Monthly Archives: August 2010
William Gale regales us with what he calls "Five myths about the Bush tax cuts" , in the Washington Post today.
Highlights, or lowlights if you will, of a couple of them are as follows. “Myth” one:
Extending the tax cuts would be a good way to stimulate the economy.
And the ammo that makes it a myth:
According to the Congressional Budget Office and other authorities, extending all of the Bush tax cuts would have a small bang for the buck, the equivalent of a 10- to 40-cent increase in GDP for every dollar spent.
So a 10% to 40% increase in GDP – at this time – is something to sniff at? Note how he worded the increase. He used the word “cent” instead of “percent”. Yeah, no attempt to shade the point at all, huh?
As the CBO notes, most Bush tax cut dollars go to higher-income households, and these top earners don’t spend as much of their income as lower earners.
Right. A) they’re the ones who actually pay taxes – many lower income earners do not. B) “Spending” is a loaded term. The high income earners don’t bury their money in the back yard safely tucked into a coffee can. They invest it. And, for those paying attention, it is investment in the economy that’s lacking at this time.
The rest of the “myths” are as pathetically argued as the first.
In reality, this is just another in a long line of liberal justifications for taking your money based in the premise that it isn’t really yours to begin with.
If you don’t believe me, look at “myth” 3 which states “Making the tax cuts permanent will lead to long term growth. Gale says:
A main selling point for the cuts was that, by offering lower marginal tax rates on wages, dividends and capital gains, they would encourage investment and therefore boost economic growth. But when it comes to fostering growth, this isn’t the whole story. The tax cuts also raised government debt — and higher government debt leads to higher interest rates.
Note that Gale tacitly admits that the "myth" is actually true. However he tries to caveat that with a horrible result that I assume he believes effectively destroys the point. The tax cuts “raised” government debt.
Uh, no, they didn’t. Excessive government spending without the revenue raised government debt. These tax cuts have now been in place for years and government debt has grown exponentially. How is that the fault of a tax cut or the tax payer?
Of course it’s not – unless you believe that money, all money, really belongs to government and it gets to decide how much you can or can’t have. How else do you claim allowing an earner to keep more of what he earned as a cause for "increased government debt?"
Of course Gale forgets one of the aspects of letting the tax cuts expire – but I suppose that’s because it’s not a "myth" in his book. A recent study finds the following to be true as a result of letting the Bush tax cuts expire:
The study found that raising just the lowest income tax rate from 10 percent to 15 percent would cost 88 million taxpayers an average of $503 next year.
Lowering the child tax credit from $1,000 to $500 per child would cost 31 million families an average of $1,033 in 2011; the reinstatement of the so-called marriage penalty, a peculiarity in the tax code that forces some married couples to pay more for income tax than they would if they were single, would cost 35 million couples an average of $595 each, according to the preliminary numbers.
Income tax rates will rise for almost every bracket, with the bottom rate going from 10 to 15 percent and the top rate going from 35 percent to 39.6 percent. Dividends and capital gains taxes also are expected to rise.
So the “your taxes won’t increase by a single dime” pledge for the gullible 95% was a crock and they should have known that when Obama promised to end those tax cuts. But it’s hard to do that when you’re also gulled into believing that they were only tax cuts “for the rich”.
In fact, they were across the board tax cuts and now the middle-class will discover that at the end of the year as they crank up the Turbo Tax and are shocked, shocked I tell you, that their taxes have increased.
And that’s no myth, my friend.