rise for individuals who make more than $200,000 a year and couples above $250,000 — which is fiscally responsible only when compared with the GOP alternative.
The most frequently repeated claim about raising taxes on the wealthy is that it's a job killer, because those taxpayers include many small-business owners. This is clever but misleading. A report from Congress' Joint Committee on Taxation shows that the top two tax brackets — which begin at about $172,000 — account for just 3% of taxpayers with net positive business income.
Judging by tax-cutters' rhetoric, higher rates for the best-off Americans would throttle the economy. How come, then, that when tax rates were higher for everyone in the 1990s, the debt fell, unemployment plunged and the economy thrived? Or that the economy prospered in the 1950s, when the top rate exceeded 90%?
The truth is that the modest tax hikes being debated make little difference compared with enormous economic forces such as the housing bust, technological disruption and global labor markets. An even more inconvenient truth is that the Bush tax cuts are no longer affordable. Not for the wealthy. Not for anyone else. Even Greenspan now says all the tax cuts should expire as a way to preserve the nation's economic viability.
Because that's considered too unpopular in an election year, a reasonable compromise would be to let the cuts expire — first for the wealthy and more gradually for everyone else — then couple that move with spending cuts in a two-pronged attack on the deficit.
If voters and politicians are really as worried as they say they are about the economic hole the nation is digging itself into, it's time to put away the shovels.
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