If taxing the rich is good for the economy, should we bring on the Cliff?

[Coyotl]

The cliff is the one good chance to raise capital gains taxes, to bring
taxation on wealth more in line with taxation on working for a living.
Perhaps this opportunity should not be passed up. Pick the Cliff?

The cliff is a great chance to cut military spending. Pick the Cliff?

Taxing the rich is good for the economy by Robert Reich

One of the most pernicious economic falsehoods you'll hear during the next seven months of political campaigning is there's a necessary tradeoff between fairness and growth. By this view, if we raise taxes on the wealthy the economy can't grow as fast.

Wrong. Taxes were far higher on top incomes in the three decades after World War II than they've been since. And the distribution of income was far more equal. Yet the American economy grew faster in those years than it's grown since tax rates were slashed in 1981.

This wasn't a post-war aberration. Bill Clinton raised taxes on the wealthy in the 1990s, and the economy produced faster job growth and higher wages than it did after George W. Bush slashed taxes on the rich in his first term.

If you need more evidence .........

Not a new article (April 18, 2012), but worth bringing to the fore before we go over the cliff.
http://www.marketplace.org/topics/economy/commentary/taxing-rich-good-economy

[unblock]

1. the cliff is a mix of good, bad, and just plain stupid.

taxing the rich more is good, as is treating all income more equally for tax purposes.
but the hikes for those lower on the income ladder is not so good, and the accross the board spending cuts is just plain stupid. even if you believe that lower government spending overall is appropriate, doing it in this fashion is stupid.

the bottom line is that the spending cuts would push us into recession.

worse, republicans will then claim it was the tax hikes on the rich that caused the recession, and they'd use that as proof we need low taxes for the rich for decades to come.


solving the problem around, say, mid-to-late january would not really be much of a problem. we don't really need to meet the end of year deadline. but if it drags on until march or april that would be very bad.

personally, i think our negotiating position only gets better in january, so we should not be bothered if an agreement doesn't happen until then.

[Coyotl]

2. Once over the Cliff, some things can be readily fixed

like budgeting money as needed and not taxing the 98% more. This can be done one item at a time, make Republicans vote up or down on these issues and show their hand over and over again. But, refuse to consider things like "fixing" the capital gains tax rate to undo the Cliff effect.

Keep the good, fix the bad, throw out the stupid.

My realization is that it will never be possible to raise capital gains tax via a bill. Take this revenue gift and keep it!!
Wow, a chance to tax the rich and not have to be labeled the party that proposed raising capital gains tax.
Even at 25%, capital gains is a lower tax rate than the middle class pays in income tax.

[Coyotl]

3. Top 2% Not Job Creators or Millionaires in Tax Debate

Top 2% Not Job Creators or Millionaires in Tax Debate
http://www.bloomberg.com/news/2012-07-20/top-2-not-job-creators-or-millionaires-in-tax-debate.html

As the Democratic president and his Republican opponents debate whether to extend the George W. Bush-era tax cuts for the top 2 percent of U.S. taxpayers -- individuals earning more than $200,000 a year and married couples making more than $250,000 -- their poll-tested phrases obscure the truth about who would be affected.

....

Obama’s proposal would set the taxable income thresholds at $247,450 for married couples and $203,950 for individuals. In many cases, taxpayers with adjusted gross incomes far exceeding those thresholds or the $200,000 and $250,000 ceilings would be able to use deductions and other tax breaks to avoid the higher rates. Separately, as part of the 2010 health care law, a 3.8 percent tax on top taxpayers’ “unearned income,” including capital gains and dividends, takes effect in 2013.

The administration’s proposal would raise income taxes for 1.3 percent of households by an average of $35,757 in 2013, according to the Tax Policy Center, a nonpartisan research group in Washington. More than 95 percent of households in the top 1 percent of income -- those making more than $596,998 a year -- would pay more.

In terms of revenue for the Treasury, the Democrats would raise about $68 billion more from a one-year extension than Republicans would, according to the nonpartisan Joint Committee on Taxation. Over 10 years, the parties are about $966 billion apart. ...