The Republican majority in the U.S. House wants to keep the Bush era tax cuts for everyone. Republican presidential candidate Mitt Romney also wants to keep the tax cuts for all Americans. President Obama and most Democrats are willing to keep the tax cuts for only those making less than $250,000. Either way, I guess that I'd be entitled to some tax advantage. So personally, I am really not affected by either program. But for the good of our country, I do have an opinion.
And here is where I am possibly going to surprise some of you. I support the tax cut for everyone - for those on both sides of the $250,000 threshold, and here is my reasoning.
In 1992, I was serving my 8th and final term in the State House of Representatives. That was the year, you may remember, that the state income tax was enacted. I, and a group of moderate Democrats voted against the tax and developed what I believe to have been a way to avoid this tax. Obviously we failed, and by one vote, the income tax became law.
1992 saw the state and the country in a recession. You just don't remove money from peoples' wallets (even the wealthy) during a recession. We (the moderate Democrats) wanted people to spend their money on goods and services and to consequently revive the stagnant economy. An income tax merely redistributed dollars, and though some would call this a more progressive form of taxation, I disagreed. The money that was taken out of my wallet and out of your wallets could have purchased goods and services that would have benefitted everyone. We are barely out of the Great Recession now and some economists believe that the economy is teetering on a cliff and could fall back into recession.
Now to the case of the Bush era tax cuts. And please understand that I will just be hypothesizing and I am sure that my readers, many far brighter than I will disagree. But here we go.
Anyone earning over $250,000 has three options in putting their money to work. They can bank it. But with interest rates at all time lows this is something they will not do. Option number two-they can buy more goods and services and thus put money into the economy. But there is just so much that one can buy, so I don't believe that this would be a viable option. But option number three would work.
What to do with the money that the government will not be taking if the tax cuts remain is easy. Option three - invest. Money not encumbered by the government could be spent on enlarging businesses already in existence. Money could be used to fund new businesses (startups). Jobs would be created, small business would be created, and new wealth would be created. And maybe even a strong middle class could once again emerge. What's wrong with that?
When the threat of recession is over, perhaps the tax cut issue can be revisited. But for now, let the tax cuts stand. I don't believe that this is a Democratic versus Republican issue, though it is made out to be just that. It is purely a fiscal issue that could very well determine the economic wellbeing of our country in the very near future.
For those of you who may consider me an apostate to the Democratic Party, I would say that I am still a Democrat. But I also believe that as a Democrat, I can still disagree with my party on some issues, and agree with my party on others.