In what can only be described as a partisan, pro-Obama puff piece, The New York Times has now proclaimed on its Economix Blog that tax increases are the best way to “stimulate” our economy and help America reach “fiscal sustainability”:
The single biggest step our government could take this year to address the structural deficit would be to let the tax cuts expire. And a credible commitment to long-term fiscal sustainability should reduce interest rates today, helping to stimulate the economy.
Adopting the leftist fiction that Americans keeping more of their money is socially irresponsible and somehow cutting taxes “cost” the government, the authors warn that the expiration of the Bush tax cuts are too costly. They want to shame you into compliance. You see it’s not your money, it’s their money! It will be your fault if the government doesn’t collect the additional $2.3 trillion of your income it’s entitled to receive. It will be your fault when the national debt grows ever larger by 2018:
What do matter are taxes and entitlements. Therefore, the coming battle over the Bush tax cuts is of real importance. According to the Congressional Budget Office, extending the Bush tax cuts would add $2.3 trillion to the total 2018 debt.
Feigning objectivity, the writers briefly flirt with a one sentence counter-argument questioning the wisdom of increasing taxes while unemployment is still at an all time high. However, the sense of “balance” quickly dissipates as Americans are again faulted for the audacity to save their money, and therefore failing to stimulate the economy:
Critics say that this amounts to increasing taxes at a time of high unemployment, and that instead the tax cuts should be extended as a stimulus measure. This overlooks the fact that tax cuts are an inefficient form of stimulus, because many people choose to save their additional income instead of spending it.
The pièce de résistance however, is at the end of the blog article. Here the authors completely leave behind any semblance of economic and common sense and logic, and head for the hills of fantasy land. In this fictional world massive tax increases will “immediately” encourage growth and increased employment:
If the goal is to encourage growth and employment immediately, it would be better to let the tax cuts expire and dedicate some of the increased revenue to real stimulus programs.
Apparently the multi-trillion dollars government “stimulus” programs already passed with little economic benefit are not “real” enough for The New York Times. There’s still more work to be done with the additional $2.3 trillion of our money they must confiscate in order to “help” us.
Back in the real world, Ronald Reagan’s across-the-board tax cuts in the 1980s stand as a testament to true and effective economic and fiscal policies. His relentless pursuit of economic reforms and lower taxes lead to the “largest peacetime economic boom in American history and nearly 35 million more jobs,” while federal revenues doubled, increasing from $517 billion in 1980 to over $1 trillion in 1990. President Reagan proved what all sensible economists and logical individuals already know, that cutting taxes inevitably leads to economic growth and increased prosperity, which in turn creates jobs and provides the government with more revenues.
Luckily, we don’t have to go that far back in history for a lesson on economics and taxes. One has to look no further than the tax-dogging behavior of former Senator John Kerry, owner of a $7 million yacht, to realize that higher taxes always negatively influence economic activity, motivate individuals to avoid paying those taxes, and ultimately lead to reduced state revenues.
If that’s not convincing enough, maybe The New York Times can look to communist China for a clue on how to stimulate an economy and increase government revenues. While American companies now face an average combined income tax rate (federal + state taxes) of approximately 39.3%, corporations in China pay only a 25% tax rate as of January 2008. The communists realized the dangers of the economic crisis spreading across the world and quickly moved to lower taxes to help their businesses and people. Our own Congress however, has done nothing about tax rates, choosing instead to let current rates increase on their own come January 1, 2011. If Obama and the Democrats allow this to happen, we will witness the once unthinkable: the “free-market” United States will tax its businesses and corporations at 46.2%, almost double the rate of communist China at 25%; even before ObamaCare’s new Medicare levy of 3.8% kicks in 2013, raising the marginal rates to 50%.
If The New York Times can’t learn this simple lesson from the actions of a quintessential limousine liberal or by looking at communist China, then no evidence will suffice to wake them up to reality.
Originally posted at American Thinker Blog.