President Obama today asked Congress to extend the Bush era tax cuts for those who make less than $250,000 per year, but let the cuts expire for those making $250K or more. This is no surprise, but his arguments just don’t bear scrutiny.
A couple of quotes from his speech:
I disagree on extending tax cuts for the wealthy because we just can’t afford them.
The money we are spending on these tax cuts for the wealthy is a major driver of our deficit. We can’t afford to keep that up.
CBO estimates show that the total of all the tax cuts is on the order of about 4.5 trillion dollars over 10 years, or about $450 billion per year. The tax cuts for those evil 2% who make over $250,000 per year amount to about $80 billion per year. The total tax cut package represents 45% of the annual deficit of $1 trillion. The “major driver of our deficit” that the president is talking about represents 8% of the deficit.
Not to put too fine a point on it, but the president is full of shit on this issue.
I like how he’s positioning this:
Let’s not hold the vast majority of Americans and our economy hostage while we debate the merits of another tax cut for the wealthy.
And, acknowledging that he and all of Congress agree on extending the tax cuts for “the other 98%,” he says:
Let’s agree to do what we agree on.
He’s trying to come across as a reasonable guy, but even a brief look at the numbers shows that he’s playing the same old game of demonizing the wealthy that’s worked for (and backfired on) politicians for decades.
In discussing the effect of the tax increase on small businesses, he states that 97% of small businesses won’t be affected. He says:
This isn’t about taxing job creators, this is about helping job creators.
He employs a common fallacy here: the idea that by not harming somebody, he’s helping them. It’s like a thug who expects me to thank him for not breaking my arm.
Republicans, too, are full of crap on this issue. They’ll have you believe that raising taxes on the wealthy will result in all manner of financial disasters. That’s just not true. There will be lots of grumbling, and likely a flight to tax-free or tax-sheltered investments the likes of which we saw in the 1980s. People do all manner of stupid things in order to avoid taxes, many of which end up costing more than just paying the tax. Congress and the president make these things possible by passing legislation that provides incentives for certain “investments,” and little industries grow up around those boondoggles. It’s all a huge scam.
The major driver of our deficit, Mr. President, is spending. You and Congress have proven that, given more money, you just spend more. When you and Congress show me that you can get spending under control, I might consider supporting a tax increase. But then, if you could get spending under control you wouldn’t need a tax increase.