Tax Cuts for 1-2% will Certainly Create Huge Deficit

Holiday Cat thinks Senator Bernie Sanders idea to create jobs by investing in building bridges, roads and other infrastructure is a great idea. Warren Buffet said he doesn't need a tax break from the GOP. How about listening to him! Photo Credit: Cat with collar by tibl on flickr cc

Why do Republicans insist that Tax Cuts for the Top 1-2% Earners in the U.S. will create jobs? This is a myth.

Tax Cuts for TOP 1-2% and Certainty Myth of Jobs

The Bush tax cuts have been in place for 10 years (2001-2010) and the number of jobs created under George W. Bush was one of the lowest number in the history of America during an 8-year Presidential administration.

  • There was a net loss of 600,000 private sector jobs from 2001-2008
  • There was a 1.1 million net gain of jobs created from 2001-2008 (1 million in the public sector according to Senator Bernie Sanders).

So what have the top 1-2% been doing with all the money they were able to gain from the Bush tax cuts if they were not creating jobs?

In contrast, President Bill Clinton’s administration created a net 23.1 million jobs during his eight-year administration.

Jobs from G.W. Bush to Obama Photo Credit: America is on the Path of Economic Recovery by Speaker Pelosi flickr cc

 

Starving Government as an Excuse to Slash Medicare & Social Security

Is there another agenda behind why the Republicans insist on extending the Bush Tax Cuts for the top 1-2% at least another 2 years?

The answer is Yes according to Senator Bernie Sanders and other critics of the current tax proposal before Congress. If President Obama’s current tax proposal is implemented, it would mean that less money would be collected by the IRS to pay for programs like Medicare and Social Security which would give the GOP an excuse to cut these programs. The GOP claim they want to “stop the spending” in Washington even as they refuse to acknowledge the hypocrisy of pushing for tax cuts for the top 1-2% of Americans.

Senator Lamar Alexander of  (R) Tennessee repeatedly kept trying to correct NPR reporter Melissa Block by saying that the Bush tax cuts were not tax cuts. He insisted that letting the tax cuts expire would create the biggest tax increase in history. This is absurd.

The false argument that Alexander claims is that the people getting the tax cuts are the job creators. Where is this substantiated? If the Bush Tax Cuts were so stimulative to the economy for all Americans, then how come so few jobs were created under G. W. Bush between 2001 and 2008?

Lamar Alexander’s claims that if the tax cuts expire “it will be the biggest tax increase in history” is a gross misstatement of historic facts. I think Senator Alexander needs a little history lesson. At one time the U.S. income tax rate for the highest earners was as high as 94%! In fact, the rate increased for the top bracket of earners from 1943 to 1944 from 88% to 94%. Prior to the G.W. Bush Tax cuts the rate for the top earners in America had been reduced to 39.6%. That means if the tax cuts for the top 1-2% expire on January 1, 2011, they will return to the former low rate of only 39.6%. That’s a far cry from 94% rate in 1945.

The tax rate on the top earners increased from 1916 to 1917 from 15% to 67%.

Also, according to the graph on wikipedia regarding tax rates, it is interesting to note that tax rates on the highest earners in the U.S. were reduced from 46% to 25% between 1924 to 1925. Then the stock market crashed in 1929 when tax rates for the highest earners had fallen to only 24%. The only time in the 1900′s when the tax rate was less than 24% was in 1916 when it was 15% and between 1913-1915 when it was 7% for top earners.

It’s interesting that the worst economic downturns in the 1900′s and early 21st century occurred when the tax rate for the top earners was extremely low.

Historic Gap between Rich and Poor in the U.S. in 2010

The gap between rich and poor in the U.S. is at an all time high and extending the tax cuts for the top 1-2% will only increase the divide.

The extension of the Bush Tax Cuts for the top 1-2% of top earners from 2011-2012 as proposed in the Obama-Republican agreement would in combination with other parts of the bill incur $900 Billion Dollars to the deficit and increase the national debt which has already ballooned to $13.7 Trillion dollars!

The Bush Tax cuts are “Tax Cuts” any which way you slice or dice them. They were put in place until December 31, 2010 when they were meant to expire. Senator Alexander’s word dances are hilarious.

Here’s what really happened. The tax rates in 2000 under President Clinton before George W. Bush came into office in 2001 were only 39.6% for the top income rate and the corporate tax was 35%.

Then instead of keeping the government on an even keel and using the huge Clinton budget surplus of $236 Billion/year, or a $5.6 Trillion Dollar projection over 10 years, wisely for future costs in Medicare and Social Security, Bush and the Republicans went on a spending spree by allowing the top 1-2% of Americans to get a large tax break. Under Bush the top income tax rate went from 39.6% to 35%.

U.S. Federal Income Tax Rates 2008 to 2010

U.S. Federal Tax Rates 1999 to 2000

Senator Bernie Sanders Economics Class on the Floor of the Senate to Americans

On Friday, December 10, 2010, Senator Bernie Sanders gave an extended speech on the floor of the Senate to take his concerns directly to the American people regarding the proposal brokered by the Republican leadership in Congress and President Obama.

In over 8 hours straight from 10:25 am to 7 pm ET on the floor of the Senate, Mr. Sanders clearly explained why he thinks the proposal for tax cuts needs to be altered. He backed up his proposals with facts, not just talking points.

Sanders Filibuster Begins…

Bernie Sanders’ “Berniebuster” Filibuster on Keith Olbermann — 12/10/10

Senator Sanders made the following major points:

1)  There is no proof that giving tax cuts to the top 1-2% of Americans will create jobs. Corporations already have nearly $2 Trillion Dollars of cash on hand and yet they are not creating jobs. Sanders said it might be because corporations do not think Americans have enough money to pay for goods and services.

2) Cutting payroll taxes for one year from 6.2% to 4.2% would reduce the amount of money going to pay for social security at a cost of $120 Billion Dollars. Sanders believes the Republicans will use this to extend cutting payroll taxes permanently which would limit the amount of money coming into the government to pay for social security. Sanders said social security has been the most successful government program for 75 years and in order to enable it to continue for at least another 75 years to help the middle class, we need to continue paying into the pot of social security.

3) Sanders claims that cutting the estate tax to 35% with a $5 million exclusion before any tax is applied with Republicans pushing to eliminate it permanently would add over a trillion dollars of debt! For example, the heirs to the Sam Walton family that owns WalMart stand to inherit $86 Billion Dollars. If the estate tax was abolished as Republicans want, one family would get a tax break of $32.7 Billion Dollars.

In 2001 the exclusion for the estate tax was $675,000 and could be taxed at a rate of 55%. Under Bush the rate dropped to 45% in 2009 with an exclusion of up to $3.5 million dollars. Then, in 2010 the estate tax was temporarily repealed so there was no exclusion and no tax at all for any amount! That means that there was no tax on any one who inherited any amount!

4) Sanders said that he and his colleagues recently proposed a one-time check of $250 to go to Seniors and disabled Veterans since they have not had a cost of living increase (COLA) in two years and most of them live on only $14,000-$15,000 a year. The entire program would cost $14 Billion, yet only 53 Senators voted for this. Senator Sanders finds it outrageous that people who really need assistance are being ignored by Republicans while millionaires and billionaires stand to get more tax breaks. In the Bush years the wealthiest 400 people saw their wealth increase by some $400 Billion Dollars!

5) Senator Sanders says real job creation that benefits more Americans will be achieved if we invest in:

  • physical infrastructure
  • human infrastructure
  • education infrastructure

Sanders said that 170,000 high school graduates are prepared to go on to college but are unable to do it because they cannot afford it.

Sanders said:

What are we doing in wasting the extraordinary intellectual potential of these young people?Because our country is too busy giving tax breaks to millionaires and billionaires and fighting two wars, they are too busy to invest in these young people. How will we compete with China and India around the world when we are not investing in education?

There are some jobs out there but according to Sanders, they cannot be filled by many of our young people because they don’t have the skills to fill certain kinds of sophisticated high tech jobs.

If you don’t invest in your young people, they are not going to become productive tax paying workers.

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This entry was posted in Banks, congress, Culture, democrats, dialogue, diplomacy, Economy, Education, Elections, Energy, Health Care Reform, human security, jobs, Media, national security, News, NPT, nuclear disarmament, Obama, Politics, President Barack Obama, Republicans, senate, Senate and Congress, Seniors & Social Security, Talking Points Alert, Uncategorized, Wall Street, Wall Street Wizards and tagged , , , , , , , , , , , , . Bookmark the permalink.

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