“Give the wealthiest Americans a tax cut and history suggests they will save the money rather than spend it.” That’s the latest piece of argumentation against the Republicans’ & corporate Democrats’ push for an extension on the Bush era tax cuts for all Americans, or more specifically, not only the people who really need them, but also the wealthiest people in America.
The general thesis, predicated by research from Moody’s Analytics Inc., asserts that the spending patterns and habits of the wealthiest Americans–namely the top 5 percent–are directly linked to the overall performance of the stock market, not adjustments in their income tax rate.
New research aside, let’s not forget about how the Bush tax cuts were paid for originally; with borrowed money! It truly disappoints me how our leaders–mostly from the right–can spend so much time attacking government spending while conveniently avoiding 5 minutes of an honest discussion about how America pays for tax cuts, but my disappointment speaks to a lack of public awareness and a media culture we almost never can count on.
Shockingly, over a month ago, even Alan Greenspan expressed that he gets the fact that the extension for the super rich is unhealthy & fiscally irresponsible. According to the Huffington Post, Greenspan was on “Meet the Press” when he expressed the following, “I’m very much in favor of tax cuts but not with borrowed money and the problem that we have gotten into in recent years is spending programs with borrowed money, tax cuts with borrowed money. And at the end of the day that proves disastrous. My view is I don’t think we can play subtle policy here.”
Or maybe you’re more likely to be shocked & disturbed by another finding which shows that provided only the middle class tax cuts ($250,000 or less a couple, $200,000 or less an individual) are extended, the rich will still make out disproportionately.
“This is because the 2001 tax law’s reductions in the lower tax brackets benefit not only people whose incomes fall within the lower brackets but also those whose incomes exceed those brackets. In fact, high-income people actually receive much larger benefits in dollar terms from the so-called “middle-class tax cuts” than middle-class people do.”
The study further clarifies that the top 2 percent of American households will receive much more money from tax cuts even if the cuts approved by Congress are said to exist only to positively impact the middle class.
So what do we do? Well, for one, we should adjust the insidiously convoluted tax bracket calculation from above that allows for such inequity in our society, but let’s face it, that’s not going to happen before Congress comes to a decision on the tax cuts extension. So, until then, we need to pick our battles, fire our congressional representatives if they extend the blatant tax cuts for the wealthy, and use the much needed revenue from the tax hike on the wealthy–despite the unfairness in regards to income proportionality as was mentioned before– “for aid to the states, extensions of unemployment insurance benefits and tax credits favoring job creation. Dollar for dollar, each of these measures would have about three times the impact on GDP as continuing the Bush tax cuts.” I think the Washington Post has the right idea in mind.