Let the Bush Tax Cuts Expire
The elephant (or donkey) in the room that no one appears to be willing to talk about is, assuming that deficits really are as important as both Republicans and Democrats claim, that the Democratic tax plan is only 25% better than the Republican plan. Democrats have been spinning the $700 billion dollars more that the Republican plan will add to the deficit over the Democratic plan. However, Democrats fail to mention that their own plan will ultimately add almost $3 Trillion to the deficit over the same time period.
But, hey, it’s all about the children and not saddling them down with the burden of paying for our mistakes or er at least not making them pay as much as the Republicans will.
The bottom line is that if deficits really do matter to the economy, and I’m inclined to believe that they do matter at least a little bit, then neither plan is rational. If deficits matter then there is only one responsible solution to the Bush Tax Cut debate: stop playing politics by trying to bribe the electorate with tax cuts and let the damn thing expire the way it was meant to in the very legislation that Bush signed into law.
What horrible things would happen if the Bush Tax Cuts were allowed to expire? Well, you remember the awful days of the Clinton Administration when we were so buried in taxes we didn’t know what to do with ourselves? Yeah, neither do I. If the Bush Tax Cuts were allowed to expire, people in the middle bracket would see their average tax rates increase from a whopping 14% before deductions, which equates to about 5% after deductions, to an intolerable 16.6%, or about 8% after deductions. Yeah, I can see why we are all in a panic here.
But what about the poor rich people? We can’t let them be hurt by our unfair tax system. Really? They will go from just under 30% before deductions, which amounts to just over 14% after deductions, to about 33% or just over 15% after deductions. Wow, the rich will be paying a whole 1% more of their steadily increasing income in taxes. It’s hard to believe any government could be so cruel as to impose such harsh conditions on the poor wealthy people. And the income tax rate for the top 1% of corporations will return to a business stifling 6.7%. Those corporations in the middle tax brackets will see their profits taxed at less than 1%.
Suddenly, the end of the world seems a little further away when you look at the numbers. So what are we worried about?
Well, if we listen to the politicians we would think that the fate of the world rests on tax cuts at least for somebody, if not everybody. Of course, if you listen to politicians and actually pay attention to what they say you will most likely go mad from the contradictions. We must pass tax cuts, at least for the middle classthrough one side of their mouthswe must get our exploding deficit under controlthrough the other side of their mouths. And they make these statements in the same speech. It’s maddening!
Either deficits are a problem, for which we should let the tax cuts expire. Or deficits are not a problem, for which we should be doing a hell of a lot more for working Americans than we are doing. Which one is it? You can’t have it both ways, even if you are a Republican.