Tax hikes don’t kill jobs

Update: Steve Benen has a brutal – and accurate – takedown of Boehner’s speech today. Benen’s conclusion: “We’re left with the discomforting fact that it appears the Speaker of the House, Congress’ most powerful official, when dealing with the nation’s most important issue, is functionally illiterate, bringing the sophistication of a slow child to the debate.” He’s absolutely right, but, still. Ouch.

In a speech delivered to Wall Street, House Speaker John Boehner reiterated an article of faith among conservative Republicans: Tax hikes kill jobs. In laying out his demands for agreeing to raise the debt limit and avert a global financial disaster – yes, Boehner is essentially holding the global economy for ransomBoehner said, “With the exception of tax hikes — which will destroy jobs — everything is on the table.”

As I said, this notion that tax cuts lead to job losses is an article of faith for conservative Republicans. It has to be an article of faith, because the facts simply don’t back it up.

In 1993, President Clinton raised taxes – without the help of a single Republican; they were all warning that the tax package Clinton wanted would lead to economic calamity (sound familiar?). Instead of economic calamity, we saw the longest peacetime expansion in history. Millions of jobs were created. The economy soared. And we had a balanced budget for the first time in recent memory – and the last time since.

President Bush cut taxes in 2001, promising economic nirvana. Instead, we saw the most sluggish economic growth in years. Middle class income stagnated. And by the time President Bush left office, there were only 3 million more jobs than when he took office, a number that didn’t even come close to keeping up with the population growth of 22 million in the same period.

Sure, there were other factors at work – just as there are now. The point is that, indisputably, tax hikes don’t necessarily lead to job losses and tax cuts do not necessarily lead to job growth.

Anyone telling you differently – Speaker Boehner, for instance – either has no clue or is intentionally trying to mislead you.

4 Responses to Tax hikes don’t kill jobs

  1. James Gilligan says:

    Obama was moved to extend the Bush tax cuts “by the fact that tax rates for every American were poised to automatically increase on January 1st.” If that had happened, “the average middle-class family would have had to pay an extra $3,000 in taxes next year,” he said. “That wouldn’t have just been a blow to them; it would have been a blow to our economy, just as we’re climbing out of a devastating recession.”

    Obama declared: “I refused to let that happen. And because we acted, it’s not going to. In fact, not only will middle-class Americans avoid a tax increase, but tens of millions of Americans will start the new year off right by opening their first paycheck to see that it’s actually larger than the one they get right now.” Obama said the tax hikes kill jobs. Has he no clue or was he misleading us? Or (as seems more likely) is his view a moving target?

    • Dan Radmacher says:

      Obama is a politician. Of course he was misleading us. The best thing that could happen for the deficit – which Republicans tell us is crucial to improving economy (they aren’t misleading us, are they?) – would be for tax rates to go back to Clinton-era levels. That would mean tax hikes for everyone.

  2. James Gilligan says:

    How about we trot Fritz Mondale out of retirement to sell that one for us? That should be successful. I’m not entirely opposed to some tax increases but tax increases by themselves won’t begin to touch the deficit. Tax increases by themselves are the basest form of class warfare.

  3. joe mostowey says:

    (James Gilligan says “Tax increases by themselves are the basest form of class warfare.”)

    No.The progressive tax, is the base of Thomas Jefferson’s desired tax code.

    “”Another means of silently lessening the inequality of property is
    to exempt all from taxation below a certain point, and to tax the
    higher portions of property in geometrical progression as they
    rise.” –Thomas Jefferson to James Madison, 1785.

    Jefferson’s ideal did not really get started until the late 1800’s, year’s after the Civil war. It was realized that the original tax code, which relied on tariffs and excise taxes could not continue to fund a government in a world growing smaller by the decade. The First World War proved them right. and the second World War put the final argument to rest.

    The Progressive tax is not a modern invention for the USA, The original property taxes were progressive, the original income tax (Civil War) was progressive and the newly reinstated income tax (WWI) was progressive. Tax rates as high as 90 percent were in place during the 1940’s and 1950s.

    Prior to the Great depression, tax rates were decreased, as happened again during the great recession.
    Both of these era’s of low taxation of those most able to pay were marked after low taxes were implemented, by shattered economies and high Government Deficits.

    Those who would claim a return to a stable progressive tax rate to be “basest form of class warfare.” are lacking in basic knowledge of history, and basic economic sense.

    To provide a stable consumer economy, which provides the value behind the stock market, there has to be MONEY based on something solid -either gold, or manufactured items. Labor is what we base the value of the dollar on, calling it the GNP.

    Taxation, which is used to maintain and fund the government, provide funds to outfit and maintain the military, provide funds to build and maintain the infrastructure, and provide a funding mechanism to help cope with disasters, natural and man made.

    Much of the tax dollars collected (unlike much of the money in our current retail structure) is spent domestically, pumping money into the consumer economy. When the tax revenue that supports this spending is restricted, and spending is curtailed, the consumer economy flounders. The actual value of stocks begins to fall, as product orders fall, and unemployment rises. With no demand, there is no manufacture, no jobs, and the people who own stock in such enterprises see the value of such stock fall Most commonly it is the small stockholder who is harmed the most..

    Class warfare? Yes, but you have it A**backwards. It’s tax cuts that are class warfare and harm the nation as a whole.

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