Obama's Tax Hikes on Top 2% Will Kill Jobs

 

IBDEditorials.com

Fiscal Policy: President Obama has redrawn his class-warfare line in the sand, vowing to let the Bush tax cuts expire for those earning more than $250,000. Has there ever been a president this incoherent on taxes?

Speaking Monday from the White House Rose Garden, Obama called for what was in effect a massive tax hike on the nation's job and business creators — a political act of desperation that could lead to another recession and soaring unemployment.

Under Obama's plan, the top 2% of earners — for families, that's anyone earning $250,000 or more annually — would be hit with punitive hikes in taxes, all in the interest of "fairness." This makes no sense whatsoever — either from the standpoint of fiscal responsibility or even Obama's own past statements on taxes.

Remember in August 2009, when Obama supported extending the Bush tax cuts because, as he then put it, "The last thing we want to do is raise taxes during a recession"?

Well, here we are with 8.2% unemployment (we haven't been below 8% for 3-1/2 years), meager 1.9% average GDP growth with a very real threat of recession on the horizon, trillion-dollar deficits extending as far as the eye can see, and this is a good time to raise taxes?

Doubly confusing is the fact that Obama and his Democrat allies are on the record as saying that the Bush tax cuts did not work. Yet he wants to extend them for the middle class, but only for a year.

Please tell us, Mr. President, why extend tax cuts you don't believe worked?

And the president still has nothing to say about so-called "Taxmageddon," the fiscal cliff that awaits next year as the Bush tax cuts end. That event will result in $500 billion in tax hikes by the end of this year, which most economists believe will plunge the economy back into recession.

Not only are the 2003 tax cuts scheduled to end, but so will changes to the Alternative Minimum Tax that protects the middle class from steep tax hikes. Another 50 or so temporary tax breaks for both families and businesses would also disappear.

If you still think raising taxes on the rich is fair, you might want to consider a few things.

First, raising taxes on the rich won't make even a small dent in our $1 trillion plus annual deficits. So as a fiscal policy, it's useless.

Second, many of the top 2% earning families already face marginal tax rates as high as 35%. The top 2% pay nearly 50% of all income taxes, but take home less than 30% of all U.S. income. Is that fair?

The "rich" Obama wants to increase taxes on are the job creators and entrepreneurs. The top 2% of earners report 66% of all pass-through business income, 25% of all net business and professional income, and 85% of all partnership and S Corp. income.

They're business owners. Tax them at a higher rate, and you'll have fewer new businesses and fewer jobs. It's the middle-class that will suffer, not the rich.

Voters should reject the siren song of "fairness" and "get the rich." It will only bring misery — and poverty.