The problem with political taxation

It does not take a genius to realize that the United States is in the midst of major economic problems. Unemployment is unacceptably high and has remained so for well over a year. Growth in the economy has staggered and nearly stopped. We are perilously close to another recession. The Federal Reserve has pumped cash into the system at rates unheard of, indeed unthought of, just a few years ago. Debt has soared together with federal spending on all sorts of programs. It is safe to say that everyone who has paid attention to the economy knows that a careful plan is needed from the government as to how best to encourage growth of output and the return of jobs. So why is it that we are faced with making a decision on tax rates based on political rather than economic factors? Why is it that Obama has waited until the last minute before even considering what to do with the tax questions? Why is it that crazy things have been allowed to happen in the realm of taxation, for example the lapse of the estate tax in 2010 and its scheduled reinstatement at extremely high rates in 2011?

The answer is one that angers me and many other Americans. The answer is that Obama and the Obamacrats care more about their power than about doing what is right for the country. No rational economic thinker could ever believe that allowing the gyrations of the estate tax is sound policy. Nevertheless, the Democrats could not be bothered in 2009 to even consider the issue since they were too caught up in their healthcare debacle. they wanted to assure their hold on power, thinking that passing the health bill would cement them in their seats. Anyone who can read knew that the tax rates were scheduled to rise for all Americans at the start of 2011; the Democrats forced that into the law in 2001. Thus, all of official Washington has had years of notice that in 2011 there has to be a plan for dealing with the tax rates. Obama even ran on his plan; all those with incomes below $250,000 were to be spared tax increases of any sort.

So again, why are we now facing a political decision on taxes rather than a careful, rational decision made on the basis of what is best for the economy? Do you realize that the bill to deal with the tax rates has not even been introduced in the congress yet, but it needs to be pased in the next three weeks. Will this be another bill that no one has the time to read or consider? Haven't the Democrats learned that last minute bills are not popular with the American people?

Obama himself has said that it does not make sense to raise taxes in the middle of a recession. Nevertheless, that is now exactly what he wants to do. Obama has also agreed that small businesses are the source of most new jobs in the USA. Nevertheless, he wants to raise taxes on over half of all the income earned by those small businesses. Amazingly, he proposes other breaks that will go to a small part of the small business community. He will take from all small businesses and give back a small part of what he takes to a select few. the net result will be the loss of jobs. I know it. You know it. Obama and his people know it. People will lose their jobs or not get new ones because of this plan.

So why is Obama doing this? Well, he now gets to argue that the Republicans want to give tax breaks to the rich. Nevermind that the bulk of these "rich" are actually the small businesses that need the money to hire new workers. Think how good it sounds: I, President Obama, am taxing the rich because they do not pay enough. I, President Obama, am the protector of those who are not rich.

Of course, although it sounds good, it is actually very bad medicine for the economy. How would it sound if Obama said that he was knowingly taking away from small business the funds needed to create new jobs? Not so good! but that is what is happening if Obama gets his way.

Then there are the taxes on energy producers that Obama is trying to slip through as a mechanism to pay for more stimulus. The stimulus will consist of more infrastructure work even though the amount of such work in the first stimulus bill has not been close to being even started. What obama is actually doing is adding more sork to the end of the assmbly line of these projects. In 2013 or 2014, there will be additional work. but we need the jobs and the work NOW!!! So why the push for the bill? the answer lies, of course, in Obama's need to look like he is actually doing something to help the economy. We have watched for nearly two years as he ignored the economy. With the election two months away, something had to be done for appearances.

And how does Obama want to pay for these additional project? He wants new taxes on American energy companies. These taxes will kill at least 150,000 jobs in the US economy and will give foreign oil firms a big advantage over US firms. I guess Obama was not satisfied with killing only the 50,000 jobs that his gulf drilling freeze hit. Now, he wants to get the rest of the industry.

I am truly amazed that Obama and the Obamacrats have been so transparent in their mismanagement of the economy. Indeed, it is the first time in his administration that Obama has been transparent on anything. Still, to watch this man take steps to dismantle America's economic greatness is a horrible thing to behold. I only hope that the American people are able to see what he is doing. Hopefully, come November 3, he will lose his chance to hurt the economy further.