Sunday, November 7, 2010

GOP's Tax Cuts: The Myth, The Reality.

Much has been said and made about the very popular Republican Party staple of tax cuts. A lot has been said about how it is the magic elixir that cures everything that ails America economically and financially, and even socially, if you can believe the Grand Old Party. It has, believe it or not, been proffered as the cure to, from failing banks to deteriorating state of education. From health care inadequacies to the Wall Street malfunction; the Republican Party has presented the tax cut as the answer to all. But, chief among these myriads of excuses is the job creation myth in which they claim that giving hundreds of billions of dollars, each year, in extra tax cuts to the rich, will help create jobs.

Having been assailed by this so-called solution everywhere I turn, for so long, I decided to take a really good look at this tax cut answer in order to try and familiarize myself with its merits, and demerits if it has any.What I found was that for eight years, under the George W. Bush Republican Presidency, the extra tax cuts given to the richest Americans did not, in any way, help the economy. Job production, which is the major reason the GOP gives to justify these tax cuts, was stagnant during this eight year period. This was despite the rich having the same extra tax cuts that is being touted, right now, to be the only hindrance to job creation in America.

Now they claim that this extra tax cuts for the rich will benefit small businesses who we all know are the major job creators in our economy. This is a very good point that they make except that what they don't tell you is that the small businesses they talk about are not the same ones me and you are talking about. This you will realize when I tell you that fifteen thousand of the small businesses the Republicans are talking about are companies that make up to, and above, $150 million in annual turnover.

Companies like News corp, the parent company of the Fox group is classified as a small business under the GOP classification. Other companies that are under this classification include General Electric, Bechtel, PricewaterhouseCoopers and Tribune Corp, to mention a few just to give the reader an idea. The only reason these companies call themselves small business is because they are privately owned and their owners are able to dodge corporate taxes by reporting profits on their income tax returns. Of course, this is another loophole put there by the Republicans to favor their rich patrons and you can see why they are fighting very hard to maintain it.

Republicans are claiming that Obama's tax plans to exclude this top three percent of the "small business" tax bracket from the tax cuts when the Bush cuts expire will affect half of all small business income. This is a fact because this 3 percent of behemoth "small businesses" produce fifty percent (half) of all small business income. Question is, can you still call a 3 percent that produces half of all the income small business?  To put this in better perspective, When 3 percent produces as much income as the remaining 97 percent, is it right to continue to keep them in the same group?

The Republican Party thinks so and that is the major reason they are holding everybody else in the country hostage insisting that they won't consider any other tax cuts unless these large corporations, fifteen thousand of which have an annual turnover of $150 million or more, get extra tax cuts. This is after every economic expert that is not a Republican strategist has come out and said, with proof, that extending the extra tax cuts for these businesses will only add to our deficits and not produce any benefits. The proof being the eight years that we have already had the tax cuts and still fell into a recession.

Despite all the attempts to deceive by the GOP, the reality is that extending the Bush extra tax cuts for the top two percent will only add to our already bulging deficit without achieving anything by way of job creation or stimulating the economy. Even when the current cuts expire on December 31st 2010, the country will still be paying for it for years to come due to interests accruing from the borrowed money. Considering that it has done absolutely nothing to help the economy since it was passed, extending it should be the last thing that should be considered in this hard economic times.

The government could more effectively stimulate the economy and job creation by letting the Bush extra tax cuts for high income earners expire and using the money for aid to the states, extension of unemployment insurance benefits and giving tax credits that specifically target job creation. Dollar for dollar, each of the above measure would have about three times the impact on the GDP as continuing the Bush extra tax cuts for the very rich.

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