When a tax cut wasn't so much of a tax cut - East Valley Tribune: Opinion

When a tax cut wasn't so much of a tax cut

Print
Font Size:
Default font size
Larger font size

Posted: Wednesday, April 21, 2010 11:40 am | Updated: 3:34 am, Sat Oct 8, 2011.

President Obama's defenders have lately been explaining how his 2009 stimulus package gave Americans one of the biggest middle class tax cuts in history, and that's true if you can't subtract, forgot how to multiply and overlook the deluge to come.

Something like a third of what Obama calls tax cuts was actually welfare, justified maybe, but money given to people who paid no income tax and whose payroll tax contribution was often covered by the largesse. That's what you have to subtract.

And the multiplication part? This is a one-time, two-year reduction, meaning that you multiply your yearly savings times two and stop. In the case of George W. Bush's middle class tax cuts -- more significant than his critics grant -- you can already multiply the yearly savings by seven, and since Obama says he won't rescind them, you can probably keep multiplying by greater numbers for a long, long time.

Polls show most Americans didn't even notice the Obama tax cuts, which arrived not via a check, but mostly through tax withholding, coming to something between $8 and $14 a week. Obama was so upset at Tea Party critics not giving him credit that he snarled, "I've been amused over the last couple of days where people have been having these rallies about taxes. You would think they would be saying, 'Thank you.' "

The president might want to consider that the economy did not notice the tax cuts, either. The historical evidence is that temporary giveaways to individuals don't do much to prompt job-creating consumer spending, especially when top earners aren't invited to the party. This time out proved no different; net unemployment has increased by some 3 million since the stimulus was enacted. While the recession does appear to be lifting, the stimulus package is less a cause than a problem down the road.

What the economy will notice is the cost of this misconceived pile of pork and hubris that moved resources from the wealth-producing private to the mess-producing public sector. The total is now put at $862 billion -- one reason spending went up as much in one year under Obama as in eight under Bush. Without any help, the liabilities amassed by Social Security and Medicare could crush the economy, and now we've got this stimulus, bailout spending and a new health entitlement to contend with.

All of which brings us to the deluge, or, to put it differently: The taxes are coming, the taxes are coming. The health law alone is absolutely filled with taxes -- for instance, on capital gains if you make over $250,000, on pharmaceuticals, on some insurance premiums, for those having no insurance and on tanning. (Don't ask me.) We could have cap-and-trade energy taxes coming at us soon, and, in 2011, President Bush's tax cuts for people with high incomes will be allowed to expire.

Well, thank God for that, some people may say, not knowing that you can only soak the rich so much before their money is seriously depleted and the economy pays a steep price, or that under the Bush tax cuts the burden assumed by the rich actually went up despite their large savings.

Some 47 percent of American workers pay no income tax at all and a record number have absolutely no federal tax liability of any kind when you figure out what they get back from the earned income tax credit. Here's a calculation I ran across and double-checked: The top 1 percent of taxpayers pay as much of the income tax (40 percent) as the bottom 95 percent.

Many of Obama's new tax laws are already aimed at the middle class, and the middle class could well be hit even harder in an effort to avoid debt disaster unless spending is drastically cut. That's what less-than-amused Tea Party activists have been trying to tell Obama. He should say, "Thank you."

Jay Ambrose, formerly Washington director of editorial policy for Scripps Howard newspapers and the editor of dailies in El Paso, Texas, and Denver, is a columnist living in Colorado. He can be reached at SpeaktoJay@aol.com.

  • Discuss

Facebook

EastValleyTribune.com on Facebook

Twitter

EastValleyTribune.com on Twitter

Google+

EastValleyTribune.com on Google+

RSS

Subscribe to EastValleyTribune.com via RSS

RSS Feeds

Spacer4px
Your Az Jobs