Thomas Paine in his Dissertation on First Principles of Government, published on December 23, 1791, wrote, “He that would make his own liberty secure, must guard even his enemy from oppression; for if he violates this duty, he establishes a precedent that will reach to himself.”
Our nation is deep into the longest post World War II recession in our history, prolonged by the uncertainty created by the policies of the Obama Administration and the Democratic controlled Congress. Businesses, large and small, are holding on to an estimated $3 trillion in cash and are not going to invest and create jobs without a dependable view of future taxation, regulation and health care costs. The taxation question is the most pressing at this point in time because of the scheduled expiration of the current tax rates less than eight weeks away.
Mr. Obama and the Democrats in Congress must have never read Thomas Paine’s words, do not fully understand their meaning or simply choose to ignore them. They are also acting like the recent election was not the repudiation of their agenda that it clearly was. They continue to divide the American people with class warfare by demonizing those taxpayers who earn more than $200,000 per year.
Mr. Obama and his supporters actually believe that the American people will be satisfied with only a temporary extension of current tax rates for those higher earning citizens while most others would see their current tax rates made permanent. They are sure the private sector will embrace that move and unlock their capital. They could not be more wrong!
By not protecting the one group of citizens who are best positioned to spark an economic recovery, the Obama Administration risks stalling the recovery for years and actually subjecting the Democratic Party to greater losses in 2012. Unfortunately, the real losers will be the American people who will continue to suffer from high levels of unemployment due to the lack of private sector investment.
Common sense tells us that businesses are not going to make the long term investments in plant, equipment, research and development that create good paying permanent jobs based on a short term outlook. They will only invest their capital when they have a clear vision of enough of the future to credibly forecast a return on that capital. It is as simple as that and Mr. Obama refuses to budge. This means that the Republicans in Congress need to stand tall and either block attempts by the lame-duck Congress to pass unequal measures or correct those measures immediately after January 1, 2011 when they take charge of the House and have greater influence in the Senate. The current tax rates for all Americans must be made permanent in order for the private sector to unlock its job creating power.
Making the Democrats look even more foolish is that their ‘tax-the-rich’ argument holds no economic merit. According to the Internal Revenue Service Data Book, approximately 142 million citizens file federal tax returns. Only 3%, or 4.4 million, make $200,000 per year or more, and 3.4 million of them make less than $500,000 per year. So Mr. Obama’s argument that he only wants to raise taxes on millionaires is misleading at best or simply an outright lie.
While citizens earning $200,000 per year or more make up only 3% of all tax payers, they pay 52% of all federal income taxes collected. If the current tax rate on these citizens expires now, or two years from now, the government may be able to take in another $75 billion per year. If those tax rates are extended permanently and investment is unlocked due to the certainty that is created, history shows our nation would see Gross Domestic Product (GDP) growth in excess of 4% annually; a minimum of $115 billion per year in new tax revenues; and unemployment trending down sharply.
One of the measures of our exceptionalism as a nation has been our ability to correct past mistakes and protect all citizens equally. We have done so primarily because it is right, but also because we recognize that if we fail to protect even a small group of citizens equally with the rest of the nation at some point we will find ourselves in peril. This time it is the economic well being of our nation that stands in peril if we fail to protect all citizens equally.
Mr. Obama and the Democrats in Congress are not likely to change their view on this important matter. They will continue to be divisive and play to their liberal base. The American people need to demand that the current tax rates be made permanent for all citizens in order to give the private sector the certainty necessary to invest in the future of our nation. The American people need to make it known to the Republicans in Congress that we expect them to show leadership on this issue and not to wavier.
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