The Republican argument for making permanent the Bush tax cuts for wealthy Americans might seem to make sense, until we realize there are at least six important things they are not telling us:
1. Even if only the middle class tax cut remained in effect, then everyone would still see no increase in their tax rate on the first quarter million dollars they earn (or less). The tax increase (or return to the old rate) is only on the earnings above that mark.
2. The new rate amounts to an average marginal increases of only around 5%, on income earned above this first quarter million.
3. Income tax rates are at the lowest level in 60 years. From 1944 to 1964 the top rate was a draconian 90%. When Reagan came into office the top rate was 7o%, which he helped bring down to 28%, though the average marginal top rate during his two terms was 54%.
4. The $250,000 dollar number is for adjusted gross income, after all personal and business exemptions and deductions. So you would have to make much more money than that to have an adjusted income of a quarter million dollars (Unless you are single, have no children and no mortgage payment or business deductions. Right!)
5. During the Bush era, America went to war for the first time without raising taxes to pay for it (with the possible exception of the early years of Viet Nam). In the last ten years we have waged two wars, and not only were taxes not raised, they were cut. While the tax cuts are soon to expire, the two wars are still in progress.
6. The idea that those making over $250,000 dollars in annual adjusted gross income are “job creators” is quite simply a fallacy:
Think about it – who do you know that makes that kind of money? Doctors and attorneys typically come to mind. Bankers. Media and financial consultants. Let’s not forget professional athletes, entertainers and musical artists. College and university deans and presidents. High level government officials and politicians. Stock brokers and hedge fund managers. Political pundits and television talking heads. There’s nothing wrong with these folks earning a lot of money but – there is not a job creator in the bunch.
But what about the CEOs and corporate executives of our largest companies? While they may have increased their companies’ stock portfolios, along with their own compensation packages, in many cases they have done so by moving as many American jobs overseas as possible. Since the first Bush tax cuts of 2001, America has lost over $5 million manufacturing jobs and closed over 42,000 factories. Of course, Wal-Mart has grown tremendously and was able to hire back many of those people at less than 20% of their former wage, and with none of the benefits. It is no mystery that Wal-Mart has based its success on the availability of cheap, sub market-priced foreign merchandise that was once made in the US.
Meanwhile, they are refusing to extend recessionary jobless benefits, saying that this $300 dollars a week is a disincentive for the unemployed to get off their lazy asses and start looking for a job. Of, course there are no jobs out there now. And when those unemployed are no longer able to spend that $300 dollars a week, there will probably be even fewer. But when you look at the typical net worth of our federal elected officials ($765,00 for a House member, $2.4 million for a Senator) it is understandable that they might be a little out of touch with middle the middle class and which Americans they more closely identify with.