|
Tax Class Warfare -- It's Not About Luck |
We're having some scorcher this summer. And I'm not talking about the weather. I'm talking about taxes, specifically expiring tax cuts -- popularly known as the Bush tax cuts.
These tax cuts are set to expire at the end of this year. So, the Democrats and President Obama have a problem. Why is it their problem? Well, currently, they're in charge. And the expiration of these cuts is now getting a lot of attention.
It seems to me that the people in charge have three choices when it comes to these tax cuts. Do nothing, which means the tax cuts for the middle class and the rich (depending on your definition of each) go away, and that is a tax hike. Or, follow the Obama Administration plan and re-enact the tax cuts for the middle class -- on a permanent or temporary basis -- but not for "the rich." Or, re-enact all the tax cuts on a temporary basis so that the economy can stabilize. (Both the Tax Foundation and the Tax Policy Center websites have great information on the expiring tax cuts as well.)
Our economic recovery is shaky at best. If the powers in charge do nothing, they take the risk -- real or perceived -- that raising taxes will slow or end the recovery. I'm not sure what the effect on economic recovery would be if you just raise income taxes at the highest levels. So, as much as I hate "patches," I think I favor a temporary one to two year extension of the expiring income tax cuts for everybody.
What I am more sure of now is that the world view of this Administration will be involved here. This administration thinks that anyone earning more than $200,000 a year or a family earning more than $250,000 a year is rich. And it is the world view of the Obama Administration that it's time for the rich to pay up.
When talking about the rich, Treasury Secretary Geithner and President Obama refer to them as "fortunate," insinuating -- if not just stating it outright -- that the rich are lucky. That's why they're rich. This is a point of view I 'd expect from a couple of liberal arts college professors, not from those in charge.
I'm all for a progressive income tax system. And I'm all for a strong estate tax for the idle rich. But the people I know who are well-off work hard for their money. They worked hard in school and worked hard in business. They took risks, which weren't backed by government safety nets. They created things. And, as they rose, they learned that there are some in this country who like to demonize success -- even fear it.
There's a saying that I'm fond of: Trying to blow out somebody's candle won't make yours burn any brighter. I'm fully aware of the growing gap in this country between the haves and the have-nots. But building class warfare by arguing that the land of opportunity has changed into the land of the fortunate few is not the answer. The tone at the top matters.
Last week, the Associated Press reported President Obama as saying, "it was just a few years ago that we had high credit card balances, we had two kids, thinking about college. We had our own retirement accounts, wondering if we were going to be able to get enough assets in there." Forget about whether the President of the United States should be talking to the nation about his personal finances. Apparently, his family is OK now. I congratulate him on his luck.
Insulting, isn't it?
You write, "They take the risk." Exactly. If there's real risk there are
winners and losers. The few winners are fortunate. The larger number of
losers, not.
Posted by Martin Browning on Jul. 27, 2010 at 06:33 PM
Right now unemployment is the biggest economic issue facing the U.S. (our
current level of unemployment would appear, of course, to be very acceptable in
Europe).
About 2/3rds of job growth, maybe more, in any recovery will come from small
business. About 60% of that will come from "successful small business." The
owners of those businesses will overwhelmingly see their taxes increased with
expiration of the Bush cuts.
So these owners - faced with tax increases, impending healthcare taxes on
investment, promised cap and trade taxes, and good gracious who knows what
other increases - will focus on squeezing more production from their existing
workforce to try to 'recapture' some of their losses to the tax collector.
This is simple economic behavior. I love when Obama's minions show up on the
Sunday talk shows and tell us expiration of the Bush cuts will only impact
about 3% of the population.
What they don't say is that those folks are the ones that will forego hiring
about 40% of the unemployed in the workforce.
That's the kind of risk and risk aversion that I believe Chris focuses on here.
Posted by Kip Dellinger on Jul. 28, 2010 at 03:49 PM
Posted by Economix Blog on Jul. 27, 2010 at 03:13 PM
Posted by Tax Lawyer's Blog on Jul. 28, 2010 at 12:04 AM
Posted by Dagelijkse Standaard on Jul. 29, 2010 at 04:27 AM
Posted by LexisNexis TaxLawBlog on Jul. 30, 2010 at 09:25 AM
Permalink | Comment | Trackback | Share | Other Posts by Christopher Bergin
All views expressed on these blogs are those of their individual authors and do not necessarily represent the views of Tax Analysts. Further, Tax Analysts makes no representation concerning the views expressed and does not guarantee the source, originality, accuracy, completeness or reliability of any statement, fact, information, data, finding, interpretation, or opinion presented. Tax Analysts particularly makes no representation concerning anything found on external links connected to this site.

Washington Post
Business Week
Detroit Free Press
New York Times

Fox Business: Tax Foundation on State-Local Tax Revenue Sources
Thank you for your comment. And I agree, risk taking often involves winners and losers. But a fundamental difference between the risk takers and the government is that one understands life fundamentally involves risk and the other believes the government can eliminate risk. And if you punish the risk takers, do you eliminate the risks that resulted in things such as the railroads, the telegraph, the telephone, the phonograph, the light bulb, color TV, space flight, computers, smart phones, IPads, and that Kindle I now can't do without? And even the United States as well? Risk takers founded this country. The risk takers that I know -- win or lose -- consider themselves fortunate to live in a country where you can take a risk and the advantage of an opportunity -- at least so far.
Posted by Christopher Bergin on Jul. 27, 2010 at 08:17 PM