Thursday, November 4, 2010

Whither Tax Cuts

With the lame duck session of Congress set to take up debate on whether to extend the Bush tax cuts to everyone, including the wealthy, I thought I'd take a moment to examine some of the rhetoric for and against.

The dividing line on this issue involves whether or not the Bush tax cuts should be extended to so-called wealthy Americans earning more than a certain amount per year. These would be the top 1 or 2 percent of Americans, depending on where the line is drawn. The Republican argument for extending the tax cuts for everyone is that the wealthy produce jobs, and that by including them in the tax cut extension we're enabling them to create more jobs. Democrats counter with the argument that American businesses are currently sitting on 2 trillion dollars in cash, and are not likely to create jobs for any reason other than an increase in demand.

Whether you believe in the philosophy of low taxation or not, the Republican position on this issue is fundamentally flawed in that it fails to explicitly draw the connection between being a wealthy American and being in a position to create jobs with that personal wealth. There is, in fact, no necessary connection between these two things.

So why are we even having this debate if the premise on one side is flawed at the outset? Perhaps we can chalk it up to lazy journalism for not forcing an honest debate. Whatever the reason, it seems simply another example of a serious issue being debated in terms of half truths. It should be no surprise when the outcome of such a debate produces unexpected results.