More On Democrat Tax Increases

Republican Senator John Kyl of Arizona wrote an editorial on NRO Online about the tax increases you can expect from the new Democrat Congress.

This isn't anything new (see previous blog here), but this is a great simplification of the causes and effects of tax changes. If you don't understand the effect of tax cuts and tax increases on the economy -- and, more importantly, on your own paycheck -- you really need to read this entire article.

Here's a summary.

The Republican-led Congress, prodded by President Bush, passed major tax cuts in 2001 and 2003. These cuts led to a booming economy, millions of new jobs, and new investment and innovation. As Kyl says, "[w]hen government gets out of the way, the American people will get to work."

Over the past five years, our overall economy has seen growth that is far better than the previous 30 years, and over 8 million new jobs have been created as part of that growth. Unemployment is at 4.5%, which is the lowest average in over 40 years. Wages have increased an average of $3,000 per person. At the same time, tax revenues have increased 37%, which has helped drive down the national deficit for the past three years, and right now the deficit is well below the average of the past 40 years.

All this is the result of Bush's tax cuts. Tax increases have the opposite effect. Kyl summarizes: "As rates increase, the rewards of labor and investment decrease. People see more of their income and the returns on their investments eaten up by taxes, and this gives them little incentive to work more or invest more. Without new labor and investment, economic growth grinds to a halt, and the economy stagnates."

Now, the Democrats leading Congress have approved a budget that fails to extend Bush's tax cuts, which in effect means a massive tax increase of over $700 billion. In addition, they're planning to increase the Alternative Minimum Tax, which will hammer wealthy Americans and most small business owners (who are usually taxed like individuals). Small businesses are responsible for 60-80% of the new jobs created over the last 10 years, and increasing the tax burden on them would do major damage to America's economy.

The most unbelievable part of this issue is that the results are not 'projected' or 'estimated' - they are concrete, tested, true, repeatable results. Anyone who is in favor of increasing taxes is simply ignoring the facts that such actions will inevitably harm America.

REMEMBER who wants to raise taxes on YOU.

There's my two cents.