Today we have a guest post by Dave Hunt of Tipton. Dave is a retired educator and former Iowa Teacher of the Year.
Before we all end up “spitting through clenched teeth”, some clarification is needed. Republicans and Democrats agree with the idea of extending the Bush tax cuts for 98% of Americans. The debate centers on the top 2%, those earning from 250,000 dollars per year up to many millions.
Whether it’s called trickle down, supply side or aiding the “job creators”, there has always been the argument that by aiding the rich we aid the economy but the result is always the same; the rich get richer and the economy is not improved.
An M.I.T. study showed for every dollar given to the top 2%, the economic return is less than 1 cent. This is because without stimulus on the demand side which gets money to the average household, there is no incentive for the rich to invest and one can only buy so many yachts and mansions. Therefore the money ends up in places like the Cayman Islands and Switzerland so taxes can be avoided. It would be hard to argue that the rich need the money since they have done very well over the last 30 years. As of 2007 the top 10% had 50% of the total wealth in the country and the top 400 people had more wealth than the bottom 150 million.
Regardless of the projections, history shows us that raising revenue does not hurt job creation. After raising taxes Bill Clinton, a Democrat, created 21 million jobs in 8 years and delivered a budget surplus. Then came the Republican Bush Administration and after cutting taxes to aid the “job creators”, they generated just over 1 million jobs in 8 years. Two tax cuts, two unfunded wars and a change in Medicare part D turned a 236 billion dollar surplus into deficits and led to 4.9 trillion dollars of debt in 8 years while middle class household income fell $2,000.
Even though, the rich don’t need a tax cut, it doesn’t help the economy and the deficit goes up, Romney is doubling down on this very policy by proposing an additional tax cut on the top 1%. He also wants to eliminate taxes on capital gains, interest and dividends which won’t help moderate income families but would lower Romney’s tax rate to .82% on a 20 million dollar income.
Romney and the Republican Party are pushing tax cuts for the wealthy just as they are sounding the alarm on the deficit which they created and refusing to raise taxes to help solve the problem, all the while advocating deep budget and safety net cuts which harm the middle class and the working poor.
No, it’s not about class warfare though Warren Buffet admits his class is winning, it’s about making sure the system is not rigged to favor the 1%. Only then can we live up to the principle our country was founded on and reaffirmed by Abraham Lincoln in the Gettysburg address, “a government of the people, by the people and for the people”. He did not say “some of the people.”