Obama’s tax hikes pose a threat to our economic health
There is no denying at all that Mitt Romney reverses positions as frequently as the wind changes. We can go through and cite numorous examples. But that doesn’t absolve or excuse President Barack Obama from his own reversals in matters of public policy, including his flip-flop on raising taxes during tough economic times.
During his weekly address on December 11, 2010, President Obama, who was pushing a two-year extension of existing tax rates, explained, “By putting more money in people’s pockets, and helping companies grow, we’re going to see people being able to spend a little more, we’re going to spur hiring - we’re going to strengthen our entire economy.” Obama also Truer words could not have been spoken.
Indeed, the strength of our economy rides on the back of small businesses. But they are currently being threatened by President Obama’s proposed tax hike, which has already cleared the Senate. But this is counter to what President Obama said in 2009, when he noted that “[y]ou don’t raise taxes in a recession.”
While we may not currently be in a recession, we are certainly teetering on that line. With the economy growing at a pathetic pace and job creation badly lagging, pulling a substantial sum of money out of the economy — money that could be invested in new employees or improvements, is an extraordinarily bad idea. President Obama’s tax hike will have a negative effect on the economy, reducing gross domestic product by anywhere from 1.3% to 2.9% — costing thousands of jobs in the process.
And though President Obama is hoping to rile up the same populist sentiment that got him elected for years ago, David Harsanyi explains that voters just aren’t interested in raising taxes right now:
It turns out, that when voters are asked to prioritize their concerns for the presidency, sticking it to the rich ranks so low that it has to look up at global warming — an issue that is perpetually near the bottom. In a new Gallup poll (summary below), “Americans assign much less importance to increasing taxes on wealthy Americans and dealing with environmental concerns.”
If the Gallup poll truly reflects the mindset of Americans, it’s curious that Barack Obama would tether his entire reelection campaign and attack (not to mention policy agenda) to the idea that taxing the wealthy will somehow transform an unjust nation into a fair one, and a struggling economy into a robust one.
If this poll is to be believed, if Obama wins, it won’t be because Americans have fallen for the populist “fair share” argument.
Not to mention that some recent polling, including a Marist/McClatchy survey, shows that 52% of Americans want the tax cuts to extended for all taxpayers — including those for higher-income earners.
There isn’t much of a difference in the economy of two years ago and the economy we face today. President Obama would like for you to believe that economic policies have worked, but with unemployment still over 8%, $1+ trillion budget deficits, and slowing GDP growth, it’s hard to believe him. And not only have his economic policies failed, Obama wants Americans to now believe that raising taxes will be some sort of shot in the arm to economy? Even Keynesians don’t traditionally buy that argument. In fact, John Maynard Keynes, in The Means to Prosperity, wrote:
[A] reduction of taxation will run a better chance than an increase of balancing the budget. For to take the opposite view today is to resemble a manufacturer who, running at a loss, decides to raise his price, and when his declining sales increase the loss, wrapping himself in the rectitude of plain arithmetic, decides that prudence requires him to raise the price still more.
Keynes also wrote that “25 percent [of GDP] as the maximum tolerable proportion of taxation.” But as Dan Mitchell explained in 2009, “America is now well past that stage.” Indeed, taxes a percent of GDP in the United States is at 27.3% (all levels of government combined), according to the Tax Policy Center.
Raising taxes is the last thing the economy needs right now. The class warfare arguments used by President Obama and Democrats may appeal to many, but they’re based on a false premise given that higher-income earners already pay 69.1% of all income taxes. They already pay their “fair share,” but unfortunately, President Obama is ready to trash the economy to prove an ideological point.