Taxes Or Growth?
Originally Posted At Investor's Business Daily
June 30, 2009
The White House now refuses to rule out raising taxes on the middle class. Meanwhile, a top finance official in the previous Democratic White House suggests a tax hike is all but inevitable. Are we being set up?
It sure looks that way. And if it happens, you can mark it down: The economy will slow to a crawl and may even relapse into a deep recession. This is a complete reversal of what was promised.
"In an economy like this," President Obama said at last summer's Democratic National Convention, "the last thing we should do is raise taxes on the middle class." That, he said, included 95% of all families. He promised flat out that he wouldn't raise taxes on families with income of less than $250,000.
How times have changed. On Monday, White House spokesman Robert Gibbs, asked point-blank several times if the president's vow was still good, would say only that "we are going to let the process work its way through."
"Process"? Middle class, watch out.
Actually, the last thing we should do is raise taxes on any class — lower, middle or upper. Tax hikes in a recession are plain crazy. They will inevitably crimp economic activity, slow retail sales, kill jobs and leave the government starved of revenues.
A major study in 2007 looking at recent U.S. economic history found that when the government raises taxes by 1%, U.S. GDP falls by roughly 2% to 3%. As we've noted before, the only surprising thing about this study is its author: Christina Romer, President Obama's top economic adviser.
Is he still listening to her? The sweeping ambition of the White House's plans to expand government will require massive tax hikes. This is no longer in doubt, if it ever was.
Just look at the tab run up so far — and some of the costs that we might soon have to pay. All told, we'll spend $13 trillion more than we'll take in through 2019. How will we pay for it all?
The Congressional Budget Office recently estimated that U.S. taxes as a share of GDP would have to rise 49% by 2035 to pay for just the spending already budgeted. And these taxes will hit all Americans, not just the "rich." This is a recipe for economic disaster.
"We'll have to raise taxes soon," wrote President Clinton's former deputy Treasury secretary, Roger Altman, in a Wall Street Journal opinion piece this week that sounded suspiciously like a trial balloon for Democrats in Congress and the White House.
There's a far better answer to our economic ills.
At the same time the U.S. is pondering economic suicide through massive tax hikes, other countries are learning not from Obamanomics but from Reaganomics: They're pondering tax cuts.
Germany's Angela Merkel wants to cut taxes, despite her country's big deficit. "How can we ensure Germany emerges stronger once the crisis is over and the cards have been reshuffled in the world? The answer is we need growth," she said this week.
Even Hungary's socialist government says the same thing. It's pushing supply-side tax cuts in 2010 to stimulate its economy.
Our guess is Germany and Hungary will show more life in the next year than the U.S., unless the U.S. wakes up.
Usually at this point in the business cycle, the U.S. is the locomotive that pulls the rest of the world out of its slump. This time, the world is looking to China to get the job done. In the U.S., the rest of the world sees only a growth-killing mix of higher taxes, soaring spending, surging debt, rising inflation and growing regulation.
We could reverse this. Instead of tax hikes, we need broad-based tax cuts for families and business. But we have to act right away. After all, why let a crisis go to waste?
|
|
Urgent Petition
|
Sign the petition to stop Social Security Cuts and send a fax to every Member of Congress demanding they cut other spending, NOT SOCIAL SECURITY.
Share This Petition
|
Recent News
Friday, May 18, 2012
Congressional Republicans are back up to their old shenanigans on ObamaCare. Politico reveals that Republicans would try to replicate popular parts of Obama’s health care law if the Supreme Court overturns the law this summer.
Read Full Story
Tuesday, May 15, 2012
Source: ABC News
The Food and Drug Administration has warned doctors to watch for fractures of the upper thigh bone in patients taking several popular drugs designed to prevent hip fractures and fight osteoprothesis. The FDA warns that Fosamax and Boniva in particular, if taken unnecessarily or for too long, may actually be causing the bone fractures they are prescribed to prevent. Watch ABC News video.
Read Full Story
Thursday, May 17, 2012
 Exit Not An Option In Chuck Schumer's America. New York Senator Chuck Schumer has introduced the Fugitive Taxpayer Act of 2012 to re-impose taxes on expatriates after they flee the United States and take up residence in a foreign country. Proposal also would impose a mandatory 30 percent tax on the capital gains of anybody who renounces their U.S. citizenship and would bar such individuals from ever reentering the United States again.
Read Full Story
Wednesday, May 16, 2012
Whether President Obama gets his second term or Romney enters the Oval Office, there’s a third candidate no one’s paying much attention to, and that candidate is guaranteed to be the one clear winner of election 2012: the U.S. military and our ever-surging national security state.
Read Full Story
Friday, May 11, 2012
According to the New York Federal Reserve, two million US seniors age 60 and over have student loan debt, on which they owe a collective $36.5 billion; and 11.2 percent of this debt is in default. 4.2 percent of all student loan debt is held by people over the age of 60, and that share grows with each passing year.
Read Full Story
Tuesday, May 15, 2012
Across the U.S. economy, anxiety is rising about the potential for widespread disruptions after the November election, when a lame-duck Congress will have barely two months to resolve a grinding standoff over taxes and spending.
Read Full Story
Thursday, May 10, 2012
Two-thirds of Republicans and nine in 10 Democrats polled support making immediate cuts to the military across the board -- a position at odds with the leaderships of both political parties.
Read Full Story
Monday, May 7, 2012
Video revealing the circumstances of how a mentally ill homeless man in Fullerton, Calif. died last July was finally published Monday, revealing a stunningly brutal police assault that left Kelly Thomas bleeding, broken and near death.
Read Full Story
Monday, May 7, 2012
The number of people with jobs declined for the second month in a row, falling by 169,000 in April after easing by 31,000 in March. This means that there were 200,000 fewer Americans with jobs in April than there were in February. Additionally, the percentage of working-age adults who either have jobs or are looking for work, fell to 63.6%, which is the lowest level since December 1981.
Read Full Story
Tuesday, April 24, 2012
In November 2010, a police lieutenant from Parma, Ohio, asked Vanguard Defense Industries if the Texas-based drone manufacturer could mount a “grenade launcher and/or 12-gauge shotgun” on its ShadowHawk drone for U.S. law enforcement agencies. The answer was yes.
Read Full Story
Read All Recent News
Get in the Know Now
Get SSI Email Alerts
Social Networks
Action Center
|
