When is a tax cut not a tax cut?
Enough is enough. While listening to the news this morning (Fox News, no less) Peter Doocy is discussing which Senators will be supporting the middle class tax cut proposed by the president. Excuse me, did I miss something? The only Obama proposal I heard called for congress to increase tax rates. In some twisted liberal logic, proposing to raise the tax rate on the most productive Americans equals cutting the tax rate on the rest. Let’s be clear, no one and I mean NO ONE is proposing to reduce the current tax rate for anyone! The current proposals are to;
1. Increase the tax rates on all income brackets.
2. Increase the tax rate on individuals making over $200,000 or joint filers earning over $250,000 annually.
3. Extend the current tax rates otherwise known as the status quo or neither a tax cut nor a tax increase.
So to be clear, no one is proposing a “Tax Cut”, the current debate is over whether or not we should increase the current tax rate and if so, should we increase taxes on all taxpayers or just the most productive.
Now that we understand the truth, it is also important to understand how we arrived at a point when tax increases can be portrayed as tax cuts. Back in 2001 when the current tax rates were proposed by President Bush, the Democrats along with John McCain insisted on a compromise. They added a sunset provision which called for the tax rates to revert to the previous levels (a tax increase) after 10 years. In a failed effort to win favor with voters in 2010, Obama and the Democrats agreed to extend the rates for 2 years which brings us to the current debate.
The current tax law is set to expire on January 1, 2013 at which time the rates will revert to the higher rates from 2000. The long-term planning of the Democrat party has enabled them to twist a proposed tax increase into an election year proposal to cut taxes for the middle class, a narrative that is now echoed on network and cable news.
UPDATE: Congressman Ryan schools Obama defender Norah O’Donnell on this very topic.