Ok, I didn’t plan it this way, but I’m punting on my first ‘Ask The Question’ poll that I want you to vote on. (Your Input at right.) Though I intended for these polls to reflect the publics preferences amongst three options, I added ‘All the above’ as a fourth. I know, defeats the purpose, right?
In this case, I’m going to keep it since I believe the answers to all the questions will yield a much clearer picture of what the benefits and costs are of raising taxes for $250k+ earners vs. not.
Some broad brush strokes. We have two ‘opposite’ problems in our economy: an increasing deficit/debt, and slow growth with high unemployment. They are ‘opposite’, because the solution to one, exacerbates the other. If we cut spending, it will help the deficit, but cause a recession, slowing growth and employment. If we increase targeted spending (jobs bill), the opposite occurs. Similarly, if we lower taxes, it stimulates the economy, but increases the deficit. Doing the opposite, flips the result.
However, these economic controls can be fine tuned, so the question is- is there a policy combination that tackles both problems while maximizing the overall upside and minimizing the downside?
My first ‘Ask the Question’ poll deals with the tax part, leaving spending for later.
As regards the first poll option- the % of $250k earners that are actually ‘job creators’- the few answers I got in the news in over a years time, ranged from less than 1%, to 3%. Whatever the exact figure, it’s pretty low if that’s the range. But why haven’t we nailed this down, and what else is relevant regarding this issue? To hedge my bets, I threw in the second part of the question- how many jobs are we talking about? The best article I read, by Gail Collins, sheds a lot more light on this question, but is still frustratingly imprecise in some areas.
On the second question, lots of figures are being given by the news media, and for varying ‘tax increase thresholds’- from $250k to $1M. The current threshold offer from President Obama is now $400k. All good data and much needed. But some make the case for raising taxes on lower income levels as well. For President Clintons’ opinion, see Part 2 (4:15 minutes in) of this previous Video of the Week.
Addressing the third, in David Leonhardt’s article “Do Tax Cuts Lead to Economic Growth?”, the answer suggests there is a tenuous link at best, with several Republican advisors weighing in. I hedged my bets on this one too- adding the ‘multiplier effect’* part of the question. If there’s additional ‘bang for the buck’ to be had going into the future with one policy vs. another, don’t we want to know about it?
Vote!
* The multiplier effect occurs when one person’s spending becomes someone else’s income, and some of the second person’s income is subsequently spent, becoming the income of a third person, and so on, leading to economic growth.
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