Vail Valley Voices: GOP baloney is taxing
December 5, 2012
There are numerous Republican lies about the detriment of raising taxes on the rich. The following are the most often repeated. The problem is that the Republicans never provide any credible, verifiable analysis and statistical support to back up these falsehoods.
So if anyone chooses to respond to this commentary, please do not waste your time or mine unless you can support your response with credible, verifiable information.
My main sources come from PoliticusUSA, Center for the American Progress, the Tax Policy Center, the IRS and the Congressional Research Service.
1. Raising taxes on the wealthy will hurt economic growth and the job creators.
In October, Speaker of the House John Boehner wrote, “As a former small businessman, my experience has taught me that raising taxes on families and small businesses will only hurt job creation. We need to be encouraging the private-sector to grow. Raising their taxes will only discourage job creation, innovation, and entrepreneurship.”
This comment is pure nonsense. Lowering taxes does not create jobs, demand for the services and products being offered is the source for creating jobs. Further the tax increases are only on the top 2 percent. There is no increase on the remaining 98 percent.
The Republicans often cite Reagan’s tax cuts for the rich as proof of this claim. The truth is that Reagan’s tax cuts created the worst recession in U.S. history, which lasted 18 months, until Bush II’s recession, which also occurred after he lowered taxes for the rich.
Reagan, after consultation with more knowledgeable people than he, became a Keynesian.
“Reagan first raised taxes by $17 billion in 1982. He then raised the payroll tax in 1983. His 1983 increase of the payroll tax virtually wiped out his 1981 tax cut. He then raised taxes in 1984 in an attempt to combat the exploding budget deficit courtesy of Reaganomics, and concerns about inflation. The Tax Reform Act of 1986 cut tax breaks and shelters, which in today’s Republican (Norquist) terms, it would be called a tax increase.” (Politicus.)
Another thing about Reagan was that he was a deficit-lover. Reagan presided over the largest (still) one-year annual jump in the size of the national debt. (Business Insider)
Remember Dick Cheney’s comment: “Debt does not matter.” Apparently debt only matters if a Democrat is the president.
According to the Center for American Progress, “Overall economic growth was much slower under the Bush administration’s tax policies than under the Clinton administration’s tax policies. Real gross domestic product grew by 26 percent in the six years after Clinton’s tax increase (from 35 percent to 39.6 percent). But real GDP grew by just 16 percent in the six years after the Bush tax cuts began (from 39.6 percent back down to 35 percent). In fact, that six-year growth rate was low even by general historical standards. The average real GDP growth in any given six-year period (from any quarter to the same quarter six years later) since World War II was 22 percent.”
Another lie is that Obama raised taxes on small businesses when in fact he lowered taxes and/or provided tax incentives on small businesses 18 times. (Huffington Post)
“The historical data shows that increasing taxes a little bit on those at the top helps small business owners and middle class individuals. The blunt truth is that Republicans don’t have a single example using non-partisan data of federal tax cuts growing the economy, so they cling to their belief even harder and tell America that this time they know the tax cuts will work.” (Politicus)
2. People who earn $250,000 are not rich. Obama’s tax hike will hurt the middle class.
According to the Census Bureau, the median income in the United States is $50,054. The Tax Policy Center ran the numbers and found that “about 6.07 million Americans earned above $200,000 in 2011. They make up the top 4.2 percent of taxpayers. But their income, an estimated $3.5 trillion, represents 32.5 percent of all the cash income earned. It is interesting to note that among those making $1 million or more a year, 42 percent of their income comes from capital gains.”
Romney is a perfect example of how much he would be hurt if this tax on his $20 million gross income (for 2010 and 2011) was increased by a few percentage points from 14.5 percent.
Another Republican complaint is that the Affordable Care Act imposes a 3.8 percent surcharge on those earning more than $250,000 a year. This is a distortion of the facts. This surcharge is on adjusted gross income (income after every single available deduction has been taken), not on gross income.
For example, if your gross income was $300,000 and you had $50,000 in deductions, you would not have to pay one penny of the 3.8 percent surcharge.
PolitiFact reviewed IRS statistics and found that 98.2 percent of tax filers had an adjusted gross income less than $250,000 per year. This represents about 2 million people only. Thus, only 1.8 percent of the taxpayers would have to pay any portion of the 3.8 percent surcharge. I am sure that this 3.8 percent will force this 1.8 percent into bankruptcy. Maybe this is why Republicans avoid at all costs basing their tax arguments on accurate, verifiable and credible data.
A CNN poll taken on Nov. 21, 2011, found that 67 percent of all Americans and 69 percent of independents side with Democrats and believe that taxes should be raised on businesses and the wealthy. Obama’s proposal is to leave the Bush II tax cuts as is for 98 percent of the country and allow them to expire for the top 2 percent only.
3. Cutting taxes for the rich benefits everyone.
This has been a Republican lie since the Laffer curve was first presented in 1974 to Cheney and others by Arthur Laffer. His idea of “trickle down” economics has been such a failure that the Republicans have stopped using this term but still argue the concept: Lowering taxes for the rich and for businesses will improve the economy and create hundreds of thousands of new jobs. This claim is a complete failure.
All through the 2012 campaign, Romney-Ryan argued, based on trickle-down principles, that a massive tax cut for the wealthy could fix the economy and benefit us all.
President Obama’s current proposal, which the Republicans seem to be fighting to the death, is: “The proposals I’m making today would extend these tax cuts for 97 percent of small businesses. Ninety-seven percent fall under the $250,000 threshold.”
According to a Sept. 14 study by the Congressional Research Service, “The results of the analysis suggest that changes over the past 65 years in the top marginal tax rate and the top capital gains tax rate do not appear correlated with economic growth. The reduction in the top tax rates appears to be uncorrelated with saving, investment, and productivity growth. The top tax rates appear to have little or no relation to the size of the economic pie. However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution. As measured by IRS data, the share of income accruing to the top 0.1 percent of U.S. families increased from 4.2 percent in 1945 to 12.3 percent by 2007 before falling to 9.2 percent due to the 2007-2009 recession. At the same time, the average tax rate paid by the top 0.1 percent fell from over 50 percent in 1945 to about 25 percent in 2009. Tax policy could have a relation to how the economic pie is sliced – lower top tax rates may be associated with greater income disparities.”
According to Survey of Consumer Finances, sponsored by the Federal Reserve Board, the data suggests “that wealth is concentrated in the hands of a small number of families. The wealthiest 1 percent of families own roughly 35 percent of the nation’s net worth, the top 10 percent of families owns over 71 percent, the top 20 percent owns about 85 percent, and the bottom 40 percent of the population owns less than 1 percent. As with the case of income, the evidence suggests an increase in inequality over time. The distribution of wealth is much more unequal than the distribution of income, especially when focusing on the bottom 60 percent of all households. The bottom 60 percent of households possess only about 4 percent of the nation’s wealth while it earns 28.7 percent of all income.” This spread has never been greater.
It is long past due for the Republicans to accept the true facts and present them to the American people honestly and accurately instead of their constant lies and distortions.
Henry Bornstein is an Edwards resident.