I was intrigued when a friend of mine posted a link with the bold title, “Raising Taxes Destroys Jobs” which led to a well-prepared map that encouraged me to “Click on your state to see the tax increases and job losses that will come to your Congressional district with the Obama-Pelosi tax plan.” I did so, and discovered that, purportedly, my current home state of Florida will lose more than 47,000 jobs in the next two years if the US Congress does not vote to keep the tax cuts enacted under President George W. Bush in 2001. (The map can be see here http://heritageforamerica.org/jobs-lost-in-your-district/.)
While duly impressed with the technology represented by the clickable map, I was somewhat disappointed to see that there were no further explanations offered for how such bold figures were arrived at. There were no links to research or reports...just a large button that would enable me to EMAIL YOUR CONGRESSMAN! To my friend’s credit, she was able to tell me that the research had been prepared by the Heritage Foundation and had been referenced by South Carolina Senator Jim DeMint. This gave me enough to go on to find the report and read it for myself.
The full report is listed as “Obama Tax Hikes: The Economic and Fiscal Effects,” and is also known as Center for Data Analysis Report #10-07. (The entire report may be found here: http://www.heritage.org/Research/Reports/2010/09/Obama-Tax-Hikes-The-Economic-and-Fiscal-Effects) I found it to be fascinating reading, and would simply like to list some of the more striking details I observed:
The report opens with these words – “The Members of the U.S. House and Senate are about to engage in one of the most consequential tax policy debates of the past 50 years. At stake is the nation’s tax policy. For 14 years, Congress after Congress has voted to lighten the tax burden on taxpayers.... If Congress enacts the Obama tax hike, it will have changed the course of long-standing tax policy.”
Long-standing tax policy? 14 years makes a long-standing policy? The last time I checked, our nation was over 229 years old...14 years is only 6% of our nation’s history.
Of course, what is being touted as an “Obama tax hike” is actually the natural expiration of the tax cuts passed by Congress in 2001, under the administration of President George W. Bush. Under bipartisan agreement at that time, Congress wisely left a ten-year limit on the tax cut package so that their effect on our economic standing could be evaluated. If successful, the tax cuts could be renewed; if considered detrimental, they would expire. Clean, simple. Not really a “tax hike,” though.
As the writers of the report continue, they state that every one of their calculations and recommendations are based on the concept that the Bush tax cuts of 2001 and 2003 are good for America, and that renewing these cuts are the basis for sound financial policy on a national level. However, they are honest enough to state this: “While the jury is still out on the overall economic effects of Bush-era tax relief, these two changes to tax policy, particularly the 2003 legislation, likely boosted economic activity and strengthened the macro economy.”
Excuse me? The jury is still out? That doesn’t sound like a very sound basis for proceeding with a decisive national economic plan. The Bush-era tax cuts likely “boosted” economic activity and “strengthened” the macro economy? Is that why we ended up in the mother of all recessions in 2008? Wasn’t it President Bush himself who had to enact the economic stimulus package in an effort to reverse the effects of his tax cut proposals?
I’d like for the writers of this report, who continually hold forth the predicted devastation of “small business owners” under the forthcoming Obama tax proposals, to actually interview a small business owner like my sister, Cindy Lay, in Knoxville, TN—a long-time and loyal Republican, by the way. How did that “boosted” economic activity and “strengthened” macro economy work out for you, my sister? Do these people who work for “think tanks” ever pull their heads out and come into the real world?
But I digress....
The report goes on to state, “Center for Data Analysis economists estimated the likely economic and fiscal effects of the Obama tax plan by introducing it into a model of the U.S. economy that leading government agencies and Fortune 500 companies use to produce economic forecasts.” This model is designed and owned by IHS Global Insight, Inc. It is, indeed, used by private-sector and government economists to estimate how changes in the economy and public policy are likely to affect major economic indicators.
Of course, the report also says, “The methodologies, assumptions, conclusions, and opinions presented here are entirely the work of analysts in the Center for Data Analysis at The Heritage Foundation. They have not been endorsed by, and do not necessarily reflect the views of, the owners of the Global Insight model.” One might be mindful of the quote attributed to Mark Twain (and later, British statesman Benjamin Disraeli,) “There are three types of lies—lies, damn lies, and statistics!”
The real issue may be revealed in one other piece of the report’s language: “The President’s budget proposal calls for the repeal of the Bush tax cuts for high-income earners, and an extension—albeit temporary—of these tax cuts for ‘middle class’ earners (individuals earning less than $200,000 per year and households earning less than $250,000 per year).... Allowing this current policy to expire for any income-earning group can be interpreted in no other way than as a tax increase.”
Notice that the “any income-earning group” of that last sentence is those making $200,000 and above! The report actually concedes that middle-class earners will NOT receive a tax increase, though the aforementioned map and chart uses dramatic numbers like the $33 billion “increase” in Florida taxes over the next 10 years as fodder for the anger of the masses. I’ve got news for you folks: it ain’t the masses they’re looking out for!
As a final note, I would highly, highly suggest that you read the editorial from the Los Angeles Times by Garret Gruener, the founder of Ask.com. As one of the “richest 1%” that are so often referred to in the tax debate, Mr. Gruener makes a compelling case for allowing the Bush tax cuts to expire as planned. The title of his essay is “Yes, Tax Me More.” You can find it here: http://articles.latimes.com/2010/sep/20/opinion/la-oe-gruener-tax-the-rich-20100920
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