Redefining the Bush tax cuts | Don Brunell

Everyone is talking about the “fiscal cliff” deadline looming on Dec. 31, when automatic tax increases and spending cuts take effect unless Congress reaches a compromise. Both political camps are in full campaign mode, blaming the other for the lack of progress.

Everyone is talking about the “fiscal cliff” deadline looming on Dec. 31, when automatic tax increases and spending cuts take effect unless Congress reaches a compromise. Both political camps are in full campaign mode, blaming the other for the lack of progress.

 

However, as the nation moves ever closer to the dreaded precipice, something interesting has happened. The long-vilified Bush tax cuts have been rehabilitated.

 

For more than 10 years, most Democrats lambasted the lower taxes approved during the Bush administration as “tax cuts for the rich.”  The mantra was repeated constantly and became part of our national lexicon. “The Bush tax cuts for the rich.”

 

Eventually, it morphed into a single word: TheBushtaxcutsfortherich.

 

Now, those same critics are embracing the Bush tax cuts as they apply to middle-income earners, warning that letting them expire will result in big tax increases for average folks.

 

Apparently, the critics knew about the benefits for middle-income families but chose not to mention them — until now.

 

Well, the former-critics-turned-supporters are correct.

 

According to President Obama’s National Economic Council, ending the Bush tax cuts will hike taxes on the average middle-income family by $2,200 annually. When combined with the automatic tax increases set for January 1, the impact will be even greater.

 

The Tax Foundation says, if we go over the fiscal cliff, a family of four in McAllen, Texas with a median income of $36,104 per year will see their taxes increase $2,938 a year, or more than 8 percent. A similar family in Mount Vernon, Wash., earning the median income of $78,569 would see a $3,300 increase annually.

 

While the Democrats’ disdain for the Bush tax cuts has moderated somewhat, the assaults on “the rich” continue. In August, President Obama urged Congress to let the Bush tax cuts expire for high-income earners, saying “…we cannot afford $1 trillion worth of tax cuts for every millionaire and billionaire in our society.”

 

There are three problems with that statement.

First, the higher taxes hit individuals with incomes of $200,000 — not millionaires and billionaires. Apparently we have redefined what it means to be rich in America. Interestingly, tax-hungry Britain now defines “rich” as making more than $64,560 a year.

Secondly, the tax hike will affect millions of small businesses whose owners file taxes as individuals.  Jay Timmons, president of the National Association of Manufacturers, notes that two-thirds of manufacturers pay taxes as individuals. Timmons warns that the fiscal cliff’s draconian spending cuts — falling mostly on defense spending — would hit companies like The Boeing Company particularly hard and says reaching an agreement on the fiscal cliff is vital to our economic recovery. “If no deal is reached, it will put a damper on growth for years to come,” Timmons said.

Third, the money from hiking taxes on people making more than $200,000 a year will run the federal government for only a week or so. Obviously, it won’t make a dent in our deficit or our $16 trillion national debt.

The only way to reduce the deficit is to cut spending. Tax hikes alone won’t balance the budget or wipe out the deficit without destroying our economy and killing jobs. Unfortunately, the relentless “tax the rich” campaign has obscured this part of the equation.

Virtually no one in Washington, D.C., wants to talk about spending cuts because it can be political suicide. Every government program has its strident supporters, and any talk of cuts creates a firestorm of protest.

But we must cut government spending, reduce our massive debt and shift capital back to the private sector to innovate, create and solve problems. That is the only way we will re-energize our economy and restore America’s financial strength.

About the Author

Don Brunell is the president of the Association of Washington Business. Formed in 1904, AWB is Washington’s oldest and largest statewide business association, and includes more than 8,100 members representing 700,000 employees. AWB serves as both the state’s chamber of commerce and the manufacturing and technology association. While its membership includes major employers like Boeing, Microsoft and Weyerhaeuser, 90 percent of AWB members employ fewer than 100 people. More than half of AWB’s members employ fewer than 10. For more about AWB, visit www.awb.org.

 

 

More in Business

Lt. Dan needs lots of helping hands

Gary Sinise formed the “Lt. Dan Band” in early 2004 and they began entertaining troops serving at home and abroad. Sinise often raised the money to pay the band and fund its travel.

New Enumclaw wine bar aims for broad audience

Bordeaux Wine Bar is scheduled to be open Wednesdays through Sundays.

Streamlining regulations makes more housing affordable

There were over 21,000 people homeless in Washington State last year.

Water pressure mounting in West as population spikes

What is happening in California with water allocation disputes is a harbinger of what is to come in our state as well.

Railroads implementing positive track

While the investigation continues into the deadly AMTRAK derailment near Dupont, the clock continues to tick on the implementation of Positive Track Control (PTC). The deadline is Dec. 31, 2018.

Keep the holiday spirit all year long | Don Brunell

During the holidays, our thoughts naturally turn to giving — not just giving gifts, but donating our time and money to charities, disasters and community programs.

Finding balance in occupational licensing

Recently, the Institute for Justice (Institute) determined state licensing barriers for lower-income workers and aspiring entrepreneurs not only hurts people trying to establish themselves in a profession, but annually drives consumer prices up by $203 billion.

Remember 1993

Twenty-five years ago, business took a beating in Olympia. The swing to the left in the 1992 general election was swift and potent. It drove higher costs to employers and more government regulations.

Remembering Ed Carlson, Vietnam POW

Since last Veteran’s Day, Ken Burns’ in-depth documentary on the Vietnam War has aired. It is a powerful reminder of an unpopular war in which many “baby boomers” fought and died.

Rural prosperity essential to Washington

While Seattle is growing rapidly, our rural areas continue to struggle. They don’t have the corporate giants such as Amazon, Microsoft and Boeing creating jobs and economic opportunities. Farms are predominantly family-owned.

Amazon’s plan reminiscent Boeing’s Chicago move

Last year, Seattle Times aerospace reporter Dominic Gates wrote about the similarities and differences between Boeing’s corporate office move to Chicago and Amazon’s plan for a second headquarters.

LiveLocal98022 meeting cancelled

Bob Green, the night’s speaker, notified the organization he couldn’t attend due to an illness.