The Politics of tax policy

In an effort to create jobs the President is asking that the Federal Government spend some money. To pay for these job creating proposals the President has offered up a tax on Americans making over a million dollars a year.

Republican Legislators say this is a "non-starter". They claim that the rich already pay too high of a percentage of the tax bill and they term these millionaires as "job creators".

First it should be noted that less than one percent of small business owners make over a million dollars a year. There a plenty of CEO's, actors, athletes, and celebrity personalities that make over a million dollars a year but to call Mike "the Situation" of Jersey Shore fame a "job creator" is a stretch.

Second, the Federal income tax is not the be all, end all for the taxes that we as Americans pay. Using the Federal income tax rates as your only metric to determine who is taxed too much and who is taxed too little, is like only watching MSNBC or Fox News. You may end up with some political talking points but you will be completely uninformed.

The reality is that we already have what amounts to a national flat tax. The graph below (from MSN) shows the effective tax rates broken down by age and earnings.



While it may be true that the rich pay a higher percentage of their wages in the Federal income tax system than the poor, it is also true that the poor pay a much higher percentage of their wages in sales tax. To make matters worse the numbers above were from 2007 and the sales tax rates just reached new record highs. This means what little savings the poor had over the rich four years ago has likely disappeared.

So while Republican legislators continue to push for higher taxes on the poor ("broadening the tax base") their refusal to increase taxes and the subsequent shortfall in federal funding for states has already produced the affect of raising taxes on the poor as states increase sales taxes to offset the losses.

There are plenty of ideological differences on job creation that deserve debate but this obstruction based on half truths is pure demagoguery. Being a Devils advocate should be an instrument of debate not a political position.