Paul Tullis's Grim Tidings

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Posts Tagged ‘small business taxes

Cantor’s Song: House minority whips spins a tall tale in the WSJ

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One of my favorite ways to indulge in masochism first thing in the morning is by reading The Wall Street Journal.

Today’s edition had a few gems from the Republican Party, but on a per-word basis of untruthful omissions, misleading statements, red herrings and pure bunk, the best piece by far is Rep. Eric Cantor’s (R-VA) op-ed.

He’s explaining why the GOP “won’t back down” on opposing the tax “increases” which “President Obama and Speaker Nancy Pelosi want…for those who happen to fit their description of ‘middle class.'”

That’s an interesting way of putting it. The president and speaker actually only oppose extending tax cuts that were to expire at the end of this year. These tax cuts—and their expiration—were enacted by a Republican Congress, and signed into law by a Republican president. But in Republican rhetoric, allowing a Republican law to expire as the Republicans themselves planned it to is a tax “increase.”

The “fit their description” part is also curious. If anything, Obama’s and Pelosi’s definition of middle class is expansive toward the wealthier end of the scale: They’re for extending the tax cuts for anyone making less than $200K a year. Only 4.3% of Americans earn more than that. So someone at $199,999 isn’t exactly in the “middle;” they’re in the top 20% of earners. I don’t know what universe it is that the top 20% is the “middle,” but apparently that’s not enough for Cantor; he implies that even people making more than $200k are “middle class.”

Cantor’s untruthful omission is the fact that the people who make the most money in the US aren’t getting it through earned income; they get it mostly through capital gains and dividends, which are taxed at 15%—far below even middle class marginal tax rates. In fact, the richest 400 Americans paid only 16.6% of their income in federal income taxes in 2007—even as their incomes rose.

But Cantor doesn’t stop there. He holds up the old Republican canard that “job creators…lack certainty” regarding “the tax and regulatory system.” This is how Wall Street and their pals in the GOP are holding the economy hostage: They don’t invest in the private sector and they don’t lend to small businesses (in whose name Cantor claims to be acting) because they “lack certainty.”

What would bring them certainty? Why, tax cuts for the rich, of course! To mix metaphors, what they’re saying is, Give us our free lunch or we won’t play ball. By the way, there’s no guarantee they will open the spigots of capital if they get the tax cuts they’re demanding for people earning a greater share of national income than at any time since the Gilded Age.

Then Cantor derides the “failed stimulus.” Here are the facts on the stimulus:

• President Bush enacted an economic stimulus in early 2008. If stimulus is so bad, why was it good enough for Bush?

• The CBO says Obama’s stimulus reduced unemployment by between 0.8% and 1.7%.

• Economists at Moody’s and Princeton say unemployment would be above 11% and GDP would be nearly $500bn lower. (Thanks to James Surowiecki for those last two.)

Some failure!

Later in that same sentence (way to pack the bullshit, Cantor!), the Minority Whip says private industry is better at creating jobs than government action. So how did Pres. Bush do in his 8 years?

1.5 million jobs LOST. The Republicans are like Superman: They created so many jobs that job creation went backwards!

Then Cantor disses “the new health care entitlement.” The biggest entitlement in the last 40 years, though, was Medicare Part D—passed by a Republican Congress and a Republican president, with no way of paying for it.

However, ObamaCare, as the Journal likes to call it, actually pays for itself—and saves money in the long run, according to CBO.

The next insult is a GOP favorite: accusing the Democrats of “class warfare.” Apparently, in the GOP universe, cutting taxes for the richest 5% of the country while income for the middle three quintiles stagnates; letting hedge fund managers (who made an average of $1bn each in 2009) declare the earnings they make on other people’s money their own capital gains so they can avoid paying a fair share; and calling the expiration of a law they themselves enacted a tax increase—none of this is class warfare.

But trying to change it, or even criticizing it, is.

The final rhetorical flourish is a red herring. Cantor writes (and he’s factually correct), “roughly half of all small business income in America will face a higher rate…”

If you’re a small business owner (like me), you probably read that (like I did) and think there’s a 50-50 chance your taxes will go up under Pres. Obama’s plan. But look carefully: “…half of all small business income…”

Because Bush was so expert with his policies at packing income at the upper end of the scale, half of all small business income in the US is earned by only about 750,000 people. How many small businesses are there in the US? 29.3 million.

For those of you keeping score at home, that’s 2.5% of the total of small business owners whose taxes will go up.

And some Americans want to put these disgraceful, hypocritical, selfish liars in charge again? Hard to believe.

#30#

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Written by ptullis

September 20, 2010 at 3:30 pm