Obviously we know that the Bush Tax cuts were extended, at least in part, back in December. Prior to the bill passing there was much talk about extending the Bush tax cuts. Liberals were of course opposed to this and were spouting all kinds of falsehoods. One of my favorite arguments is "We can't afford to give the rich more money"
Excuse me? Give? I know some people have trouble grasping this (see liberals) but the government can't "give" what was never theirs to give. The government doesn't give anyone a tax cut, they merely let productive members of society keep more of what they earn. If I steal your wallet and hand it back with half the cash missing I'm not giving you anything.
That's the problem with statists. They mistakenly think it's their money and talk about how "we can't afford it" because of massive deficits. If the Federal government can't afford to let Americans keep $700 billion of their own money they surely can't afford to engage in massive deficit spending. You know what we really can't afford? For our taxes to go up when most Americans are tightening their wallets. For our government to inflate and devalue our currency during an economic downturn.
Even the language about giving them a so-called "tax cut" is disingenuous. What's at issue here isn't whether we should cut taxes, it's whether or not to keep taxes at their current levels or raise them in the middle of a recession.
People forget, or perhaps refuse to acknowledge that Bush's tax cuts reduced the tax burden on earners in each tax bracket not just on those over the $250K threshold. That's right folks, those evil tax cuts for the "rich" actually cut the tax rates for everyone. Failure to renew the Bush tax cuts would be a tax increase. Democrats will never call it that but that's what it is nonetheless. I'm also shocked at the number of people who don't seem to realize that the $250K threshold really isn't. That $250K ceiling refers to joint income if you're married, a significantly lower threshold.
From a personal standpoint I can do nothing but view the expiration of the cuts as a tax increase. In 2000 I was 15 and working part-time at an ice-cream store. I've lived under the Bush tax rates for my entire working life, so you'll have to excuse me for not being sympathetic when people claim that this would only consititute a return to "normal" tax rates.
Failure to renew Bush's cuts would've caused capital gains and dividend taxes to skyrocket. Again, this would not apply only to the rich but to everyone. Then again, President Obama is a liberal ideologue who has proven he will ignore facts that don't suit his views. Recall this exchange where it's pointed out to him that lowering capital gains taxes actually increases overall tax revenue. His response was to ignore the facts and start talking about "fairness."
Failure to renew the cuts would've undoubtedly hurt small businesses. If you own a small business as part of an S-Corp you are required to report profits from the business on your individual tax return. If taxes were raised, especially on high-income earners, you'd be killing the profitability of these businesses. Those profits lost to higher taxes mean less money in the pocket of the business owner AND less money he can reinvest in the business. Most small businesses are these kinds of S-Corps and partnerships.
My roommate is a liberal. He opposes tax cuts "for the rich". He actually said to me in one of our discussions that the tax cut was a "subsidy" for the rich. He believes there's nothing wrong with saddling the rich and small businesses with substantially higher costs. His basic argument was that any business making $250K or more that is unable to "do without the subsidy" probably isn't viable and should fail. No matter how logical a position I had he was simply unwilling to admit that forcing businesses and those who start those businesses to incur substantial new cost would absolutely hurt economic growth. I cimply cannot wrap my head around the logic needed to say that allowing people to keep more of the money they earned is somehow a government "subsidy."
This should be basic common sense. Your employer brings in X amount. If changes in the tax code mean he now takes in X amount minus 10% that's 10% less he has to reinvest, innovate, grow the business or pay employees. I know small business owners who have had to lay off workers during this recession. Raise their taxes and they'll simply have to let a few more workers go in order to stay in the black.* The rules of economics don't change simply because you want them to, and tax increases are nothing but a direct cost for business owners. Every action has a reaction. It never ceases to amaze me that liberals cannot see past their ideology and recognize this.
*after all, businesses can't just print money like the Feds can...
Wednesday, March 16, 2011
On Tax Cuts
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