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The economy is ailing, but extending the tax cuts for the wealthy (I’m opting for the lower threshold – anything $250,000) is plain stupid economics. Here’s why:
Andrew Fieldhouse, John Irons and Ethan Pollack of the Economic Policy Institute have written a number of well-supported articles that contend that the Bush tax cuts disproportionately benefit the wealthy and provide little in the way of true economic growth, providing almost no short-term stimulus and no long-term gains.
The guys at EPI cite Mark Zandi of Moody’s Analytics, who made the following estimates:
Every dollar spent making the Bush income tax cuts permanent generates only 32 cents of economic activity. Comparatively, every dollar spent on unemployment assistance generates $1.61 worth of economic activity, a dollar of spending on infrastructure yields $1.57 and a dollar in assistance to states to prevent layoffs of teachers or first responders yields $1.41. Tax cuts for the wealthy are simply not a good way to stimulate the economy.
The Bush tax cuts have added trillions of dollars to the national debt. If Democrats were to push a bill that would let the tax cuts for the lower threshold expire, some $629 billion in revenue would be generated over the next 10 years. (For a more detailed analysis of the pitfalls of the Bush-era tax codes, read this.)
What are the Democrats waiting for? Extending the Bush tax cuts for the wealthy won’t do anything to help us avoid the fiscal cliff; it won’t boost the economy; it won’t increase the jobs numbers. So why is Obama the only guy pushing for a sensible and clear economic policy? For good politicking and economic policy, the Dems need to unite behind Obama and write a bill that will let Bush tax cuts expire for the uber-wealthy.
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