August 2 2012
Dems: But It's Fun to Raise Taxes on "the Rich!"
Are the Democrats beginning to crack on raising taxes?
Nineteen House Democrats voted with the Republicans to extend the Bush tax cuts for everybody. The final tally: 256-171. One Republican sided with the Democrats.
The Senate voted to extend the cuts, except for individuals making $200,000 or households with an income of $250,000.
The Democrats will seek to spin the House vote as Republicans toadying to their rich friends, but the truth of the matter is that letting the rich keep more of their money would be better for the economy.
The Hill reports:
[Speaker of the House John] Boehner and other Republicans cited an Ernst & Young study saying that more than 700,000 jobs would be lost if taxes were raised on people with higher incomes, and said the key difference between the GOP and Democratic bill is that only their bill creates jobs.
"The question is, which path will our country take," House Ways & Means Committee Chairman Dave Camp (R-Mich.) said. "The Democrats' path that includes tax hikes that will cause small businesses to lose 700,000 jobs, or the Republican's tax reform path that will make the tax code simpler and fairer, and led to the creation of more than one million jobs in the first year?"
But Democrats said Republican demands for a full extension of all tax levels is effectively blocking extended middle class tax relief that passed the Senate. Democrats argued Republicans continue to favor the wealthy. Rep. Lloyd Doggett (D-Texas) said the Ernst & Young study was "bought and paid for" by people who would benefit from keeping the higher income tax cut in place.
The Ernst & Young study, if this is the one to which Boehner referred, was, indeed, commissioned by pro-business advocacy groups. But that doesn’t mean Ernst & Young, a respected firm, lied to get results desired by the client.
A news story in the Washington Post when the Ernst & Young study came out noted:
Researchers determined the plan would actually subject 2.1 million business owners to higher rates; specifically, those who pay pass-through taxes, like most partnerships, LLCs and S-Corporations. The result, less capital in the hands of business owners and diminished labor supply, would cost the United States an estimated $200 billion in economic output and 710,000 jobs.
Moreover, business owners and the unemployed won’t be the only ones adversely affected, according to the study, which predicts that employers would also be forced to trim their workers’ wages by 1.8 percent.
“These results may suggest to policy makers that allowing the top tax rates to increase comes with economic consequences,” Ernst & Young’s Robert Caroll and Gerald Prante wrote in their report, released Tuesday. Caroll said the team applied what economists call a general equilibrium model, which seeks to aggregate the economic tendencies of individuals and businesses, to arrive at the predictions.
Apparently, 19 Democrats recognize this.