Tax is emerging as the next big battleground in the US Congress. George Bush’s “tax cuts for the rich” expire at the end of the year. Obama proposes extending them for everyone except those earning over $250,000 (couples) / $200,000 (singles). That means only the top 2% revert to their previous tax rates (about 4 percentage points up on the situation now). The Republicans want all the Bush tax cuts to be maintained and, indeed, extended to everyone.
Well, I suppose we can be relieved that, after simply naysaying all Obama’s proposals for a year, the Republicans have at last come up with an alternative suggestion. They must be rubbing their hands with glee at the prospect of the tax issue coming to the boil just as the campaigns for the mid-term elections start in earnest.
They can dust off and wheel out all their favourite arguments about “reducing the size of the federal government” and “helping business by giving tax cuts” etc, etc.
Indeed these very arguments were outlined by Senator Kyl of Arizona in the US Senate this week:
Raising taxes will have a highly significant, negative impact on job creation, investment, and economic growth in our country.”
In generality he’s right. But when you get down to the specifics he is bordering on the insane.
Senator Dorgan of North Dakota addressed the point brilliantly in a speech following Senator Kyl. Dorgan pointed out that the Bush tax cuts came because, at the time, there was the possibility of the first US federal budget surplus in 30 years. But the US is currently in debt to the tune of $13 trillion, be stated, and 30% of that figure has been caused by the Bush tax cuts:
Extending those tax cuts for roughly 2 percent of the wealthiest U.S. households will cost, with interest, about $1 trillion (over the next decade)…shall we add another $1 trillion in Federal debt in order to give tax cuts at $80,000 a year to someone who makes $1 million a year? At the same time our colleagues say that is essential to do, they say if you don’t do that, you will have an unbelievable impact on small business, because that is who will pay these taxes. That is not true at all–just not true. About 3 percent of small business income, would be captured by that; 97 percent would not. Those are the facts.”
You can’t really argue with that. Not for the first time one has to ask what planet the US Republicans are living on.
The New York Times summarises the issue here.
* Paul Walter blogs at Liberal Burblings.
Follow @libdemvoice.org on Bluesky
Like us on Facebook
Subscribe to our feed
Sign-up for our daily email digest
Endometriosis and acetylation
Reform makes first gain from Conservatives in this by-election cycle
How Chancellor Reeves torpedoed the economy
The Disneyfication of Hayley Mills
Michael Meadowcroft: A Liberal of Intellectual Rigour and Uncommon Integrity
Daniel Walker
Peter Martin
Chris Cory
Ruth Bright
5 Comments
“Raising taxes will have a highly significant, negative impact on job creation, investment, and economic growth…”
It entirely depends on the taxes used of course. If we taxed economic rent instead of productivity, it would have precisely the opposite effect of the list above.
In recent years, the Republican platform has gone totally crazy. They’ve subscribed to a twisted verson of supply-side economics where they think that tax cuts don’t need to be funded yet spending should not be cut either. They should be the party of fiscal conservativism, not outright insanity. Fact is, they make the Democrats look competent, and that’s not an easy thng to do.
Frankly, US politics flatters British politics. New Labour may have been fiscally incompetent, but it never felt like their platform made that incompetency inherent, and at least they attempted to build a social policy that matched their spending. That can’t be said about the Republicans.
Oliver: Agreed. Republicans can only get away with it because the US media is so compliant to their absurd tax message. In the UK if the Tories tried that logic they would get ripped apart in a way that Fox would never dream of doing to the Republicans.
Republicans don’t think tax cuts need to be funded. Labour don’t think spending needs to be funded. It’s much the same kind of outright insanity isn’t it? I wonder if the seeds were sown during the Blair-Bush love in.
David Stockman, head of the Office of Management and Budget under President Reagan, has a good piece in the NYT explaining just how crazy the Republicans have gone in the last 30 years.
http://www.nytimes.com/2010/08/01/opinion/01stockman.html