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Tax Cut, Cold Cuts

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A vigorous debate about public issues is usually a healthy thing. The clash of opposing views and opinions can stimulate the public's interest and thought, and provide substance -- meat -- for people to chew on and digest. Expressing opinions is one of the most sacred hallmarks of American life. However, the audience usually has to trust in the honesty of the person expressing the opinion to ensure it bears some relation to the truth. Unfortunately, in political debate for most of the last 20 years, the truth has been missing in action more and more frequently. Today, the truth is seldom allowed to get in the way of creating a great sound bite or persuasive argument.

For example, the Heritage Foundation has disseminated an op-ed claiming that "Obama's tax plan would definitely hurt job creators." It didn't allow truth to be an impediment in opposing the expiration of the 2001 and 2003 Bush tax cuts for personal income above $250,000 per year. In trying to make a case that allowing Bush Administration tax cuts to expire for the highest 3 percent of income in the country will stifle the economy by raising taxes on "job creators," the Heritage Foundation ignored facts and relied instead on tired and completely discredited talking points.

Let's sprinkle the discussion with just a few factual points:

  • President George W. Bush's original rationale for cutting tax rates in 2001 was to get rid of a sizable budget surplus at the end of the Clinton Administration. Remember?
  • President Bush, Vice President Dick Cheney and Republican Congressional leaders swore up and down that tax cuts would pay for themselves, even though such claims were disputed by the U.S. Treasury Department and Congressional Budget Office.
  • Pushed into law through the same budget reconciliation process used to pass President Obama's Affordable Care Act in 2009, the tax cuts were programmed by Congressional Republicans to expire in ten years to limit their ultimate price tag. So, how does the scheduled expiration of Republican tax cuts now become an Obama tax increase?
  • The tax cuts were zealously guarded by Congressional Republicans at the same time they were passing into law the $1.2 trillion Medicare Prescription Drug Benefit in 2002 and funding the wars in Iraq and Afghanistan into 2009, with a price tag of $2.3-2.7 trillion to date, without including any of those costs in annual budgeting. Ever wonder where $1.6 trillion of our national debt came from?
  • The Heritage Foundation cited an anonymous but "growing list of prominent economists and influencers" calling for the tax cuts to continue. Yet in 2003, 450 of our nation's leading economists, including ten Nobel Prize laureates, signed and published a statement predicting increased income inequality, growing budget deficits and a decrease in the U.S. government's ability to fund essential services or promote economic growth if the tax cuts were enacted. Looks like they might have known what they were talking about.
  • During eight years of the Bush Administration -- with its tax cuts -- job growth was 1 percent, the lowest since 1945. If lower taxes spur job creation, what happened?
  • It is absolutely true that in past years the majority of Americans jobs were created in small businesses. However, it's also true that the likelihood of a small business adding jobs is due, more than anything else, to increased customer demand for its products or services, not the owner's individual tax rate.
  • The Heritage Foundation claimed that restoring previous tax rates for income over $250,000 per year will affect nearly 30 percent of small business owners. But the foundation takes serious liberties with the definition of a small business. According to the Congressional Joint Committee on Taxation, allowing the Bush tax cuts to expire on family income above $250,000 will affect 3 percent of America's small businesses.
  • According to the Tax Policy Center, 1.5 percent of tax filers reporting business income are in the top two income tax brackets that President Obama wants to let expire at the end of this year.
  • A Treasury Department report finds that only 2.5 percent of business owners taxed at the individual rate are in those top two tax brackets.

The idea that allowing the Bush tax cuts to expire -- as Republicans intended -- yet only on income above $250,000 per year will somehow stifle the economy or burden a large proportion of small business owners adds no substance to the public dialog. Instead of meat for a discussion, we're being served very thinly sliced baloney.