Tax Cuts? What Tax Cuts?

We've been over this before, but it's worth highlighting again in the light of Obama's recent statements on tax cuts:

President Obama marked Tax Day with a speech touting his tax policies. He made several claims about how his policies will improve the economy, most of which don't hold up under close scrutiny.

Here are a few of the more egregious examples:

• President Obama claimed the tax cuts in the mis-labeled "stimulus" bill are the most progressive in history. This is true because the so-called stimulus created the Making Work Pay Credit and expanded the Child Tax Credit and the Earned Income Tax Credit. All these credits are refundable, so they send checks to tax filers who pay no income tax. This is income redistribution that does nothing to stimulate the economy.
• President Obama also claimed that his tax policies cut taxes for the most number of workers ever. This is flat out false. The credits in the so-called stimulus phase out for anyone making over $95,000 ($190,000 for married filers), so a large number of workers are excluded from claiming any portion of them. The 2003 tax cuts applied to all workers because it reduced all income tax rates. It also did not limit the tax cut to earned income, as the stimulus tax cut did, and exclude income from social security and pensions. By all measures the 2003 tax rate reductions applied to more workers and taxpayers than the stimulus tax cuts.
• President Obama stated that the tax cuts will boost demand and stimulate economic growth. The tax cuts will not stimulate economic growth because they are economically identical to spending. And spending does not stimulate economic growth because the money must first be borrowed or taxed out of the economy before it can be spent by the government. No new demand is created. Income is just shifted from one sector of the economy to another.
• Lastly, President Obama said the tax cuts will create or save 500,000 jobs. The latest jobs figures contradict this claim. The economy shed 663,000 jobs in March. The analysis used to concoct the number of jobs created by the so-called stimulus has already been shown to be fatally flawed.

The tax cuts in the so-called stimulus will not stimulate the economy. President Obama chose to pursue tax policies that redistribute income to low-income tax filers instead of cutting tax rates to encourage economic growth. By doing so, he missed an opportunity to actually create jobs and put more money in the pockets of the people he wants to help.

The American people are not stupid, and the more he talks about his plans, the more people dislike them.  Thus, a backlash is building...

3,000 in Hartford, CT. 8,000 in Madison, WI. 2,000 in Jacksonville, FL. 2,500 in Boise, ID. 5,000 in Sacramento, CA. And many, many more. If turnout is your metric for success, then the nation wide Tea Party protests held yesterday were wildly successful. Establishment left organizations like the Center for American Progress and mainstream media CNN (like Susan Roesgen) tried their best to portray the protesting taxpayers as corporate shills, but a new Gallup poll released yesterday should give the left some pause before they start believing their own press releases.

CAP even cites the poll in their anti-Tea Party tirade, noting that a "Gallup poll found that Americans' views of income taxes are among the most positive since 1956." This factoid is true but it ignores two things: 1) the poll's other findings on American's appetite for big government; and 2) the universal understanding that Americans will soon see their tax bills sky rocket to pay for the Obama administration's big government plans. When asked by Gallup if they approved of the government's new expanded role in the economy, 44% said no, 39% said yes but "want it reduced when the crisis is over", while a mere 13% of Americans said they wanted Obama's government expansion to be permanent. Just 13%.

And make no mistake; there is nothing temporary about the Obama administration's push to expand government spending and power. Just ask White House chief of staff Rahm Emanuel who echoed his previous "never let a serious crisis go to waste" sentiment when he told USA Today:

Every time in a period of crisis — look at the time of World War II or the Depression, look at the Civil War — people have reinterpreted what the government can and should do. We're in that moment of time now. Crises create that.

And who is going to pay for President Obama's reinterpretation of "what the government can and should do"? American taxpayers. And not just the rich. As The Hill reported earlier this week: "Many economists, including some who voted for Obama, do not believe that he can indefinitely avoid imposing tax increases much further down the income scale — on the middle class." The Washington Post editorial board concurs: "But there is a limit to how much the tippy top should bear. President Obama has promised that taxes will not be increased for families making under $250,000. That is a promise that will probably have to be dropped down the road."

President Obama has already signaled he will allow his stimulus tax cuts to expire in just two years. And he wants to raise taxes on small businesses, on corporations, and on investors. Not to mention his plan to enact a trillion dollar energy tax on all Americans. Oh and states are also moving to approve major tax hikes too. So the left should enjoy Americans' brief ambivalence with their tax burden while it lasts. The backlash is already brewing.

And when those tax increases start dipping deeply into the middle class -- as conservatives have been predicting for months will happen (see here, here, here, here, and here) -- it will explode.  Good; the sooner the better.

There's my two cents.