So, if you are a rich guy, you go back to your playbook and dig out your old favorite, the fear card. You tell a scary fairy tale and paint the picture that what is really wrong with our economy is the fear and "uncertainty" about what will happen next year insofar as taxes are concerned.
The fairy tale myth is that small business owners and large corporations are holding back a tidal wave of capital, ready to light our economy on fire--but only if tax rates stay exactly where they are now. They are ready to make tons of money in their businesses, but only if Congress gives them the tax cuts they want. Otherwise, they will just have to build bigger dams to hold back the reservoir.
Jack is keeping the beans in his pocket and doesn't want to grow that giant beanstalk. He doesn't want to get the gold at the top of the beanstalk because he might have to pay an additional 3% to the government....Really?
The fairy tale is that these titans of industry are completely beside themselves and are worried sick to death (and out of their minds) about the "uncertainty" of what the future holds for their personal bottom lines. We can't hire anyone until this uncertainty goes away.....
You see, there isn't really any uncertainty at all about what happens if nothing is done by Congress before December 31, 2010. Quite simply, the maximum personal income tax rates go up from 36% to 39%. Three percent. That's all. And we have known that for the last 10 years. It hasn't been uncertain at all.
Does this sound like Armageddon? Or, another global financial disaster?
Hardly.
Does this sound like something that couldn't be budgeted for if a business was really ready to unleash the hounds?
By the way, what we are talking about here is the same tax rates that we had when Clinton was President. You remember how bad that was. The economy grew at a record pace and hummed right along just fine (oh, yea, and we stopped running such huge deficits and balanced the budget for a couple of years).
But to hear the never-ending stream of GOP fear-mongers spewing forth on all cable and radio channels, you'd think that the economy is about to fall off a cliff because of this grave "uncertainty."
It's all made up, folks. It's a fairy tale. There is no uncertainty. We know exactly what next year's tax rates will be, unless the President and Congress cave into these fear mongers and want to make them wealthier while we increase the deficit to pay for these additional tax cuts for the top 2%.
Here's another myth. Raising taxes by 3% won't kill the economy or stop businesses from acting in their best interest.
Businesses act in their own self-interest, based upon needs and opportunities. Raising the income taxes of the CEO's of businesses by 3% is not holding back their decisions of whether or not to hire more workers. The businesses who are flush with cash (and who are supposedly holding that avalanche of cash back from the economy until the curtain of uncertainty is lifted) have been profitable in this recession by cutting their workforce and cutting salaries. How do you think they emassed the huge tidal wave of capital that is supposedly going to be unleashed?
Only when demand for services or products exceeds that which they can produce with their current workforce will businesses begin to hire again. It has nothing to do with the 3% myth.
Here is a real truth we cannot ignore.
We cannot afford the additional deficits that will be created by continuing the tax cuts for those whose incomes exceed $250,000. President Obama needs to propose tax cuts for everyone up to the first $250,000 and then we need to start paying down our debt (and certainly not exacerbate it) by raising tax rates by a modest 3% for incomes greater than $250,000. Our debt is killing our country.
The media never reports about the fact that the Bush Tax Cuts were passed under the process known as "reconciliation" with only 51 votes in the Senate. This "reconciliation" process was demonized during the health care debate, but gets absolutely no publicity now when talking about the Bush tax cuts and how they came to pass. The Bush Tax Cuts were required by law to "sunset" (i.e., end) after 10 years because it was known to the Congressional Budget Office that the deficits would be too great to last any longer than 10 years, and therefore it was written into the 10-year law that tax rates would be required to revert to prior rates at the end of that 10 years.
If it was blowing up our economy when this law passed in 2000, and it was known that it had to end after 10 years, then we need to make it stop now, not extend it.
But, hey, if you want to talk about "uncertainty," ask anyone who favors extending the tax cuts for the top 2% how many jobs will be created by extending the tax cuts for the top 2%. You'll find uncertainty raise its ugly head in a heart beat. Remember that these were the same tax rates that have been in place for the last 10 years and we have created less jobs in the last 10 years than in the prior decade before that.
So, please explain to me how anything is going to change, job creation-wise, if the current tax cuts are extended.
When it comes to extending the tax cuts above $250,000, we just have to say "Goodnight Moon...."
Recognize a fairy tale when you see one.
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