A real recovery?

Last week, Rep. Scott Garrett from New Jersey and 33 co-sponsors (including Maryland’s Roscoe Bartlett) introduced a bill which probably will get nowhere in the Democrats’ scramble to target tax relief to those who don’t pay income taxes and create make-work jobs for their union benefactors building bike paths and “green” buildings.

H.R. 470 instead takes the proven formula of stimulating the economy by cutting taxes for everyone and assisting small business. It makes the 2003 Bush tax cuts permanent, lowers rates for all taxpyers (the current 10% to 35% rates would slip to the 9.5% to 33.25% range, which is a proportionate 5% drop in rates from low to high), repeals the alternative minimum tax entirely, and cuts corporate income tax rates from 35 percent to 25 percent. And that’s just for starters.

The proposal also increases the child tax credit from $1,000 to $5,000 and makes it permanent, allows those over 70 to maintain their retirement accounts without withdrawing the money, increases the allowable deduction for educational expenses and student loans, and allows tax-free IRA withdrawals to those who otherwise would be penalized – but only for this year.

Finally, the proposal mandates an across-the-board 1% cut in discretionary spending.

While I’ve never been crazy about the way our federal government has somewhat arbitrarily selected the several different tax rates or targets certain actions for deductions as opposed to other actions, lowering each of the tax rates proportionally would be a good thing. If we’re to be saddled with the tax code we have for the foreseeable future, certainly these provisions make a lot more sense than growing government through deficit spending to put money back into the economy.

And while this plan makes more financial sense than anything the Democrats have come up with, we already have enough instances where the money one is forced to give to the federal government as an interest-free loan comes back in the form of a “tax refund.”

Personally I’d prefer a more permanent version of H.R. 143 (which Bartlett also co-sponsors), a bill which would suspend part 2 of the TARP funding and instead give taxpayers a break by temporarily halting backup withholding. But in either case, I don’t anticipate the bills ever getting anywhere close to a floor vote.

Instead, taxpayers will be bending over and grabbing the ankles sometime in the future as the bills we incur today come due tomorrow. Writing in the Washington Times on Thursday, Richard Rahn postulated on the shape of things to come (h/t NetRightNation.) Maybe it won’t be as gloomy as Rahn sees it, but there will be a lot of forthcoming pain if we abandon the ideals of capitalism and supply-side economics which served us well until federal interference became too great.

Author: Michael

It's me from my laptop computer.

4 thoughts on “A real recovery?”

  1. If the Bush tax cuts had been paired with Bush spending cuts, then there might be some reason to celebrate them. Bush lost his veto pen for six years, and look at the mess we are in. CNN poll says 68% feel that Bush was a failure. Nobody cares about your constant reminders of the Bush tax cuts. The Democrats can come up with their own tax cuts, and they don’t need to be named Bush.

    I guess you would refuse the work to design a bike path or green building if it were offered to you as a result of the stimulus plan. Maybe you would prefer to be laid off in spite.

    Obama has stated regularly that their will be spending cuts. There is no need to make them 1% across the board. It makes much more sense to do a responsible review of all government programs and make cuts in the areas that are found to be wasteful or mismanaged. His budget team has this on their to do list according to the One.

    Supply side economics is not part of the definition of capitalism. According to Wikipedia, the term wasn’t even coined until 1975, and their was quite a bit of prosperity created before the theory began to dominate the Republican party rhetoric. Their are just as many economists who believe in the focus on the demand side of the economic equation.

  2. CNN!Who did they poll,Obama staffers? A caveat, Wikipedia is hardly noteworthy as a source of statistics if you factor in the biases of it’s contributors.

  3. Swampy, If you have information that provides a different date and origination of the term supply-side economics, please offer it. I also found a reference to the Wanniski article on Townhall.com. Maybe you would believe them. They’re not biased.

    From Townhall:
    The label was new, but the basic concepts had been explained in Wanniski’s Journal article of Dec. 11, 1974, “It’s Time to Cut Taxes.”

    From Wikipedia:
    The term supply-side economics was coined by journalist Jude Wanniski in 1975, and popularized the ideas of economists Robert Mundell and Arthur Laffer.

    Since Bush has had approval ratings in the 20’s, the 68% failure rate is actually an improvement. No, they weren’t Obama staffers.

    From CNN:
    The CNN/Opinion Research Corp. poll was conducted from January 12 to 15, with 1,245 adult Americans questioned by telephone. The survey’s sampling error is plus or minus 3 percentage points for some questions and 4.5 percentage points for others.

    Any other caveats?

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