Thursday, February 02, 2006

Will Democrats ever be able to argue against tax cuts again?

Throughout all of 2004 leading up to the election, one of the things we constantly heard from John Kerry and other Democrats was how “tax cuts don’t work” or that they were “only for the rich”. As far as the tax cuts being mostly for the rich they would be correct because of a few simple points and misleading statements. First, in order to get a tax cut you would need to pay taxes that in itself is obvious. However if you look at the fact that the top 20% of wage earners in this country pay 80% of the income tax that goes to the IRS, it would make sense that they (the so called rich) would get the lion share of the tax cut. Since our tax code is progressive where you pay a higher percentage on a higher amount again it would make sense that someone making $100K would get dollar for dollar more than someone making $30k.

Either way what the last two and half years since the tax cuts has shown (not the first time I’ll remind you) is that tax cuts work. Since the tax cuts by President Bush, which also included tax cuts on money repatriated back to the U.S. by companies, The U.S. has seen its treasury receipts at record levels, corporate profits at record levels and 4.6 million jobs created, which is more than Japan and Europe combined. As early as this morning, initial jobless claims for week ending Jan 28 fell to its lowest level since Feb 2001.

As the old saying goes, “numbers don’t lie”, and based on the economic data from the last three years I would think democrats would finally have to of reached a point where even they can see now what the majority of economists have been saying for over a century. When an economy is weak it needs to be stimulated, the only way to do that is with an injection of capital through lower interest rates and money in the consumers hand through tax cuts.

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