February 12 2013
President Obama has argued higher tax rates are the key to balancing the budget and that only those with high incomes—the so-called “rich”—will be affected by tax increases. For example, when signing legislation in January 2013 to avert the so-called “fiscal cliff,” the President professed he was: “…sign[ing] a law that raises taxes on the wealthiest two percent of Americans while preventing a middle-class tax hike...”
Yet in spite of this rhetoric, in practice nearly every taxpayer will pay higher taxes in 2013. As a result, most Americans’ monthly incomes will shrink, and so will their purchasing power, which means businesses will have fewer costumers.
Even tax increases that only directly impact high-income earners will affect Americans at all income levels. Increases in the tax rate on capital gains, dividends, estates, and the new Medicare surcharge will profoundly impact the economy, by discouraging savings and investment, and taking money away from small business owners who drive job creation.
America cannot tax its way to prosperity or a balanced budget. The key to closing the deficit is to reduce government spending and create the conditions for real economic growth. That includes comprehensive tax reform to simplify our tax code and reduce marginal tax rates for all Americans.
Politicians may promise to tax only the “rich,” but everyone pays a price for a tax system that strangles the private sector and robs American families of their incomes and opportunities.
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