I think the President and fellow Democrats are making a mistake not to combat the current Republican talking points and misconceptions about letting the Bush tax cuts to the rich expire.
I am no tax accountant, but I think I have a basic understanding of our tax system. Please feel free to toss some ridicule my way if I've gotten anything terribly wrong.
Misconception Number 1:
Allowing the Bush tax cuts to expire is a tax increase
No. The Bush tax cuts were always a temporary tax holiday. There was a good reason that they were not made permanent. There is no tax increase, we would just be going back to the rates that we should have been paying at all along.
These cuts were supposed to stimulate the economy and create tens of millions of new jobs. You remember, good old Ronald Reagan's trickle down economics and this time we were going to have ten years worth of data to prove it.
Unfortunately for Bush, all he did was prove that trickle down economics does not work. I'm pretty certain Republicans have known this all along they just needed some sort of rationale to sell their fleecing of the country.
Misconception Number 2:
The "rich" won't get a tax break
You would not believe how many Americans don't understand the graduated tax rates. If you re-new the middle class tax cuts, the rich are getting this tax cut as well since all income up to $250K is taxed the same for everyone including those making over $250K.
Misconception Number 3:
If I make over $250K per year in salary I will see an increase.
I don't believe this is the case. The $250K amount is in AGI which for an average working American is much less than their salary. Check out your taxes from last year. I believe that most working Americans to have an AGI over $250K would have to have a salary in the $300K to $400K range.
Misconception Number 4:
Allowing the Bush tax cuts to expire for income over $250K will hurt small businesses.
I'm not as certain on this one, but it seems to me that a tax increase on AGI over $250K would be an incentive to invest more in your company. Let's also be clear, this means this small business owner after expenses is taking $250K out of the business as income.
Democrats have proposed separate, targeted tax breaks for small businesses that Republicans have blocked.
Finally, I believe it has been shown that contrary to what Republicans are saying, the vast majority of small businesses would not be affected by the expiration of the tax cut for those over $250K.
Misconception Number 5:
During this time of economic trouble we cannot afford to have taxes increasing on anyone.
Considering these Bush tax cuts have been shown to have been a complete failure in stimulating economic growth and helping to create a vibrant middle class, this argument is a joke. These Bush tax cuts have done one thing though -- they've padded the bank accounts of the wealthy in this nation to the point where the economic disparity between the have and have-nots has never been greater.
If the Bush tax cuts on over $250K were extended, I think most of it would just end up padding already very large bank accounts and portfolios.
If Republicans were serious about this argument then let's move all of the tax breaks that would have gone to those over $250K and move that money into increasing the tax breaks for those under $250K. It is the same amount of dollars being given in tax breaks, and those same people who would have been getting it are still getting it (in their money earned up to $250K). There is much more stimulative effect in giving this money to the middle class than to the rich.