Originally published in the Daily Press.
“The last thing you want to do is raise taxes in the middle of a recession.”
That’s pretty good advice coming from President Barack Obama back in 2009.
Of course, now that the Supreme Court has decided that Obama’s signature piece of legislation, the Affordable Care Act, the effect of which indeed appears to be the largest tax increase on the American people in our history (nearly $1 trillion), one shouldn’t be too surprised that the president is changing his tune and doubling-down on raising taxes.
This past Monday, as part of the debate to extend the 2001 tax rates, the president announced that he would favor allowing taxes to rise on those Americans who make more than $250,000. He would like to see the top two individual tax rates of 33 percent and 35 percent raise to 36 percent and 39.6 percent, respectively.
“Most people agree that we should not raise taxes on middle-class families or small businesses — not when so many folks are just trying to get by,” said the president. “And that’s why I’m calling on Congress to extend the tax cuts for the 98 percent of Americans who make less than $250,000 for another year.”
Translation: because this policy will only affect 2 percent of Americans, and they can afford it, while 98 percent of you can’t, they need to sacrifice for the sake of the country.
This has, predictably, unleashed a flurry of reaction from the right.
“We just saw a terrible jobs report just last week, and now to add a higher tax on job creators and on small business is about the worst thing I can imagine to do if you want to create jobs,” rebuked the presumptive Republican presidential nominee Mitt Romney.
And Majority Leader Eric Cantor said, “With unemployment stuck above 8 percent and millions of Americans out of work, the last thing our nation’s small businesses and families need are higher taxes.”
While I agree with both Gov. Romney and Congressman Cantor that this is bad policy coming from the administration, the ensuing debate over these tax rates is also a distraction from the real problem facing the U.S. economy: overspending.
“In 2009 the budget deficit was $1.5 trillion,” said Professor Antony Davies of Duquesne University in a recent video, “Will taxing the rich fix the deficit?” available at LearnLiberty.org. “Increasing taxes on the richest 5 percent of Americans by 15 percent only raises about $400 billion.”
Obama’s proposed tax rate increase is on 2 percent of wage earners with an average increase of 3.8 percent. Professor Davies explains that we would have to tax the wealthiest 5 percent of Americans at a rate of 88 percent just to balance the budget.
Once again, our politicians, both Republican and Democrat, are going to expend a lot of political energy on the margins when the true problem is not with the tax rate on the richest among us, but how our government spends.
Medicare, Medicaid, Social Security literally devour our federal budget, yet our political class has shown little to no backbone at doing anything about it.
And why should they? In a 2011 Marist poll, 70 percent of self-described tea party members said “no” to Medicare spending reforms.
If even the tea party isn’t willing to reform entitlement spending, what hope is there?
Instead, it’s just politics as usual.
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