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Posted at 12:28 PM ET, 12/ 1/2010

A very belated tax deal

By Jennifer Rubin

President Obama is finally ready to deal on tax cuts. He has Treasury Secretary Tim Geithner and budget director Jacob Lew horsetrading with Republicans over the Bush tax cuts.

It's shameful that this wasn't done months ago. With businesses and and individuals still not knowing what 2011 tax rates will be, is it any wonder that employers are paralyzed and investment dollars are sitting on the sidelines? And really, there's no reason this deal couldn't have been done earlier. Obama didn't have the votes then, and he doesn't have the votes now, to extend only part of the cuts. The administration and the Republicans have thrown cold water on Chuck Schumer's proposal to draw the line for extension of the tax cut at $1M rather than $250,000. And the Democratic effort to "set up" Republicans by ensnaring them in a classic class war over tax rates on the "rich" -- that would be employers, investors and wealth creators -- turned out to be a political bust.

And so the eventual agreement will likely involve a temporary extension of all the cuts cuts -- something Peter Orzag urged back in September, shortly after leaving the White House.

The Obama team prides itself on its intellectual prowess and wonkish devotion to empirical evidence. But it seems its entire approach to the economy ignored compelling, cutting-edge research on stimulus spending and taxes. In today's Wall Street Journal, Michael Boskin, who chaired the Council of Economic Advisers under President George H.W. Bush, explains the "puny" effect of stimulus spending:

Using powerful statistical methods to separate these effects in U.S. data, Andrew Mountford of the University of London and Harald Uhlig of the University of Chicago conclude that the small initial spending multiplier turns negative by the start of the second year. In a new cross-national time series study, Ethan Ilzetzki of the London School of Economics and Enrique Mendoza and Carlos Vegh of the University of Maryland conclude that in open economies with flexible exchange rates, "a fiscal expansion leads to no significant output gains."

My colleagues John Cogan and John Taylor, with Volker Wieland and Tobias Cwik, demonstrate that government purchases have a GDP impact far smaller in New Keynesian than Old Keynesian models and quickly crowd out the private sector. They estimate the effect of the February 2009 stimulus at a puny 0.2% of GDP by now.

Instead of spilling more red ink, the Obama team should have examined its tax policy. Boskin writes:

Former Obama adviser Christina Romer and David Romer of the University of California, Berkeley, estimate a tax-cut multiplier of 3.0, meaning $1 of lower taxes raises short-run output by $3. Messrs. Mountford and Uhlig show that substantial tax cuts had a far larger impact on output and employment than spending increases, with a multiplier up to 5.0.

Conversely, a tax increase is very damaging. Mr. Barro and Bain Capital's Charles Redlick estimate large negative effects of increased marginal tax rates on GDP. The best stimulus now is to stop the impending tax hikes. Mr. Alesina and Ms. Ardagna also conclude that spending cuts are more likely to reduce deficits and debt-to-GDP ratios, and less likely to cause recessions, than are tax increases.

In short, the White House and the Democratic-controlled Congress have been pursuing precisely the wrong approach: spending to no avail, and holding the prospect of tax hikes over the heads of employers and investors. Boskin notes that Erskine Bowles seems to have reached the same conclusion: "If anything, we should lower marginal effective corporate and personal tax rates further (for example, along the lines suggested by the bipartisan deficit commission's Erskine Bowles and Alan Simpson)."

Fortunately, the election results, if not economic data, have finally impressed on the White House the need to make a tax deal that doesn't deal another blow to the businesses and investors whose economic health is crucial to the recovery.

By Jennifer Rubin  | December 1, 2010; 12:28 PM ET
Categories:  economy  
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Next: Reaction to Schumer/Levin letter

Comments

I would prefer no extension of the tax cuts for anyone. Economists really have no idea what this extension will do. The tax increase in 1993 didn't drive the economy into a recession, as predicted, we went on a seven year economic boom. If the national debt is such an important matter let's start addressing it by being adults and paying our bills.

Posted by: braddockboy | December 1, 2010 12:38 PM | Report abuse

Business and corporate taxes are not at issue here, personal taxes are. We have had the tax cuts in place nearly the last decade and where is the job growth?

Last quarter was the best EVER for business while the employment rate has remained high. Do you really think businesses will hire knowing that they can make a mint during high unemployment? Where is the evidence that lowering the personal taxes of the top 5% of earners will create jobs? Also, Wall Street is anticipating higher bonuses this year. Isn't there something wrong with the business and banking community scoring enormous amounts of wealth while the middle class scrapes for crumbs? The middle class did not create the economic mess we are in, but the righties want to make sure they pay for the clean up.

Posted by: jillcohen | December 1, 2010 12:40 PM | Report abuse

Typical republican narrow-mindedness. Lower personal tax rates have not stimulated the economy so far, so why do we think extending them will? Companies hire new people because of an increased demand. That is why extending unemployment benefits puts money into the economy and helps hiring. Republicans want to add to the deficit by extending the expiring tax cuts to the rich.

Posted by: jake14 | December 1, 2010 12:51 PM | Report abuse

So Jennifer, are you RICH so you benefit from Republican ideas? Or are you stupid, and vote to make the Rich Richer at your own expense? RICH or stupid?

Posted by: chucky-el | December 1, 2010 12:53 PM | Report abuse

Isn't the "wealth creator" the same kind of animal as the "deficit creator"? They are both fat cats.

Posted by: maggots | December 1, 2010 1:00 PM | Report abuse

Ridiculous, this nonsense about 'uncertainty' and higher tax rates. Businesses aren't growing because there's no demand. There's no demand because there's no jobs. Taxes come in about the bottom of the list, Jennifer. Thanks for schilling out some more talking point from the business community and pretending they're part of the policy debate.

Posted by: brykin | December 1, 2010 1:02 PM | Report abuse

I'm not rich by any means, just tax-paying middle-class, but I don't think Anyone's taxes should be increased.
When taxes increase, it has a negative psychological affect. People who budget and live closely to that budget will Not
Spend if taxes increase.
It seems very discriminatory to Punish those who work hard, those who create jobs,
those who pay salaries, etc.
If Gates and Buffett want to pay more taxes, that's fine, then our government should set-up some type of system to allow millionaires and billionaires and anyone else who wants to pay More taxes, to do that.
But don't increase anyone's taxes, especially in This economy. DUH!

Posted by: ohioan | December 1, 2010 1:03 PM | Report abuse

Lots of bloggers spell "Orszag" incorrectly. Good to see you've joined them.

Posted by: remulac | December 1, 2010 1:10 PM | Report abuse

Welcome to the new Conservative homeland

_____________________________

My people have been wandering for so long in the hostile lands of Chris Cillizza and Greg Sargent.

.

Posted by: RainForestRising | December 1, 2010 1:24 PM | Report abuse

jake14 wrote: "Lower personal tax rates have not stimulated the economy so far, so why do we think extending them will?"

and

jillcohen wrote: "Business and corporate taxes are not at issue here, personal taxes are. We have had the tax cuts in place nearly the last decade and where is the job growth? "
------------------------------------------
We enjoyed 5% unemployment under Bush and the Republicans, that is until the Democrats took back congress in 2006 and proceeded to lead us, along with Obama's help, to the point we are at today.

And jake and jill, we are not talking 'personal' income tax as though we are all working for someone else. Because of the tax structure, business owners are taxed just as we peasants are, so please do not confuse the two things.

The real question is for how much longer are liberals going to ignore the fact that Reagan was right? The Carter disaster was resolved in the 80s through lessened regulations and lower taxes just as the Obama catastrophe will be resolved in the 10s through much the same process.

Liberals.

And Jennifer, you are doing a fabulous job. All of your pieces have been extremely thoughtful and accurate. What a change from the slop we have come to expect from Cohen, EJ, Eugene, and Meyerson. Not to mention the amazing difference between you and that conservative-hater you replaced, Weigel. Welcome aboard and keep up the awesome work.

Posted by: bryanmcoleman | December 1, 2010 1:24 PM | Report abuse

I don't know that I would say "shameful" but it was certainly politically stupid of them not to take care of this back in July, or earlier, when it might have made some difference in losing 60 seats.

Posted by: 54465446 | December 1, 2010 1:24 PM | Report abuse

Jennifer Rubin

I have been saying this for a while now.

Bush only lowered the top income tax rate to 35% from 36%.


The other portion of the taxes was the Clinton Temporary Surcharge - which was a 10% Surcharge on top of the 36% rate.


So, what they have been arguing about is really the Clinton Temporary Surcharge - which they let go of when Bush put his cut through.


If they "eliminated all the Bush tax cuts" the top rate would only go up to 36%.


That is significant - and it could be a basis for a compromise.


,

Posted by: RainForestRising | December 1, 2010 1:28 PM | Report abuse

braddockboy:
Boskin says: "In a dynamic economy, many parts are moving simultaneously and it is difficult to disentangle cause and effect. Taxes may be cut and spending increased at the same time and those may coincide with natural business cycle dynamics and monetary policy shifts," and bases his two-part conclusion that tax hikes are detrimental to the economy and tax cuts much more helpful than spending increases on "powerful statistical methods to separate these effects." Against that you need to do better than "the tax increase in 1993 didn't drive the economy into a recession, as predicted, we went on a seven year economic boom," as an argument for raising taxes.
It's certainly a good idea to act like adults and pay our bills, but when have politicians ever used revenues from tax increases to do that? They're much better at finding new ways to spend than they are at paying off their past debts.

Posted by: limatom | December 1, 2010 1:32 PM | Report abuse

chucky-cheese at 12:53 PM


Is that anyway to greet our new blogger at the Washington Post

That is pretty disrespectful


Please clean up your act - state your opinion and leave it at that.


Posted by: RainForestRising | December 1, 2010 1:32 PM | Report abuse

Truly exasperating that every politico and pundit FORGETS WHY these tax cuts were meant to expire. They were a ruse of the "starve the beast" strategy 2000-2006 to "return the surpluses".

The expiration was just in case those forecasted surpluses were an illusion.
They were - because the dedicated taxes to fund SocSec and Medicare trust funds were included with general revenue. Had those funds been kept in their accounting lock box, there is no way all of these Bush-era tax cuts would ever have passed.

Let them all expire on schedule, and see what the GOP does for an encore once they have no accounting trick surplus to return.

The U.S. has had 20 years of fake job creation based on bubble after bubble.

Using all the oxygen left in the atmosphere to argue over this is what is killing consumer and investor confidence.

Let them all expire as they were meant to if the fantasy surpluses disappeared.

Posted by: K2K2 | December 1, 2010 1:33 PM | Report abuse

More tax cuts? Again? Seriously? We can't have our cake and eat it too.

The extension of the Bush cuts for the rich shouldn't happen. For those in lower incomes in current times, sure, those should be extended for now and revisited later again. The cuts were put in place because we had a surplus, that has gone bye-bye and then some. This is the reason, supposedly, there was an expiration date. Circumstances have changed.

Posted by: jhnnywalkr | December 1, 2010 1:33 PM | Report abuse

bryanmcoleman "We enjoyed 5% unemployment under Bush and the Republicans", only because 75% of all jobs created were related to the housing bubble 2000-2006. It was a fantasy, and those jobs are not coming back.

Posted by: K2K2 | December 1, 2010 1:36 PM | Report abuse

Ohioan at 1;03


You can pay down the national debt - ironically, you can send a check, or you can do it by credit card at

https://www.pay.gov/paygov/forms/formInstance.html?agencyFormId=23779454

________________


This page has a list with how much people have given to pay off the national debt

and there's a link to show you where to send a check


http://www.treasurydirect.gov/govt/reports/pd/gift/gift.htm


.

Posted by: RainForestRising | December 1, 2010 1:38 PM | Report abuse

jake14 wrote: "Companies hire new people because of an increased demand."

brykin wrote: "Businesses aren't growing because there's no demand. There's no demand because there's no jobs."

----------------------------------------
I couldn't pass this up.

There's no demand because there are no jobs.

Or is it there are no jobs because there's no demand.

Jobs do not grow on trees. The job market expands only when the source of those jobs (businesses) have the resources to CREATE the jobs AS WELL AS the certainty that the government will not minimize their resulting profit margin by raising taxes, imposing fees, and creating unnecessary regulations.

So what we have is a situation where the Obama and the Democrats have made it as difficult as possible on the only source of jobs, the businesses, constricting them literally to death, and then they turn around and demand of those businesses: NOW GIVE US JOBS.

You live in a fantasy world if you think that plants grow when you pour alcohol on them and stick them in the shade, which is pretty much what you all are clamoring for in the realm of taxes, businesses and jobs.

Posted by: bryanmcoleman | December 1, 2010 1:39 PM | Report abuse

Ohioan at 1;03


Here is the address


How do you make a contribution to reduce the debt?
There are two ways for you to make a contribution to reduce the debt:

•You can make a contribution online either by credit card, checking or savings account at Pay.gov
•You can write a check payable to the Bureau of the Public Debt, and in the memo section, notate that it's a Gift to reduce the Debt Held by the Public. Mail your check to:

Attn Dept G
Bureau of the Public Debt
P. O. Box 2188
Parkersburg, WV 26106-2188

Posted by: RainForestRising | December 1, 2010 1:40 PM | Report abuse

bryanmcoleman:

Your stuff is new to me. I see a lot of generalizations, but not a lot of supporting facts or data.

Hopefully, this isn't going to be the type of column where people say "Obama is a Kenyan, Marxist, anti-colonial, business-hating, apologizing, non-exceptionalist, Communist.

I could post on Milbank's thread for that! LOL

Posted by: 54465446 | December 1, 2010 1:48 PM | Report abuse

Thanks Rainforestrising! From watching Gates and Buffett on TV Sunday, maybe "someone needs to tell them", also!
While I admire Gates and Buffet for their huge charitable contributions, I found them to be very "self-righteous" in expecting everyone else making over $250,000 to feel the same way they do.
I guarantee Gates and Buffett did Not feel the same way about paying more taxes 30 or 40 years ago when they were "building" their businesses.
If Democrats truly think they're solving a problem by Increasing taxes on everyone making more than $250,000... they will advertise this information to those who Want to pay more taxes. Go ahead and Do It.
But don't discriminate against people making over $250,000 by trying to Increase their Taxes.
That's class warfare.

Posted by: ohioan | December 1, 2010 1:54 PM | Report abuse

Wealth creators, huh? Please explain in your next column how people like Paris Hilton and Susan Gutfreund create wealth.

Posted by: usemark1 | December 1, 2010 2:29 PM | Report abuse

Brian, you are truly ignorant to the reality of this economy and world.
Jobs are created when Demand is great enough to demand them... a business adds a worker because the demand for its goods and services are greater than the current output.
This continued brain washing of people by business groups to turn you against regulations which just enable them to rape the citizenry of its money and property is the real crime of the last 20 years.
Oh Yea and Reagan started this by being the corporate spokesperson in chief and setting up government to transfer the wealth of its people to those at the top.

Posted by: tjproferes | December 1, 2010 2:40 PM | Report abuse

"In a rare moment of candor last week, the third-ranking Republican in the House admitted the failure of the Bush tax cuts. 'You know, I think it's fair to say, if the current tax rates were enough to create jobs and generate economic growth we'd have a growing economy,' Mike Pence acknowledged, adding, 'It's not working now.' Given that the Bush years produced the worst economic growth in the past 50 years, Pence is sadly correct. But sadder still is the dismal performance of the Bush economy across almost every indicator that counts. From moribund job creation and sinking household incomes to skyrocketing deficits and record income inequality, Republican economic stewardship over the past decade has been a disaster.

Here, then, are the 10 Epic Failures of the Bush Tax Cuts:

1. Dismal Economic Growth
2. A Decade of Budget Deficits
3. Red Ink as Far as the Eye Can See
4. Disastrous Job Creation
5. Declining Incomes
6. Increasing Poverty
7. A Massive Windfall for the Wealthy
8. Record Income Inequality
9. A Sagging Stock Market
10. Jeopardizing Future Economic Growth

Posted by: fzdybel | December 1, 2010 3:10 PM | Report abuse

Let's keep in mind, DC lefties, that 'tax cuts for the rich' includes millions of small businesses that report income on their 1040s. Are you telling me that a plumbing contractor with 5 employees making 400k per year is 'rich'? Do you think raising taxes on such people in this economy is a wise move?

The GOP does a poor job of pointing out that it is actually defending small business when it is pushing for all tax cuts to be extended.

Posted by: jmpickett | December 1, 2010 3:13 PM | Report abuse

"With businesses and and individuals still not knowing what 2011 tax rates will be, is it any wonder that employers are paralyzed and investment dollars are sitting on the sidelines"

This is like high school economics. Oh wait, we don't teach economics in high school or anywhere else.

Employers aren't paralyzed, and their money hasn't been sitting on the sidelines. The money has been going where the return is best, mostly in the bond market. Businesses have been cutting labor and other costs, and raising margins. More manufacturing operations have been transferred overseas, because that's the low cost alternative. It's also the reason that you can never create "green jobs, unless you mean more in Asia.

The president at best come in fourth in control over the economy. In a downcycle, the Fed is most important, followed by Wall Street. In an up cycle they trade places. Congress is third, and the president next. It doesn't matter which party the president is from, unless you include the power of naming the Fed chairman.

While you are wasting your time on this, Goldman today forecast $110 a barrel oil for 2012. I think they're late. I think we'll hit that number possibly by early fall of 2011. There's huge market rally going on today as the shorts got caught short so to speak, on a positive jobs report,and good Chinese manufacturing numbers.

With ANY recovery at all, we will be in serious real inflation problems by summer, though "core inflation" will lag that. Look for a big increase in ag commodity prices, for which I believe we have only scratched the surface. Again, it doesn't matter though because that will not be included in the core inflation numbers.

Anyway, I started out to write at the beginning that Treasury yields are back on the rise again, as they will be anytime the skies clear over Europe for a few days or weeks. We're back to closing on 3.00 on the 10 year, which will be more influential on the economy than anything you've written.

Bernanke has made the decision that the currency is going down to kill the deficit. Consequently, all the numbers you play with above, have used the wrong variables.

Watch the Fed, watch the currency, and everything else be damned! LOL

Posted by: 54465446 | December 1, 2010 3:14 PM | Report abuse

Jennifer: Do you read any of the comments in your comments section? If so, do you ever participate. Just curious.

"With businesses and and individuals still not knowing what 2011 tax rates will be, is it any wonder that employers are paralyzed and investment dollars are sitting on the sidelines?"

Well, wonder or not, that's not the reason. Businesses aren't paralyzed with uncertainty due to what taxes might be, their paralyzed by not needing to buy stuff or hire new people because even if business is improving (according to some reports), there's still some room to go before it gets back where it was.

If they were certain the tax cuts weren't going to change and that regulations weren't going to change, but saw slow growth for the next year, even so, would the hire new people? Or buy new equipment?

Businesses respond more to the market than uncertainty about just how large a pound of flesh the government will take. More to the point, they don't have that much to be uncertain about--corporate tax rates aren't going to change. So only small businesses who (a) file as a sole proprietorship or s-corp and (b) do this and still show a profit have to worry about higher taxes, or "uncertainty". And, even so, if they saw new business in the future that they needed to prep for, they'd be spending the money. We know, because businesses that serve strong or growing markets are spending money. Just, right now, there's more stagnant or softening markets than there are strong ones.

I.e., there are more buggy whip makers trying to stay in business than there are Apples coming out with the latest iPad. But such has it always been, and that cycle will swing, too. And while the government can impact it (punitive new taxes, endless unemployment benefits, draconian regulations) the only uncertainty that's restraining the private sector is the uncertainty about where the next customer is going to come from.

Posted by: Kevin_Willis | December 1, 2010 3:16 PM | Report abuse

Let all the tax cuts die.
Next session, propose tax breaks for 95% of Americans and force the Republicans to say NO! one more time.

Posted by: thebobbob | December 1, 2010 3:41 PM | Report abuse

in response to this:
=============
Wealth creators, huh? Please explain in your next column how people like Paris Hilton and Susan Gutfreund create wealth
===================

Please explain to me how you reconcile your bigoted, narrow minded stereotyping with your liberal proclivities. If you can, you'll be the first liberal to do so.

Bigotry and stereotyping are acceptable for liberals as long as the target is not a member of a liberals endangered species group. Therefore bigots like usemark1 can be as silly as he (she?) (it?) wishes about rich people, or even white people. But heaven forfend that anyone use a generalization about oh say blacks, or hispanics or even muslims.

What a sad state of affairs for the liberal cause that it is represented by folks like usemark1.

and with the remaining 2200 characters at my disposal let me take on tjproferes. I must say that I admire your writing style. In just a few highly productive words you managed to be rude and wrong. It must take some work to cram so much of the liberal dogma into such a few succinct sentences.

On my commute into work today I shared to road with a lot drivers in very nice automobiles. I wonder if that guy in the Audi knows that he's being raped by the guy in Benz.

If you look at economic growth in America, state by state, you'll find that those states with the best combination of taxes, regulation and government services are growing while the Democrat controlled states that feature intense regulation, high taxes and powerful unions are losing jobs and citizens.

The liberal agenda, then, is designed to spread the misery of states like Ohio and Michigan across the country. If they succeed, the remaining jobs will got overseas.

I think that Mitt Romney got it right. He said that if we liked what Granholm did to Michigan, we'd love what Obama will do to America.

He's right. Granholm and the Democrat legislature destroyed Michigan. Obama and the Democrat congress seriously injured America.

Posted by: skipsailing28 | December 1, 2010 3:49 PM | Report abuse

This bit about "Uncertainty" is complete nonsense. If you're managing a company of any size, then you're supposed to have some skills managing things like risk and uncertainty. What's up with all these Captains Of Industry; these Rugged Individualists who seem to be in such constant need of reassurance from The Gummint?

As for tax cuts - businesses are NOT going to take the extra bucks in tax cuts and rush right out to hire more people to increase the production of goods and services that aren't being sold in the first place. If you know anything about economics at all, then you're supposed to know at least that much.

So, dear Ms Rubin, you're really just another shill for Corporatist Elites pretending to be a journalist.

Posted by: EvilleMike | December 1, 2010 3:56 PM | Report abuse

Hey skipsailing28, the Blue States SUBSIDIZE the Red ones, doncha know? Yeah, those red states that hate the federal government the most are the states most dependent on federal revenue to pay their bills. I say let's let the red states survive on their own, and let the blue states stop giving them charity. Let's see how long red America lasts, shall we?

Posted by: raqualung | December 1, 2010 4:03 PM | Report abuse

Let's keep in mind, DC lefties, that 'tax cuts for the rich' includes millions of small businesses that report income on their 1040s. Are you telling me that a plumbing contractor with 5 employees making 400k per year is 'rich'? Do you think raising taxes on such people in this economy is a wise move?

--------------

If it were true that these were the types of small businesses that are affected by this, no it would not be wise. Unfortunately, this is not true. Certainly, there are some businesses like the ones you describe that would be affected, but hardly the number of them you have been led to believe, and certainly not Mom & Pop's Plumbing Services hiring people to do actual work. Most of them, in fact, would be sole proprietorships which hire nobody anyways.

Posted by: jhnnywalkr | December 1, 2010 4:06 PM | Report abuse

in response to this:
=========
Hey skipsailing28, the Blue States SUBSIDIZE the Red ones, doncha know? Yeah, those red states that hate the federal government the most are the states most dependent on federal revenue to pay their bills. I say let's let the red states survive on their own, and let the blue states stop giving them charity. Let's see how long red America lasts, shall we?

=======

(1) So what? what is the point here? what drives the Federal money to the states? What is the source of your information and how can I verify its accuracy?

(2) I have a much better idea. Let's end the process of paying taxes to the Federal government solely for funds to be transferred to the states. It makes no sense at all to give money to DC, only to have DC give the money to the state capital thieves who then dole out what is left. It would be far more efficient for us to simply pay taxes to the states themselves. We have a much better chance of effecting the behavior of our state and local governments than we do of the federal behemoth. In addition, the fewer times that the money changes hands, the less skimming we'll get. We're paying massive salaries for bureaucrats who do nothing by move our money around. That makes no sense.

How about them apples?

Posted by: skipsailing28 | December 1, 2010 4:09 PM | Report abuse

Then there is this:
=======================
If it were true that these were the types of small businesses that are affected by this, no it would not be wise. Unfortunately, this is not true. Certainly, there are some businesses like the ones you describe that would be affected, but hardly the number of them you have been led to believe, and certainly not Mom & Pop's Plumbing Services hiring people to do actual work. Most of them, in fact, would be sole proprietorships which hire nobody anyways.

=============
While this is not in the same league and the bigoted tripe from usemark1. Still I believe that some proof of the assertions here is in order.

What is the basis for your assertion that sole proprietorships hire "nobody" Can you link us to some data that supports this?

Next, how does the LLC/tax code impact your assertion. Isn't it completely possible that a small business would file as personal income and yet still hire people?

Why would increase taxes on anybody, at any level of income be wise now?

Why won't the left be honest about their charge toward class warfare? Obama even said that if a capital gains tax increase wouldn't generate more inflow for the Feds he'd do it anyway. he was honest. Why not try it yourself?

Posted by: skipsailing28 | December 1, 2010 4:21 PM | Report abuse

skipsailing wrote:

"think that Mitt Romney got it right. He said that if we liked what Granholm did to Michigan, we'd love what Obama will do to America.

He's right. Granholm and the Democrat legislature destroyed Michigan. Obama and the Democrat congress seriously injured America."

Granholm began as Governor in 2003, by which time all three carmakers were already losing money on average with every car they sold.

I'm listening.

Posted by: 54465446 | December 1, 2010 4:43 PM | Report abuse

really? It is an interesting rebuttal. Of that there is no doubt.

I will share this, which I scooped up from the NRO site:
"Prior to May 2010, it had registered America’s highest jobless rate for 49 consecutive months. Wolverine State policymakers cannot reverse the long-term structural forces that have reduced American manufacturing employment, nor can they undo the damage wrought by union excesses in the auto industry. But they can tackle the thorny issue of public-sector compensation — Mackinac Center scholar James Hohman and researcher Adam Rule have estimated that “Michigan’s state and local government full-time employees are getting $5.7 billion more in benefits than they would if they received benefits equal to those of private-sector employees” — and they can address the notorious Michigan Business Tax (MBT), which discourages investment."

So how many of those months wherein Michigan lead the states in poor employment numbers did Ms Granholm preside over? And if the Auto industry went south (which it did) what did Ms Granholm do about it? Apparently nothing. Is that leadership? uh, no.

did she do anything about the onerous tax that kept businesses away from the state? NO. And why? Gosh, who was going to pay all those inflated union salaries? If the state cut taxes, it might have to cut spending to. AFSCME can't abide that, and the unions own the Democrat party. At least the party of it that the Trial Attorney's and wall street folks don't own anyway.

Posted by: skipsailing28 | December 1, 2010 4:56 PM | Report abuse

What is the basis for your assertion that sole proprietorships hire "nobody" Can you link us to some data that supports this?
----------
I made a blanket statement, and you called me out on it. They all don't necessarily not have employees, but they mostly aren't the businesses people like you describe them as and lead people to believe. The fact is most of the companies that will be affected by the expiration of the Bush cuts on income taxes over $250,000 are not the types of companies that those that want them continued hold them up to be.

Can you link me to data that supports the opposite assertion that these businesses are the real job generators in this country and that this increase in taxes will cause them to cease hiring and investing?

Posted by: jhnnywalkr | December 1, 2010 5:11 PM | Report abuse

I made no assertion, therefore no proof from me is required. I don't have to prove you wrong, you must prove yourself right. You provided additional generalizations not proof.

What I can never get a satisfactory answer to is this simple question: what are the moral and ethical underpinnings that support the notion of higher taxes for people who earn more?

We can argue ad nauseum about the nature of the folks who are in danger of having their money confiscated. But I have yet to read any definitive moral argument for doing so.

And let me tell you, I've read some pretty entertaining attempts. My current favorite is what I call the Willie Sutton defense. It states that the Federal government should raise taxes on the "rich" because that's where the money is. Amusing, but hardly morally edifying.

Have a great evening

Posted by: skipsailing28 | December 1, 2010 5:19 PM | Report abuse

Well done, jmpickett. Of course, you got just one thing wrong. A plumber who has 5 employees and brings in $400K doesn't pay taxes on the $400K, only on his profit. So he wouldn't be in any way effected by a change in the tax rate above $250,00. Unless, of course, he doesn't pay his employees anything and he takes the entire $400K for himself -- in which case he is, in fact, rich.

Posted by: numediaman | December 1, 2010 5:45 PM | Report abuse

I made no assertion, therefore no proof from me is required. I don't have to prove you wrong, you must prove yourself right. You provided additional generalizations not proof.
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Ah. We wish to play "the disinterested 3rd party" I see.

Posted by: jhnnywalkr | December 1, 2010 6:46 PM | Report abuse

skipsailing:

You and I would agree that excessive union compensation was a large factor in Detroit's implosion. Why blame just the unions though? Wasn't it equally the fault of managemnt who agreed to the money? Also, the union didn't design some of the worst cars this country has ever put on the road, management did. Quality control, almost non-existent, is also a managment issue. So there's plenty of blame to go around.

As far as onerous business climate, Michigan's economy has depended almost exclusively on manufacturing. Except for the big ticket items, manufuacturing has left this country and isn't likely to come back anytime soon. You would say she should have lowered municipal employee benefits. I would say that might be an option, but who would live in the city of Detroit BUT municipal employees?

I respect your argument as having validity in part, but going back to my post, blaming Granholm is like blaming Jim Schwartz that the Lions have never been to the Super Bowl

Posted by: 54465446 | December 1, 2010 7:24 PM | Report abuse

Two points: The simple fact is that the people with money,"the rich", are the source of capital creation. Capital creation is the mother's milk of job creation. The President's best hope for re-election is a growing economy with a declining rate of unemployment. That is the first reason he should be for extending the current tax rates. The second point is that historically whenever we have had a reduction in tax rates (yes, even democrats such as Kennedy believed in this} the economy expanded at a greater rate than it had before and tax receipts grew at a greater rate than before. In fact since the end of the second world war, the revenues of the government have been at a constant rate of 18.5% of GNP,plus or minus 1% regardless of the tax rates. Logically then, policies that boost GNP (lower tax rates) mean greater tax receipts. Don't we all, liberals and conservatives want more people employed and a better debt picture than currently projected? I guess if you are more concerned about equal misery than greater prosperity, you adopt the present liberal position.

Posted by: nachman51 | December 1, 2010 7:28 PM | Report abuse

Limatom:

So much goes on at any one time in a business cycle that it is nearly impossible to predict the outcome of small tax increases or decreases. My point is that we need to both pay more in taxes (which I am willing to do) and spend less through raising the age for social security, raising the cap on it, cutting defense, etc. Nothing should be sacred at this time or the fate of Greece awaits us.

Posted by: braddockboy | December 2, 2010 3:59 PM | Report abuse

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