English: South façade of the White House, the executive mansion of the President of the United States, located at 1600 Pennsylvania Avenue in Washington, D.C. Español: Fachada sur de la Casa Blanca, la residencia oficial del Presidente de los Estados Unidos, situado en 1600 Avenida Pennsylvania en Washington, D.C. (Photo credit: Wikipedia)
In order to understand the conversation in Washington, DC, it is necessary to follow the money. Taxes, who pays and how much will be the subject of the conversation at least until the election and probably afterward. Unless you understand a few facts, you will not be able to separate fact from fiction, and the GOP will be airing a lot of fiction.
Should we extend the Bush tax cuts? Should we extend the payroll tax cuts? Should we tax the rich more or less? These are all questions that we will face between now and year-end or longer. Every position will be supported by statistics. Beware of partisans bearing statistics to “prove” their position is correct. There are lies, damned lies, and statistics in order of mendacity. Statistics can be and are used to prove anything under the sun or moon.
I too am a partisan, but here are a few facts to keep in mind. Job creators don’t create jobs unless there is a demand for the product or service. Most small business owners earn less than $250,000 annually. Not by percentages, but by dollar amount, most of the Bush tax cuts go to the wealthy or very wealthy. In my opinion, they don’t need the money. Tax cuts for the poor and middle class will be spent creating demand. Tax cuts for the wealthy are saved or spent on luxury goods produced outside the US. The savings of the wealthy may be banked abroad or invested speculatively in derivatives or commodities such as petroleum, driving up prices at the pump.
Returning to the Clinton era tax rates would be a step in the right direction. The Clinton years were prosperous and at the end of Bill Clinton‘s eight years in office, the nation’s debt was paid off. Now the GOP are complaining about a $16 trillion national debt that they blame on President Obama. The truth is that the debt was caused by the Bush tax cuts, the unfunded wars in Iraq and Afghanistan, and the Great Recession. If we eliminate the Bush tax cuts, the national debt will soon be vastly reduced.
Please see Follow the money part 1