Thomas Sowell, a senior fellow at the Hoover Institute in Stanford, California, posted an article at Front Page Magazine today about the current Congressional debate over extending the current tax rates before they expire on January 1.
He comments, "The fact that this decision has been left until late in the eleventh hour, even though the expiration date has been known for years, tells us a lot about the utter irresponsibility of Congress."
The discussion has been that we need to extend unemployment benefits rather than cut tax rates for the wealthy. There are some problems with this statement. Extending unemployment not only does not stimulate the economy, it slows down the process of laid-off workers finding jobs. Statistics show that unemployed people are most likely to return to work within two weeks of the time their unemployment insurance runs out. That is a basic statement about human nature--it's not rocket science. Cutting tax rates for the wealthy is not what is happening here--the actual issue is whether or not taxes will be raised on the wealthy on January 1. No one's taxes are being cut--the question is whether or not to raise taxes on certain Americans. The Democrats argue that the 'rich' don't need tax cuts, but the unemployed need more benefits. The Democrats argue that extending unemployment insurance will stimulate the economy and that continuing the current tax rates will not.
Mr. Sowell concludes:
"What does that record say? It says, loud and clear, that cuts in tax rates do not mean cuts in tax revenues. In all four of these administrations, of both parties, so-called "tax cuts for the rich" led to increased tax revenues-- with people earning high incomes paying not only a larger sum total of tax revenues, but even a higher proportion of all tax revenues.
"Most important of all, these tax rate reductions spurred economic activity, which we definitely need today.
"These are the facts. But facts do not "speak for themselves." In terms of facts, the Republicans have the stronger case. But that doesn't matter, unless they make the case, which they show little sign of doing."
I hope someone begins making an effective case for keeping the current tax rates soon--the rates expire at the end of the month.
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