End The Recession By Taxing the Rich!

After 9/11, the stock market tanked and unemployment rose.  Some economists predicted a massive recession bordering on depression.  America hadn't been hit by a major attack on the homeland since Pearl Harbor, they reasoned, anything could happen.  Then-President Bush enacted across-the-board tax cuts and the economy recovered.  Based on this reasoning, Obama has a blueprint of how to end the current recession if only he would use it.

The Bush tax cuts are due to expire January 1st, 2011.  Obama has said he will let them expire, thereby raising taxes on all Americans.  Once the taxes expire, the highest federal personal income tax rate will go to 39.6% from 35%.  But it is not only income taxes that will rise.  The highest federal dividend tax rate pops up  to 39.6% from 15%, the capital gains tax rate to 20% from 15%, and the estate tax rate to 55% from zero.  At a time when the stock market can lose a thousand points in a week and a half do we really want to raise taxes on dividends and capital gains?

Although the income tax will go up for all Americans and anyone with a 401K will be affected by the other hikes, the rich are all Obama and his team want to talk about.  Hillary Clinton recently said that the wealthy do not pay their fair share.  However, the New York Times found that "In 2006, the top quintile of households earned 55.7 percent of pretax income and paid 69.3 percent of federal taxes, while the top 1 percent of households earned 18.8 percent of income and paid 28.3 percent of taxes."  Reason.tv's Nick Gillespie explains this better in his video than I can so I defer to him:



But who cares if the rich are taxed into oblivion to pay for government services?  I'm not wealthy and no one I know is so it won't affect me, right?  Wrong.  Taxing the rich is the same as taxing investors and employers.  It is apparent from anemic performance of the market that we should not be raising taxing on those who would infuse the market with cash.  The unemployment rate similarly implies that no good would come from further taxing employers.  Raising taxes on everyone, including the rich, is the quickest way to kill off a recovery and lead us into a double dip recession.  Arthur Laffer, of the Laffer Curve fame, agrees.  In a Wall Street Journal op-ed, the economist says that the expiration of the tax cuts is even fooling people into thinking we are in recovery now.  His reasoning is that companies are pushing as much production as possible into this year from next year due to tax incentives.  The results are twofold, unpredicted economic growth this year followed by lackluster performance next year. 

Even when the wealthiest 1% of taxpayers foot the bill for almost 30% of our nation's taxes, it is never enough for liberals.  They don't think in absolute terms when it comes to taxes or entitlement programs.  We are always told that we could do so much more with just a little more money but the request never ends no matter how much money the government takes.  In good economic times, this is an annoyance.  In bad economic times, it is a recipe for disaster.