Lies, Taxes, and Politics

Nothing stirs the blood of a citizen—a patriot—as strongly as the evil words: “Taxes” and “Taxation.” We familiar with King John of England chiefly because of the Magna Carta and our revolutionary complaint against the English Parliament: “No taxation without representation.”

We voice strident complaints against taxes and taxation in each generation, and especially these days. If we peel away the hyperbole and venom, however, we might see that many who so loudly complain about our government and our taxes appear to have very self-serving reasons for doing so.

The Tea Party Express & Federal Taxes

In a blog posted on the Tea Party Express Website on August 16, the blogger began with this claim:

“When the Tax Cuts of 2001 and 2003 expire in 2011 people across the country are going to see the federal government taking more and more of their hard earned money! When Obama, Reid, Pelosi, and the rest of the corrupt Washington politicians claim that these are just tax cuts expiring they are lying — the net effect will be to RAISE our taxes. THIS IS OUR MONEY and THEY HAVE NO RIGHT TO IT!!!!! Our taxes are going up, THAT IS A TAX INCREASE.”

The problem with this charge—it’s chock-full of lies. But, let’s begin with that which is not completely a lie:

“Our taxes are going up, THAT IS A TAX INCREASE.”

The blogger is absolutely correct: when taxes go up, it is a tax increase. This may surprise some of us, but it’s true. It is also true that taxes on practically all US taxpayers will rise if the cuts of 2001 and 2003 expire in January, 2011—as written in the law passed by Republicans during the administration of George W. Bush.

What isn’t true is that the Obama administration and Congress:

• Intend that taxes on all of us shall be increased
• Claim that expired tax cuts do not result in tax increases

Yes, these are lies. To date, no one in Congress, including Nancy Pelosi and Harry Reid, have claimed that the expiration of tax cuts will result in anything other than increased taxes. The question they have worked to resolve is:

Whose Taxes Shall Increase?

If the President and the Democrats in Congress had their way, taxes on the wealthiest 1% of taxpayers would be increased in January, 2011. Increased, that is, to the level expected of them in 2001, before the Republicans and former President George W. Bush lowered the upper tax rate from 39.6% to 35%.

According to analysis reported by Citizens for Tax Justice, the top 5% of taxpayers received over 50% of the benefits derived from the tax cuts enacted in 2001.

The fact is, that as top tax rates us drop, the middle class pay more and more proportionately than the wealthiest among us. Why? Senator Mitch McConnell (R-KY) and Representative John Boehner (R-OH) claim that, by changing the 2001 law to retain the Bush tax cuts indefinitely will result in:

Greater Investment & Jobs

This rather remarkable theory is predicated on several interlaced assumptions, to wit:

• The wealthiest will have more disposable income available
• The wealthy will invest that money
• Their investments will create many new jobs

There’s a corollary to the position that our richest citizens will be more “incentivized” to create more jobs by lowering their taxes. What is it?

Reduced Revenue = Deficit Reduction

I believe a stronger economy could result in a reduced federal deficit. That certainly was the case during the Clinton administration, after all. Today, however, Republican leaders in Congress claim that the federal deficit can only be lowered by reducing taxes.

Hmmm.

If I am out of work—or, “between contracts,” as I like to say—and have significantly less income…does that mean that my fiscal bottom line is enhanced?

Okay. So, taxes on the wealthiest 1% of taxpayers were lowered in 2001.

• Where are the jobs?
• Did our financial institutions come near to collapse in 2008?
• Did General Motors and Chrysler come to the brink of insolvency?
• Did the federal deficit decline from the level in 2001?

I could believe the premises if, and only if, there were trends (facts) that could, conceivably, support them. Rather, the arguments are advanced based on speculation supported by unsupportable assumptions and hyperbole. And, have we not had enough speculation to last us for a long, long, loooong time?