Monday, August 09, 2010

A little reality and truth

The Democrat strategy for this upcoming election is abundantly clear: they are running against George Bush. The language on the network shows lately point to the "Bush recession" and the "failed policies of George Bush." Democrats are trying their best to link Republicans to George Bush. This is particularly evident when it comes to the battle over the Bush tax cuts. Democrats and Obama administration officials like to tell us that we simply cannot afford to continue tax cuts for the evil rich. In other words, the evil rich need to pay more of their 'fair share.' But there are a few facts about the Bush tax cuts (and tax cuts in general) that you should keep in mind. These come from the Heritage Foundation:

Myth #1: Tax revenues remain low.
Fact: Tax revenues are above the historical average, even after the tax cuts.

Myth #2: The Bush tax cuts substantially reduced 2006 revenues and expanded the budget deficit.
Fact: Nearly ALL of the 2006 budget deficit resulted from additional spending above the baseline.

Myth #3: Supply-side economics assumes that all tax cuts immediately pay for themselves.
Fact: It assumes replenishment of some but not necessarily all lost revenues.

Myth #4: Capital gains tax cuts do not pay for themselves.
Fact: Capital gains tax revenues doubled following the 2003 tax cut.

Myth #5: The Bush tax cuts are to blame for the projected long-term budget deficits.
Fact: Projections show that entitlement costs will dwarf the projected large revenue increases.

Myth #6: Raising tax rates is the best way to raise revenue.
Fact: Tax revenues correlate with economic growth, not tax rates.

Myth #7: Reversing the upper-income tax cuts would raise substantial revenues.
Fact: The low-income tax cuts reduced revenues the most.

Myth #8: Tax cuts help the economy by "putting money in people's pockets."
Fact: Pro-growth tax cuts support incentives for productive behavior.

Myth #9: The Bush tax cuts have not helped the economy.
Fact: The economy responded strongly to the 2003 tax cuts.

Myth #10: The Bush tax cuts were tilted toward the rich.
Fact: The rich are now shouldering even more of the income tax burden.

There is one fact that stands out to me: Tax revenues correlate with economic growth, not tax rates. If the Obama administration's true goal is to get businesses hiring and investing, increases taxes and maintaining economic uncertainty clearly isn't going to do that. What the administration SHOULD consider are policies which will give businesses true incentives to hire. Obama should focus on growing the economy rather than generating more tax revenue with tax increases. For example, repealing or at least lowering corporate tax rates would be a huge help to corporations at this time. Ironically enough, countries like England are currently lowering their corporate tax rates. Meanwhile, we can only assume that any taxes on the rich or evil corporations is only going to sky-rocket. Would continuing the Bush tax cuts cost money? Well sure .. in the short term. Clearly you would expect an increase in revenue over the short term with an increase in tax rates, but as the high producers adjust their behavior to meet the punishment of increased tax rates you would see government revenue from those with increased taxes start to fall. Remember ... more than half of the evil rich people who will be hit with these Obama tax increases are small business owners. These are the people we need to grow our economy and produce jobs. I would submit to you, though, that Obama's intense dislike of the private sector, and his dedication to wealth seizure and re-distribution overweighs any desire for jobs growth in the private sector. Obama truly believes that money spent by government will do a better job of prompting economic growth than money spent by the parties who actually earned it. If you agree, Obama is your man. Keep that obscene bumper sticker on your car.