In this video the new chairman of the White House's Council of Economic Advisor's discusses tax cuts. There are too many flaws to go over all of them so I will just state the major criticisms I have.
First, the graph is incredibly misleading, and shows how much contempt this administration truly has for the wealthy. The dots represent tax savings, but not by percent, but by raw dollars. This means that even the a smaller decrease in the tax rate for the wealthy will be represented by a scarily huge dot meant to do nothing more than terrify middle class and lower class voters into soaking the rich with tax hikes.
The problem with punishing the rich with higher taxes is that it is not only immoral but nonsensical for job creation. The government taking money out of the hands of the hiring class will further deteriorate job creation. This group has a great deal of small businesses and small business owners in it. Mr. Gooslbee's graph makes sure not to mention that the rate hikes are not just on those evil millionaires but rather on any couple making over 250,000 dollars if Obama were to get his way. So, the small business might be forced to shift their hiring budget over to pay the increase in taxes. This does not even include the group of people who might not start a new business because of the increase in tax rates. This analysis also does not include two income homes who might have one person stay at home to get into that lower tax bracket. This will lower tax revenues, not increase them as Mr. Goolsbee insists.
The tax raises are also immoral. The administration's policy punishes people they don't care for. Nothing more; nothing less. They seem to have a deep dislike for the wealthy. The evidence for this is clear. They talk about "spreading the wealth around"; constantly bash wall street, despite them being the engine that drives this nation's economy; and refuse to blame people for taking out loans they knew they could not afford, instead choosing to blame banks. The practical reality is that this administration will have to choose between increasing employment and punishing the rich. They can't get both. It saddens me that they are continuing down this path as it means a slower recovery, a less complete recovery and many more years of suffering for the middle and lower classes.
To make matters worse, no one in the White House seems to understand that this is NOT the government's money. This is an individual's money who worked darn hard for it. The person who worked hard for it should have the right to spend it as they see fit. The more the government takes, the more immoral it is. Taxes are nothing more than the government stealing your money under threat of violence and imprisonment. They should be as low as practicable because the average citizen can spend his money better than the government can.
Not only does the administration distort the truth about what the effects of the tax increase he is proposing will do to the government, but the evidence he cites that every objective economist and analyst agrees with Mr. Goolsbee's analysis. The reality, is far different. The administration tried this trick before stating similar evidence for the bailout before more than five hundred economists signed their name onto an advertisement saying that the bailouts would do more harm than good. Who was right, there?
I am not sure who Mr. Goolsbee thinks of as an "objective" economist. His friends at the Progressive Policy institute likely agree with his redistribution plan but the majority of economists do not and likely will not. Professor Sowell from Stanford has been particularly effective. Professor Perry from University of Michigan has as well. The fact is that the majority of economists from Mr. Gooslbee's old university likely disagree with this tax hike. Professor Fama certainly is critical of it as are Professor Rajan. The administration needs to explain how tax revenues increased the first years of the tax cuts before making wild claims that every economist agrees.
The practical reality is that President Obama needs to rethink his economic team. He has been in office for two years and things have not been going well for him, or more importantly, for the country he is supposed to lead. It doesn't take a genius to figure out that these problems started with the economy. His policies have led to a marketplace where people are terrified to act. Risks that created this country and made it great are now considered taboo. We need to go back to embracing the free market. We need to return to the times when we encouraged that young entrepreneur to risk it all and create the next ipod, starbucks coffee or tablet pc. The more we punish them by discouraging risks and taking more of their money through taxes, the less likely we are to see them pop up. Mr. Gooslbee is obviously very gifted on television but it will take a fundamental turnaround in President Obama's economic policies, not better sound bytes, to quickly turn around this country's economic problems.
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