There's been a lot of discussion about the deadline that is looming. The Bush Era tax cuts, meant to stimulate a soft economy, are expiring on the last day of this year. The debate has been to extend or not to. We as a nation are debating whether or not the tax cuts have worked in the past or not. It really doesn't matter what happened in the past. These are tough times now!
Here are the two sides: The Dem's say that they work on the middle class, but not on the upper class. How is that? I am not sure personally. The Repub's say that you can't raise taxes in a down economy, taking more out of an economic system already short on cash and growth capital. I personally agree with the latter. Why do I?
I just got my property tax bill, and my personal property tax bill. Guess what? They went up again. I have dues to pay at my subdivision association. My health insurance renewal just went up. Raw materials and Gas are up due to QE2, (check my previous posts) and I need to buy some Christmas gifts. I'm trying to keep payroll going for my staff, too. Do I have room for a 20% tax increase? I'll let you answer that for me.
The Estate Tax goes up so much, that a family farm changing hands to descendants next year would force the family to sell land to pay the tax, just to pass it on to their kids. Everyone, especially the middle class will see a large increase in weekly withholding. By year end, 2 million people on unemployment insurance will run out of benefits. Capital gains taxes would almost double. There is no logical argument that these tax increases will help pull us out of this recession. None. We need a temporary extension, if not a permanent one, for a couple of years. Just remember, 70% of all employment is created by small businesses. Small businesses are owned by hard working middle class folks who can't afford a tax increase right now.
Yes, the deficit does need cutting. We also need a balanced budget. But, folks, this is going to take 30 years not 5! Everything will need to be on the table to end our deficit spending. Taxes and entitlements including Medicare and Social Security. The table below shows what we spend on entitlements (click on the pic for a larger view):
No, I'm not advocating that we balance our budget on the backs of seniors. I am just saying that everything has to be on the table. We obviously need the tax cut extensions now, and we need take a serious look at what we can afford to spend in the future. The tax cuts will be extended I am sure. The Dems can't afford not to politically, and the Repubs ran on extending them.
But after January 1st, a lot of heavy lifting remains.
D
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