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As Long as We Remember...

September 21, 2011

Presidential Tax Attack

Kevin E. Dayhoff

Just as the United States’ economy teeters on the brink of a double-dip recession, President Barack Obama on Monday prescribed his solution – $1.5 trillion in new taxes.


Of course, the president’s plan has nothing at all to do with addressing the economic woes of the nation, creating jobs, stimulating the economy or dealing with the national debt. It is all about the president keeping his job in the face of his plummeting job approval ratings and an increasingly restless far-left political base.


When the president first took office, he enjoyed historically high approval ratings and his party held an overwhelming majority in both houses of Congress. Yet he could not get a tax increase passed.


That was before the political tsunami of last year’s elections, which witnessed the majority in the House go to Republicans, who are in no mood for a tax increase.


Zachary A. Goldfarb noted in a Washington Post piece last Sunday: “But his plan has little chance of passing and is already inflaming Republicans, who have vowed to oppose new taxes and have called for deep cuts in federal spending and entitlements. On Sunday, Republicans responded with vitriol to the proposal to create a special tax for millionaires.”


Rep. Paul Ryan (R., Wis.), chairman of the House Budget Committee, said for many on Fox News Sunday that “class warfare may make for really good politics, but it makes for rotten economics… It adds further instability to our system, more uncertainty, and it punishes job creation.”


The president’s tax attack proposal on our nation’s economy only pours salt in the wound. American corporations are already sitting on vast amounts of un-invested cash out of fear of the instability of the current vacuous administration in the White House.


All the president seems to be able to do well is make splendid speeches with exquisite political polemics, roaring rhetoric and palliative populism – but no leadership on the economy. Not a clue.


The Democrats and the president ought to be smart enough to understand that all politics – even national politics – is local and on the grass roots level. The Wall Street Journal reported just yesterday: “Polling in 10 states shows that Americans want politicians to cut spending and reduce public employee benefits before they raise taxes.”


The conventional wisdom is that voters throughout the nation also feel this way about the big picture. We do not have a revenue problem; the government has a spending problem.


The Wall Street Journal article by Douglas E. Schoen noted that voters overwhelmingly “blame politicians for creating and exacerbating the problems: 48% say ‘elected state officials made careless and self-serving decisions,’ while only 6% say ‘state governments did not tax enough.’


“The top priorities for resolving current fiscal issues are to cut government spending (47%) and to ask for greater sacrifice from current public employees, by having them contribute more toward their benefits (31%)…”


Mind you, this is not the polling results of a conservative think tank. Mr. Schoen served as a pollster for President Bill Clinton.


Mr. Goldfarb wrote in his piece that “the proposed tax, which Democrats welcomed, will target the top 0.3 percent of American earners, whose income often comes from investment profits, which are taxed at 15 percent — compared with the top tax bracket of 35 percent that the wealthiest Americans would ordinarily pay.”


Of course, not mentioned by the president or Democratic spinmeisters is that the capital gains tax is levied on at-risk investments, made into the economy and job-creating companies, with money that has already been taxed at 35 percent.


After the government adds another 15 percent tax on top of it, the money is actually being taxed at a nominal rate of 50 percent.


Furthermore, if an investor loses, he or she is only allowed to take $3,000 per year off their income tax… This amounts to a substantial hindrance to job-creating capital making its way to Main Street – and has caused literally trillions of dollars to be trapped on paper and not make its way into the economy.


And the populist president and the class warfare warriors on the left only want to make it worse.


Moreover, all this talk about raising corporate taxes is rubbish. Read this carefully, corporations do not pay taxes. The cost of taxes is passed on to consumers; and when the economy is contracted and the costs cannot be easily passed on, corporations make up the difference by laying-off workers or forestalling expansion. Consumers pay corporate taxes. It is another one of too many “hidden taxes” in the economy.


Another hidden tax is the enormous and ever-growing burden of increased regulation and bureaucracy that continues to force corporations to maintain increased reserves.


Mr. Goldfarb noted that “last week, Obama told supporters at a fundraiser in Washington that the upcoming debate will crystallize the difference between his views and the GOP’s…”


On this point, we may totally agree with President Obama.


“2012 is going to offer a clearer contrast than I think we’ve ever seen before,” President Obama said. “If you see the direction that the Republican Party is now going in, you have a party that offers a fundamentally different vision of where America should be, and what we should be aspiring to, and what our core values are.”


What is now quickly crystallizing is what began as a cyclical economic downturn is rapidly becoming a systemic depression as a result of the reign of error at the hands of the Obama presidency.


We now run the risk of enduring not a repeat of the Great Depression of the 1930s, but another “Long Depression,” our nation’s worse economic downturn, which lasted 30 years from the 1870s into the 1890s.


That was the result of our country’s only president who was arguably as big an economic disaster as President Obama. That was President Ulysses S. Grant – arguably one of the worse presidents in nation’s history. Hmmm…


… I’m just saying


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