Tuesday, December 14, 2010

The Offensive Tax Cuts

I already knew this and I don't know why everyone doesn't know it. From what I hear people say, most people believe that tax cuts for those making more than $250,000 per year will create jobs. It won't. Here's why: The tax cuts for both the middle-class and for those who make more than $250,000 are "Income Tax Cuts." That's the reason. Income tax cuts only apply to the personal income a person "is taking home." It's the tax on the money that a person is receiving in the form of a paycheck. He or she is taking the money home. It is not the money that a business has in its grasp that can be used to hire an employee.

That's what makes this article, Manufacturers Say Obama Tax Cuts Will Spur Hiring - NYTimes.com, interesting. It talks about the tax cuts in the Obama compromise that really benefits businesses, and those tax cuts are not the same cuts promised the rich. In fact, the cuts given to businesses are a relatively small portion of the total $858 billion of cuts in the bill, while those promised the rich are a huge one-third of the bill.

So, you could look at the Obama compromise as benefiting the rich in two ways; 1) they get to pay less taxes on the money they take home, and 2) they get to pay less taxes in their businesses. Sort of like a double benefit. Of course, when transferring public money from our pockets to the rich, it is us middle-class who are forking it over.

It's interesting that David Wyss, chief economist at Standard & Poor's, is quoted in the article as saying we're, "...not getting the biggest bang for our buck." No shit, Sherlock.


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