Bush Tax Cuts (For The Rich) Should Die

The subject of taxes is a touchy one. While taxes are necessary to provide the government services that we want, no one enjoys paying those taxes. And a large part of the public doesn't seem to understand exactly what has been happening with taxes. A ridiculously large portion of the American public thinks President Obama has raised taxes for most Americans. That is not even close to true. For 95% of the population, income taxes under President Obama are lower than they were under President Bush (thanks to Obama's earned income deduction). And for the remaining 5% (the richest 5%), taxes are the same as they were during the Bush administration.

It is important that we understand that as we approach the end of this year for a couple of reasons. First, the government is currently receiving a lower revenue from taxes than has been seen in decades (largely due to dropping tax revenues from the rich and the corporations). Second, the Bush tax cuts will expire at the end of this year. There is going to be a lot of talk before the year ends on what to do about both of these problems.

President Obama and the Democrats want to let the Bush tax cuts expire for those making above $250,000 a year, and continue the cuts for those making less than that amount. They say this will do two things. It will pump billions of new revenue into the government, lowering the deficit. And it will keep the economy from falling deeper into recession, because most of the people who get to keep their cuts (those making less than $250,000 a year) will spend that money (giving the economy a boost).

The Republicans disagree. They say that everyone must keep the cuts made by the Bush administration -- including the richest Americans. They say that if those rich Americans don't get to keep their cuts (cuts that were much larger than for struggling Americans), then the economy will be hurt.

I can't buy the Republican argument. The richest Americans are sitting on record amounts of cash -- and have seen their incomes grow much faster than the income of other Americans (while their tax liability has dropped). Neither the rich nor the economy will be hurt by asking the rich to give up the tax cuts they got from President Bush -- and they would still be paying a smaller top tax rate than at other times in our history (times when the economy did quite well).

And it looks like I'm not alone in that belief. A recent survey (done between July 12th and 15th) by the Pew Research Center shows that a majority of Americans don't believe the economy would be hurt by taxing the rich a little more. It is only the Republicans who are buying into the argument being made by congressional Republicans (and then only a plurality rather than a majority). Democrats, Independents, and the public at large are not buying the argument that the economy would be hurt if the rich have to pay more taxes. Here are the numbers:

WOULD TAX HIKES ON THOSE MAKING OVER $250,000 HELP OR HURT THE ECONOMY?

General Public
help the economy...............44%
hurt the economy...............22%
neither help nor hurt...............24%
don't know...............11%

Republicans
help the economy...............27%
hurt the economy...............41%
neither help nor hurt...............24%
don't know...............9%

Democrats
help the economy...............64%
hurt the economy...............11%
neither help nor hurt...............15%
don't know...............9%

Independents
help the economy...............41%
hurt the economy...............18%
neither help nor hurt...............30%
don't know...............10%

If you add the percentage of those who believe the economy would be helped with those who say it would be neither helped nor hurt, then you come up with the percentage that does not believe the economy would be hurt by raising taxes on the rich. That yields the following numbers:

PERCENTAGE WHO SAY RAISING TAXES ON THE RICH WOULD NOT HURT THE ECONOMY.
General public...............68%
Republicans...............51%
Democrats...............79%
Independents...............71%

Those numbers make it obvious that the Republican message of economic harm is not being bought by most Americans. Significant majorities of the general public, Democrats, and Independents say the economy would not be hurt -- and even about half of Republicans (51%) agree. In other words, most Americans agree with the position President Obama and the Democrats have taken on the Bush tax cuts -- that they should not be extended for those making more than $250,000 a year. This is not really surprising since many polls in the last few months have shown the same thing.

It does put the congressional Republicans in a bind though. They do not have the support of most Americans for the position they have taken. Don't expect this to change their minds though. They are bound and determined to repay the rich for the huge campaign donations they have been getting, especially through the super-PACs. They will probably hold their ground and hope the Democrats back down.

The Democrats are showing some backbone though. They are now saying they will not give in -- even if that results in all the Bush tax cuts expiring at the end of the year. If that happens, they will just try to pass a new tax cut for people making less than $250,000 when they come back in January 2013. This will then put the Republicans in the position of either approving or blocking a tax cut for almost all Americans.

Clearly, the Democrats are the ones in a position of power on this issue, and it is the Republicans that will have to accept the blame if most Americans have to pay more in taxes next year.