Everyone needs to make sacrifices during this tough time. That's politicians of all stripes are saying. What they're not adding is that when they say “everyone,” they really mean “everyone else.” We're in the midst of a debt crisis, and we have politicians (who at least have had the decency to freeze their pay the last two years) doing their best to explain why Social Security payments, government employment pensions, and any number of programs are on the cutting block, but higher taxes aren't even on the table.
It makes no sense. Okay. It kind of does. Us regular schmoes aren't making huge, vote-buying campaign contributions to maintain the status quo.
I agree that some cuts need to be made, and that hard choices are coming. But the spending cuts being considered don't exactly mean sacrifice for the big corporations raking in record profits this year and the wealthy who are enjoying some of the lowest tax rates in the developed world. If everyone were actually expected to sacrifice, we wouldn't just be asking students to start paying student loan interest immediately. We'd be raising taxes on individuals making more than $500,0000, couples making more than $1 million and businesses making more than $50 million. That would be a way to raise some revenue without completely gutting the middle class and the small businesses that represent the backbone of our economy.
“But, Miranda,” you say. “Tax cuts stimulate job growth because big businesses will hire more. Tax cuts stimulate economic growth because people at the top will spend more, helping everyone. When we cut taxes, it encourages net revenue growth. Tax cuts at the top help everyone else by paying for themselves — and then some.”
Sorry, folks. I don't buy it. That's trickle down B.S. at it's finest. I've got 5 reasons why the argument that tax cuts at the top are beneficial for everyone is a huge load:
- Tax Cuts Don't Boost Revenues, Time, 2007
- “No serious economist believes Bush's tax cuts will pay for themselves,” from an article in The Economist, 2006.
- Rich Americans Save Tax Cuts Instead of Spending, Moody's Says, Bloomberg, 2010.
- This testimony from the non-partisan Congressional Budget Office that points out that cutting income taxes ranks last in effectiveness among 11 proposals for spurring economic growth.
- Economist Robert Shapiro points out that “out of 8,467,000 private sector jobs lost in this dismal cycle, 7,796,000 of those jobs or 92 percent were lost on the Republicans' watch or under the sway of their policies.”
“If policymakers are to put the nation on a sustainable budgetary path, they will need to let revenues increase substantially as a percentage of GDP, decrease spending significantly from projected levels, or adopt some combination of those two approaches,” the CBO report said.
I, personally, believe that we should follow the third path: Decrease some spending, and increase some taxes. It's not an either-or situation — and it shouldn't be. Yes, government spending needs to be reined in. We need to decide on what our priorities will be, and we need to cut some of the fat. But we shouldn't rely entirely on spending cuts.
If everyone's going to sacrifice, tax hikes at the top need to be put in place.