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Extending tax cuts: rhetoric meets reality.

By: Moe Lane (Diary)  |  July 26th, 2010 at 10:00 AM  | 

RESIZE: AAA

The basic situation?  The Democratic party is facing a dilemma of more or less its own doing with the looming end of Bush-era tax cuts.  The party generally ran on a program of repealing them for the ‘rich,’ which was rhetorically useful (if not fiscally so); and some Democratic legislators are beginning to worry about the political effects of that.  The problem – which the Right has been saying all along – is that raising taxes on the top two tax brackets will affect an indeterminate number of small businesses.  Democratic legislators apparently plan to solve this problem by demonizing the Republican party’s position on tax relief while simultaneously coming as close to it as they dare.

While the battle lines at first glance seem straightforward enough, what the NYT carefully did not mention in its article above is that at least some small businesses will see a tax increase (one of almost 5%) under this system; a lot of businesses report their earnings – perfectly legally and openly – as individual income.  The effects of changing this? The Wall Street Journal reports ‘doom:’

New data from, of all places, the Democratic-run Joint Committee on Taxation show that in 2011 roughly 750,000 taxpayers with net business income will pay the highest marginal rate of 39.6% or the next highest bracket of 36% (up from 33%). About half of the roughly $1 trillion of total net business income will also be reported on those returns. In a stroke, that will make tens of billions of dollars unavailable to invest or to hire new workers.

It will probably not surprise most of the people reading this that when you take energy out of a system, you end up with a less productive system; conservatives have certainly not been shy about saying so.  It will probably also not surprise any of the people reading this that the White House is ignoring fiscal reality.  To be fair, their own ideology is getting in the way; they can’t afford to fund our currently bloated government, and the Democratic party is constitutionally incapable of cutting the government down to size.  The very idea that you can cut or eliminate an entitlement, once it’s been allocated… is semantic white noise to many on the Left.

But facts are stubborn things.

Moe Lane

Crossposted to Moe Lane.

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COMMENTS

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  • Dave_in_Fla

    We know is it fiscal reality, but to many (most?) of the administration, you are criticizing their religion. There are ALWAYS more unfeeling capitalist fat cats who have stolen from the deserving underclass who can be taxed to pay for social justice. To suggest otherwise is to instill a crisis of faith. They would rather become martyrs to the cause, than actually run the country with any semblance of competence.

  • rdelbov

    should be all or nothing at all. Don’t provide one vote for the massive tax increase on those over 250K.

    Obama already lied about raising taxes on those under 250K when he passed healthcare but between now and december let the democrats run a platform of raising taxes.

  • romeg

    one Timothy Geithner, saying something to the effect that in the interest of “fairness” that the cuts for the “wealthiest” should be eliminated but that for “everyone else” they should be extended.

    Yesterday on FNS, Brit Hume went through this “logic” like a buzz saw. Someone needs to pose two questions to anyone attempting to make this argument: (1) “What is the Number One issue facing the country AT THIS MOMENT?” Anyone paying attention knows that the answer to that question is high and growing unemployment. In fact, this is the argument that Democrats used to push through the unfunded extension of unemployment benefits.

    (2) “How many jobs will eliminating these tax cut create?” The answer to that question is, of course ZERO.

    So if the top priority of this Administration is to encourage job creation, why would they squander yet more time, money and political capital pushing legislation that will DO NOTHING to address that top priority and will, according to any mainstream economist you can ask actually exacerbate an already intolerable situation? Because it’s Fair? Or MORE Fair?

    Is it fair to those will continue to remain unemployed or will actually LOSE their jobs?

  • eastbaylarry

    It is an unknown, but very significantly large negative number.

  • eastbaylarry

    It is an unknown, but very significantly large negative number.

  • bk

    The Democrats don’t even like to use the term “tax increase” when talking about the (so-called) rich. They are obviously PETRIFIED of using that term. They’ll say it ten other ways that sound less severe, like whether to let “temporary tax cuts expire” and such.

  • teresakoch

    http://www.thefreemanonline.org/featured/the-power-to-tax-is-the-power-to-destroy/

    This should be “must-read” material for every person in this administration, including Congress…..

  • romeg

    Jobs created, in order to be counted as such, would have to be a POSITIVE number, that is a number GREATER than ZERO. Put another way, the question might be “Will this create jobs? Yes or No” . If the answer is “Yes” then that, again, has to, by definition, be a positive number.

    They are in no position where they can even entertain the possibility that an action might cost jobs, even though they haven’t, as of yet, been called to account for their job destruction or, when so confronted, they blame George W. Bush.

    The question as it is posed is “How many jobs will [this action] create?” I suppose it could and perhaps should be framed as “How many NET NEW jobs will this action create?” but we can follow that process to the point of ridiculousness.

    I’m unaware of a way to create a NEGATIVE number of jobs nor have I ever seen a report indicating a NEGATIVE number of jobs created. I’ve seen plenty of reports that might lead me to conclude that “job creation” is a negative number but would you not agree that even that is an arcane way of describing the situation.

    Who hires a negative number of employees?

  • JamesSmith130

    not nothing. If you take the stance that we should either renew all the tax cuts or get rid of them all, the Dims will run attack ads on the latter, saying that the GOP wants to raise taxes on the middle class.

    Our position is that all of them should be renewed.

  • JamesSmith130

    all the tax cuts to expire. That is his preferred position. If we give him that out, he will take it and blame us in the process.

  • azred

    GUBMINT JOBS!

  • msctex

    The degree to which a true Leftist’s blind faith and adherence to dogma equates to religious zeal cannot be understated. It is a modern religion, a bastardized form of Christianity without the pesky expectations of Morality. Their Gospel is the forced enlightenment of supposed bigots of every stripe, and their goal is a Utopia of equal station, as opposed to opportunity.

  • eastbaylarry

    The words spoken talk of job creation, but the actions taken cause jobs to be lost.
    The ‘words’ are to quell the fears of the people: Things are bad now but look! The government is taking steps to help.
    The ‘actions’ reveal the true intent: Destroy the worlds’ greatest country by turning it into yet another failed socialist state.

    So the ‘jobs created’ IS a negative number because of the {false} terminology used. If they had stated their intentions truthfully, there would have been a *positive* number of jobs *lost*.

  • qixlqatl

    “has been increased from 12 grams per week to 8 grams per week”

  • davesinsanantonio

    but so is the self-induced blindness of the Left. “There is no so blind as he who will not see”! And the willful blindness of the Left is truly something to behold. Pointing out facts to the has them putting their fingers in their ears and saying, “I can’t hear you” over and over.
    The other commentators have it right, it is the religion of the Left, and just as the medieval Catholics did not want to hear Galileo say the earth moves, the Left do not want to hear the truth about the economy, the war, the Constitution, or anything else.
    Those stubborn facts will only have an effect on those who actually use their brains. Let us hope that those in the middle who believed in “hope and change” have come to realize that hope must be based in facts, not wishes.
    And, we have to watch out for the congressional lame ducks and try to minimize the destruction they will try to impose before January.

  • davesinsanantonio

    but only about appearing to be fair. As long as they can sell their dupes on the concept of “fairness”, they can count on the votes of those who believe they are “owed”. Those who are “owed” do not care if they actually end up with less than they have now, only whether they end up with less than someone else. It is like the communist who found out that his neighbor got a cow by praying fervently. When he tried to pray and the angel said he could have one wish, the communist said, “I wish my neighbor’s cow would die”! Do not misunderstand the use of the politics of envy. It works. The problem is the recipients do not!

  • davesinsanantonio

    John Marshall told them that almost two centuries ago. That is what they are counting on! They want to destroy the rich, and then the middle class. That way, everyone else will be equal, and they will be the only rich ones left. They do not care that their levels of real wealth will be less than the super rich of today, only that they will have achieved their rightful place as the rulers of the rest of us.