Political posturing was in full bloom in the Senate recently as Democrats and Republicans refused to vote on President Obama’s proposal to extend Bush-era tax rates but to allow them to rise on families earning $250,000 or more.
The president’s position is clearly a populist attempt to shore up his base on the left heading into the November election.
Majority Leader Harry Reid, D-Nev., vowed the Senate would vote on the plan before the August recess. Minority Leader Mitch McConnell, R-Ky., replied that he would agree to arrange for votes “just as soon as the majority leader produces a bill to show us what tax increases they have in mind.”
There also are indications that the president wants more increases than the one for higher earners.
A large proportion of the taxpayers falling into the above-$250,000 category are owners of small businesses, many of whom file as individuals or as Subchapter S payers. But small business is historically the largest creator of new jobs, and the June jobs report shows this economy continues to fall behind on new employment.
Moreover, pre-Bush tax rates on those “millionaires and billionaires” the president excoriates would be only enough to fund current federal spending for eight days. They would not pay down the national debt.
What’s needed in Congress is a rational rewrite of the federal tax code that would get rid of many write-offs in exchange for a broader base of taxation, something the president’s Simpson-Bowles Commission recommended and which the president immediately sent to the round file.
Tax policy is important, and one that encourages investment and innovation is what this economy needs to get out of its funk.
Pueblo (Colo.) Chieftain (July 16)