The economy (i.e. businesses and consumers) started tightening their belts in 2008 in anticipation of the 2010 tax hike (I know I did) – now that the tax rates all likely to be extended for 2 more years it’s 2008 again and businesses will reset to 2008 and continue to tighten their belt, but now they also have to factor in ObamaCare in addition to the possibility of another tax hike at the end of 2012. Businesses mainly need long term tax rate stability to plan and two years isn’t very long.
I’ll try to explain, but first…
I have heard at least 100 or more Democrats and some so-called conservatives … like Krauthammer – whining about extending these tax cuts not being paid for and costing the government money – first it’s our money not the governments so there is no cost to it. We don’t have a taxation problem we have a spending problem – it’s real, real simple – you as an individual never base your budget on a raise you have not received – if you do then you’re a moron. You don’t go out and buy something then figure out how to pay for it, if you do you are again a moron.
Obama and the rest of the Democrats are whining about extending the current tax rate and are acting as if it is going to cost the government 100′s of billions of dollars – it’s not, it’s a lie. What is going to cost the government is another extension of unemployment – about $150 million and not a single Democrat has said how they will pay it. Seems to me Pelosi says it stimulates the economy then pay for it out of the stimulus package – problem solved. How are they going to pay for the growing list of food stamp applicants? How are they going pay for anything when they’ve obligated every dime coming into the coffers.
The liberals think businesses are greedy and the the rich are greedy but the reality is it is Washington that is greedy both Republicans and Democrats – when has the Washington done with less? When has Washington taken a pay cut? When has Washington laid people off? When has Washington done without? Seems to me that way back in Clinton’s day when the government actually spent less than they took in it was the Republics in control of congress and the purse strings. So for the Liberals to say businesses and the rich are greedy- I ask you how many Liberals have turned down they raises? How many have sent extra money to the IRS? How many have said ‘oh no I have enough money here you take the rest?’ – answer NONE! Have the Libs in congress turned down their perks? Have they avoided paying their taxes? We don’t have a revenue problem we have a spending problem and the Liberals have had the checkbook for the last $5 Trillion in overspending but it’s not their fault – oh no it’s those greedy businesses and greedy rich people that ran up a huge national debt – right?
Think of it like this… I go out and spend $100,000 more dollars than I have, I spend it on stupid stuff like chartered flights, fancy meals, parties etc – you know like Nancy Pelosi would spend it – I now have a $100,000 deficit in my checking account. I decide I’m going solve it by taking $100,000 from you to cover my wasteful spending, I’m not going to give it back to you, I’m just going to take it! But you refuse to give it up and protest my attempt – now I can blame you for my budget shortfall because you’re to greedy to give up your money to pay for my wasteful spending. You didn’t spend the money, you didn’t ask me to buy the things that got me in debt, but you’ll just to selfish and greedy to give me your money to pay off my debt – don’t you know there is starving children in Africa? (What that has to do with it I have no idea, but it is what I was always told as a child.)
Here is the deal – the rich pay more and here is info straight from the CBO…
The federal tax system is progressive–that is, average tax rates generally rise with income. Households in the bottom fifth of the income distribution (with average income of $18,400, under a broad definition of income) paid 4.0 percent of their income in federal taxes. The middle quintile, with average income of $64,500, paid 14.3 percent of that income in taxes, and the highest quintile, with average income of $264,700, paid 25.1 percent.
Higher-income groups earn a disproportionate share of pretax income and pay a disproportionate share of federal taxes. In 2007, the highest quintile earned 55.9 percent of pretax income and paid 68.9 percent of federal taxes.
Yeah those evil rich people aren’t paying enough, soak’em some more…
Actually extending the current tax rate for 2 years is going to do little if anything for the economy – all it will do is not cause further damage to this pitiful Obama economy. Two years of a given tax rate is not long enough for a business to make sound long term decisions – you cannot properly make a 5 or 10+ year business plan when you have no idea what the tax rate will be in 2 years and that is not even factoring in ObamaCare and it’s unknown cost and skyrocketing unemployment insurance paid the the government due to the same governments endless extensions. Businesses need stability to plan, no business is going to invest $1 or $100 million dollars in expansions or R&D regardless of tax breaks if they can not reasonably anticipate future expenditures and taxes are a expenditure.So that is why this is 2008 again – businesses are not going to invest in squat – not equipment, not research, not people, not anything if the loom of higher taxes are on the horizon and pushing 2010 out to 2012 in the twelve hours is to late for businesses to adjust, you can’t turn a battleship on a dime and it just goes to show how little government knows about business – face it if businesses where ran like the government they would last a quarter.
The democrats are trying to call this supply side economics, it’s not. This is nothing more than the status quo economics and keeping the status quo gets you the status quo and I don’t know about you but the status quo isn’t working to well for me. So welcome back to 2008 – at least you know what’s in store for the next two years.