Jenny EriksonAre you ready for the biggest tax increase in United States history? Me neither. My only hope is that the still Democratic-majority Congress will vote to extend or even make permanent the so-called Bush tax cuts.
As it stands now, everyone’s taxes are set to go up January 1. The average American household making the average American income of $52,029 will see its federal taxes go up 10%, from $11,261 to $12,441.
That’s a lot of money to be forking over to the government so that Congressman John Conyer’s scalper son can have a sweet ride.
It seems that most of Congress wants to extend some of the tax cuts -- specifically for those households making under $250,000 or individuals making under $200,000 annually.
This discriminates against high-income earners, who are already picking up more than their fair share. The top 1% of earners (those making more than $352,900) pay 28.1% of all federal taxes. Despite what Warren Buffet says about ‘doing his part’ for society, it’s not fair to foist your beliefs on other people.
Maybe some business owners would rather give bonus checks to their hard-working employees to boost morale, or expand operations, or invest in something new, rather than give up that money so that 20-somethings won’t have to get a job while they’re ‘discovering’ themselves.
When high-income earners have more capitol to invest, the economy booms, benefitting everyone. History has shown over and over that this is the case. The most recent tax cuts were passed to boost the economy that was going downhill right as George W. Bush took office in 2001. It worked too; GDP grew more than it had in 20 years and unemployment was the lowest it had been since WWII.
In the last 100 years, only two things have pulled a declining economy out of its downward spiral. One was a war, which pulled us out of the Great Depression. The other was cutting taxes for everyone, including the rich. Ronald Reagan did it, John F. Kennedy did it, and Andrew Mellon did it.
Never ever in all of history has raising taxes on high-income earners led to greater prosperity. In fact, when you raise taxes on the rich, federal income actually dries up.
According to then-Treasury Secretary Mellon in 1921:
The history of taxation shows that taxes which are inherently excessive are not paid. The high rates inevitably put pressure upon the taxpayer to withdraw his capital from productive business and invest it in tax-exempt securities or to find other lawful methods of avoiding the realization of taxable income. The result is that the sources of taxation are drying up; wealth is failing to carry its share of the tax burden; and capital is being diverted into channels which yield neither revenue to the Government nor profit to the people.
Why would this time be any different?