I don’t agree with the Republicans in Congress who want to extend tax breaks for the richest two percent of Americans as well as the other 98 percent. But let’s be honest here. The reasons these worthies give to support their point of view are sometimes entertaining. Indeed, on occasion, they’re a real hoot.
Take the Republican congressman from Georgia interviewed on Public Radio this past weekend. To justify extending tax breaks for the top two percent of American earners, he said we should do so (and I quote here) “because we’re all in this together.”
We are? This tiny two percent minority has seen a hefty increase in its wealth during the past three decades, while the wealth of most other Americans has gradually declined in the same period, a fact not apparent for several years only because of bogus increases in real estate values and debt-based spending.
So while the two percent and the 98 percent didn’t share past economic benefits, and certainly aren’t sharing the current austerity, this Republican congressman thinks we should all be in it together when it comes to sharing tax breaks. You don’t get that level of humor from Democrats, not even from the newest Democratic senator from Minnesota.
An even funnier line from this Georgian jokester was his repeated reference to these top two-percenters as the “job creators.” This is supposed to suggest that the multi-millionaires and richer folks who this congressman wants to see continuing their extra tax breaks will take the $100K or more they keep from these breaks and sink this money into things that lower the unemployment rate.
Since the highest earners have actually had this extra money to use as they chose for the past decade, however, and since it hasn’t generated the employment boom it was supposedly designed to produce, one might detect a certain weakness in this thinking — a weakness made clearer when one looks at how so much of this tax saving has actually been used.
No, it hasn’t trickled down to small business like your local pizzeria or mom-and-pop hardware store. What it has done instead to a large extent is find its way into hedge funds that do things like buying healthy companies, burdening them with excessive new debt to facilitate the ownership transfer, then firing employees of these companies to please Wall Street analysts.
So no, the best way to create jobs today is not to give enhanced tax breaks to the richest Americans. And that’s true even if these well-to-do folks did follow the old economist model that has them putting much of this money into new capital equipment investment.
The reason? We don’t need more investment to produce more goods that aren’t being purchased anyway. What we need is more widespread consumption — which is why both Republican and Democratic proposals in today’s Great Tax Break Debate miss the mark.
What should come out of this debate is a plan that allows tax rates for the top two percent of earners to return to pre-2001. But instead of using the $700 billion over 10 years this would generate to reduce government deficits, use it instead to cut taxes (the Payroll Tax, the income tax, take your choice) for those making less than a quarter million dollars a year.
We could use this $700 billion in this way to do the most good for the economy. Or we could do the usual Washington fandango and argue over the two and only two approved choices — neither of which is the best option or even the most politically expedient option.
Guess which way you’ll see Congress and the Administration play it in the next month or two.
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