To hear the media report it, President Obama is proposing a tax increase on wealthy Americans. That's misleading at best. He's proposing that everyone receive a continuation of the Bush tax cuts on the first $250,000 of their incomes. Any dollars they earn in excess of $250,000 will be taxed at the old Clinton-era rates.
Get it? Everyone is treated exactly the same. Everyone gets a one-year extension of the Bush tax cut on the first $250,000 of income. No "class warfare."
Yet regressive Republicans want Americans to believe differently. The editorial writers of the Wall Street Journal say the president wants to extend the Bush tax cuts only "for some taxpayers." They urge House Republicans to extend the Bush tax cuts for "everyone" and thereby put Senate Democrats on the spot by "forcing them to choose between extending rates for everyone and accepting Mr. Obama's tax increase."
Pure demagoguery.
Regressives also want Americans to think the president's proposal would hurt "tens of thousands of job-creating businesses," as the Journal puts it.
More baloney.
A small business owner earning $251,000 would pay the Bush rate on the first $250,000 and the old Clinton rate on just $1,000.
Congress's Joint Tax Committee estimates that in 2013 about 940,000 taxpayers would have enough business income to break through the $250,000 ceiling -- and, again, they'd pay additional taxes only on dollars earned above $250,000.
All told, less than 3 percent of small business owners would even reach the $250,000 threshold.
A third lie is Obama's proposal will "increase uncertainly and further retard investment and job creation," as the Journal puts it.
Don't believe it.
The real reason businesses aren't creating more jobs is American consumers -- whose purchases constitute 70 percent of U.S. economic activity -- don't have the money to buy more, and they can no longer borrow as before. Businesses won't invest and hire without consumers. Even as executive pay keeps rising, the median wage keeps dropping -- largely because businesses keep whacking payrolls.
The only people who'd have to pay substantially more taxes under Obama's proposal are those earning far in excess of $250,000 -- and they aren't small businesses. They're the fattest of corpulent felines. Their spending will not be affected if their official tax rate rises from the Bush 35 percent to the Bill Clinton 39.6 percent.
In fact, most of these people's income is unearned -- capital gains and dividends that are now taxed at only 15 percent. If the Bush tax cuts expire on schedule, the capital gains rate would return to the same 20 percent it was under Bill Clinton (the Affordable Care Act would add a 3.8 percent surcharge).
Funny, I don't remember the economy suffering under Bill Clinton's taxes. I was in Clinton's cabinet, so perhaps my memory is self-serving. But I seem to recall that the economy generated 22 million net new jobs during those years, unemployment fell dramatically, almost everyone's income grew, poverty dropped, and the economy soared. In fact, it was the strongest and best economy we've had in anyone's memory.
In sum: Don't fall for these big lies -- Obama wants to extend the Bush tax cut "only for some people," small businesses will be badly hit, businesses won't hire because of uncertainty this proposal would create, or the Clinton-era tax levels crippled the economy,
A ton of corporate and billionaire money is behind these lies and others like them, as well as formidable mouthpieces of the regressive right such as Rupert Murdoch's Wall Street Journal editorial page.
The truth is already a casualty of this election year. That's why it's so important for you to spread it.
ROBERT B. REICH, Chancellor's Professor of Public Policy at the University of California at Berkeley, was Secretary of Labor in the Clinton administration. Time Magazine named him one of the ten most effective cabinet secretaries of the last century. He has written thirteen books, including the best sellers "Aftershock" and "The Work of Nations." His latest is an e-book, "Beyond Outrage." He is also a founding editor of the American Prospect magazine and chairman of Common Cause.
Follow Robert Reich on Twitter: www.twitter.com/RBReich
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They are simply not doing much of it in the United States.
Better figure out why and fix it soon. I can assure you it is not because the tax rates are too low and it is not because the government is not intrusive enough.
We will continue to bleed capital and jobs until integral changes are made.
You won't have consumers if you don't have jobs and you won't have jobs if the government continues to believe that we are our brothers financial keeper.
If your system was so great Reich, why isn't it still being used?
people have jobs, they will buy more, and the factory owners will have to make and sell more product and make a profit. But, that profit will be TOO big and the cycle starts all over again. People bitch because they have a job and can buy more but their bosses cannot make a profit, and if they do make a profit, the government says you must share it with your employees.
You get pizzed because your company is employing 200 workers but your company is actually supporting 250 people, 200 employees and 50 " no loads" GReat country or what??
No problem with anybody making a profit. The issue is that if too large of a profit is concentrated at the top and the top tax is disproportionately low, money does not circulate, the tax base (middle class) shrinks, the economy suffers. How much is it worth to let that pool at the top stagnate until it becomes worthless? When we had a top tax bracket of 50% there were still rich people but there was a thriving middle class to support the country.
The most disgusting part of all this? A great many Americans are not educated enough, or are so easily frightened by sound bites that they can't logically look at the situation we're in and the dire consequences to us as a country if this thinking - or lack thereof - continues.
If the middle class can't afford to buy we fall apart: No consumers, no sales tax , lost jobs and resulting loss of middle class income tax revenue (the part that supports this country). Think about it logically. For the benefit of the 1%, the middle class is punished--pensions and benefits they have earned are cut, spending power is cut, and the blame for this mess is shifted from the 1% to the "greedy" middle class, immigrants, labor unions, outsourcing and two wars. Distractions. Don't keep swallowing it. Look at your pay stub (if you have one). Has the net increased within the past ten years at the same rate as the net of the top earners? Where is all the money? Not reinvested. Not in the workers' pockets in the form of salaries and benefits, not reducing the deficit in the form of income tax, not in the economy.
Enough of the "big lie." Quit letting the regressives make us look like idiots.
If you know that the truth is one thing (not all participants will be able to take advantage equally), and you deliberately attempt to mislead the public, you should could be called out for being the evil person that you are. As an independent, I am offended at either your stupidity or evilness, and hope that people will be able to read through this remedial spin to push an agenda.
If you at least had some capacity for intellectual conversation, you would have stated why (even if it was erroneus) you think it is people like I - those of us in the middle of the political spectrum who see you fringe seekers as the pathetic drones that you are.
The reason this country is going down the tubes is because the American people are lazy, stupid (and getting dumber), apathetic, and afraid to do that which will fix the struture of how government should be run.
Don't go away mad little boy....just go away....
We need to take the extra revenue generated and use it to rebuild and upgrade our crumbling infrastructure (roads, bridges, airports, public transportation, etc). Talk about creating jobs!
We also need to raise the minimum wage to $10/hr for businesses with under 50 employees and $13/hr for businesses with 50+ employees. A two earner household where both earn minimum wage should make enough to be well above poverty/food stamp level. This is not currently the case.
We also need to harshly punish companies that send American jobs overseas in order to benefit their bottom line. The mentality that values the bottom line above all else is what is truly doing the most damage to the country today.
I do agree that taxes should be based on both income and gains (from wherever sourced). But to be FAIR, everyone should be taxed at the same rate .. say 10 or 15% ... FLAT ... limited or no deductions ( again, keeping it fair ... same ... for everyone ) ... and simple ... no wasted time ... no loop-holes ... no tax-shelters
Second, Minimum Wage should be ABOLISHED ... or set to $1 / hour
Regulations should be kept down to a minimum: they should allow for personnel safety and harassment prevention. Red-Tape eliminated so that companies can start operating in under 60 days.
Recommended reading: Thomas Sowell's book Basic Economics.
( Actually, anything by Thomas Sowell is great to read ... from analysis on greatest Pitchers / Hitters ... to effect of minimum wage ... to effect of food price controls in medieval European nations. )
Regressive is the right word and it's nothing to be proud of.
Without a definitive program in every school for STEM skills, the rich will see their fortunes disappear as financial services actually produce no goods or even services.
You can't risk money you NEVER GET.
Unfortunately, too many uneducated and lazy people regurgitate these numbers without knowing anything about them. Do you even know what is defined by "the middle class"? You don't have to trust me, but don't listen to the news stations (any of them) for your facts. You can go look this up yourself on the IRS website.
I know plenty of people who are in that top 1% of earners, who do NOT have their own companies, many do not even have children (as wealth is often correlated to family size as well here in the U.S.), and they pay for the pathetic school systems, the uneducated spending habits of government (seriously? you are going to let a school union board member run a fiscal budget? lol), and get nothing in return.
The agenda is simply jealous people who feel guilty because they themselves do not do enough to help society, that they have to try and find someone else to blame (fact: republicans out donate democrats despite earning less).
Of course, if they *don't* have employees, and aren't employed, then they are parasites on the economy.
If the money were being spent to create jobs - IT WOULDN'T BE INCOME!
It would be a business cost and 100% tax deductible. The person who would have to pay income tax on it is the lucky shnook who got the job that was created.
You economics are wrong. Profits is gross revenue minus expenses. Assuming revenue is constant, you are arguing that you reduce your tax liability by increasing your expenses and, consequently, decreasing your profits. In essence, you are saying that you didn't want to pay a lot in taxes, so you simply made less profit.
But if you are willing to make less profit, though, there is no reason that you "need" a higher income tax rate to act as an incentive. In your above scenario, you don't care how much profit you make, so you could just as easily "stimulate the economy" by voluntarily spending more.
But that doesn't apply to people who aren't willing to make less profit. For them, a higher tax rate means that they have to reduce expenses in order to ensure the same take home pay.
We're not talking about the standard rates here -- those are still technically, in my view, the "Clinton-era rates" that Prof Reich discusses here.