Do you raise taxes in a recession? Obama once thought that raising taxes would hurt a recovery and hamper job creation.
Fox News reports on what Obama the President thinks now.
President Obama, ahead of his first press conference since winning re-election and a meeting later this week with congressional leaders, staked out his starting point for fiscal cliff negotiations — $1.6 trillion in tax hikes.
White House Press Secretary Jay Carney made clear that the president is sticking by his original budget plan, which includes $1.6 trillion in new revenue, by raising taxes on households making more than $250,000.
[…]Republicans, though, are adamantly opposed to raising tax rates, despite a willingness to deal on closing loopholes and deductions.
[…]On Tuesday he met with labor leaders and liberal groups, telling them he would stand behind his campaign pledge to make top earners pay more in taxes.
“We’re prepared to stand up to make sure there is shared sacrifice here, so the rich actually start paying their fair share and the middle class don’t get soaked for that,” said AFL-CIO labor union federation President Richard Trumka.
At issue is an annual U.S. budget deficit that now is routinely above $1 trillion and a national debt that has risen to near $16.5 trillion.
Washington politicians have just over seven weeks, including breaks for the Thanksgiving holiday next week and the Christmas holiday season, to avert the year-end fiscal cliff.
$1.6 trillion of tax increases won’t hurt the middle class?
This article from Arthur C. Brooks addresses that point.
On average, failed attempts to close budget gaps relied 53 percent on tax increases and 47 percent on spending cuts. Successful consolidations averaged 85 percent spending cuts and 15 percent tax increases. Some of the most successful financial comebacks–like Finland’s in the late 1990s–involved more than 100 percent spending cuts, so that taxes could be lowered. The spending cuts by the successful countries centered on entitlements and government personnel.
Now let’s look at the moral argument against raising taxes. Why does the president want to increase America’s tax burden? You may think it’s just a way to increase revenues and reduce the deficit. But even the president knows he can’t solve the fiscal crisis by helping himself to bigger and bigger chunks of the income of America’s most successful people. Even if individuals earning more than $200,000 were taxed at a 100 percent marginal rate–and we confiscated their passports so they could not flee–the take would come to $1.27 trillion, or just 77 percent of this year’s deficit.
For the administration, it’s not about the money–as we have heard again and again, it’s about “fairness.” The president believes that we will be a better nation if we redistribute more money from those who have more to those who have less. How much more do we need to redistribute until our system is fair?
As you ponder this question, remember the facts: The wealthiest 5 percent of Americans already account for 59 percent of federal income taxes. Nearly half of our citizens pay no federal income taxes at all–yet two-thirds of us believe that everybody should at least pay something, even if just to remind ourselves that government isn’t free. The Tax Foundation reports that the percentage of Americans who are net takers from the tax system is nearing 70 percent.
Note that even if you confiscated the passports of the wealthy, as communists tend to do, they would not agree to work for free voluntarily – they would stop working and do other things with their time instead. Perhaps Obama’s plan involves forcing the rich to continue to work while confiscating the fruits of their labor to distribute to his non-working constituencies. That would be slavery, which is not surprising if you know your history of slavery in the United States. Abraham Lincoln was a Republican, after all, and William Wilberforce was a Conservative.
The right way to solve this problem is with spending cuts and shutting down duplicate programs, waste and entire federal departments that are unconstitutional. But since we re-elected Obama, this is unlikely to happen. The Democrats are the party of big government and they will pass the costs of big government onto the middle class and their employers. When you tax the rich, you tax job-creating businesses and job-creating investors. You lose jobs. You make more people dependent on government. That’s what “making the wealthy pay their fair share” really means.
Filed under: News, 1.6 Trillion, Arthur C. Brooks, Bankruptcy, Barack Obama, Budget, Business, Debt, Deficit, Fiscal Cliff, Government, Job Creation, Job Creator, Jobless, Joblessness, Jobs, Recession, Recovery, Spending, Tax Cuts, Taxes, The Rich, Trillion, Unemployment