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Why wait indeed?

Pay attention to the rich talking heads on TV who start huffing-and-puffing when their beloved tax cuts come under the Obama chopping block. The only argument you ever hear to keep their taxes low is that you need low taxes in order to generate jobs. It's all about the jobs! Right? WRONG!

Those who oppose repealing the cuts will offer the same argument they used to promote them during Mr. Bush's first term -- an argument echoed during the presidential campaign by Senator John McCain, when he invoked Joe the Plumber.

In a nutshell, the claim is that low tax rates for top earners prompt small businesses to create jobs. Although this idea went largely unchallenged during the presidential campaign, it flies in the face of everything we know about the economic logic of hiring decisions.

It rests implicitly on the premise that business owners will hire new workers whenever they can afford to do so. What matters, however, is not whether owners can afford to hire, but whether hiring will increase their profit.

If the goods produced by additional workers can be sold for at least enough to cover their salaries, hiring makes economic sense, no matter how poor a business owner might be. But if additional workers won't produce enough to cover their salaries, hiring is a losing move, even for the richest owners. The after-tax personal incomes of business owners are irrelevant in hiring decisions.

EGG-ZACTLY!

But wait, there's more! What's going to happen to all those rich people when they're forced to cough up the same amount of money that they were paying in taxes back in the 1990's? Remember how badly things were going back in those lousy days of Peace & Prosperity during the Clinton years?

Higher tax rates for top earners wouldn't appreciably reduce their spending. A robust finding in behavioral research is that people are extremely reluctant to accept cutbacks in their standard of living.

With few exceptions, high-income taxpayers earn substantially more during their lifetimes than they spend, generally bequeathing the surplus to heirs or charities. If these taxpayers faced slightly higher rates, they would have ample resources to maintain their current lifestyles, so most would keep spending as before. The only consequence would be that, years from now, they would leave smaller bequests.

So, given the financial mess this country finds itself here at the end of 2008, what's the best use of all that extra cash that the richest in this country are hoarding?

The added revenue from eliminating the Bush tax cuts would pay for larger temporary tax cuts for low- and middle-income families than the permanent ones now planned. And because these families spend most or all of their post-tax income, the immediate effect would be an increase in total spending roughly equal to the additional revenue from repealing the cuts.

As an option, the extra revenue could be used to raise unemployment insurance benefits and extend them more broadly. Or it could increase eligibility for food stamps. These steps, too, would have the immediate effect of bolstering total spending by almost the full amount of the additional revenue.

Still another option would be to use the added revenue to increase grants for road maintenance in cities and states. Here again, 100 percent of the distributions would be spent immediately.

So, the idea is to get money into the hands of those who will spend it immediately, and one of the best ways is to lower taxes on the middle class with revenue from the upper class. Class warfare, right? NOT. It's called a fair tax policy.

As Kevin Drum, over at Mother Jones points out, the Rich and Famous have gotten off swimmingly well during the Bush years when it comes to paying their fair share (it's why Warren Buffet is embarrassed that his tax rate is less than this secretary's):

Full chart from the NY Times is here.

As Kevin sums up:

Not very progressive! Add in state and local taxes and it would look flatter still. And just to remind everyone of exactly what that "Top 400 Taxpayers" segment at the far right looks like, here are the pinkos over at the Wall Street Journal to explain it to you:

The top 400 taxpayers have greatly increased their share of individuals' income since the mid-1990s. The group accounted for 1.15% of total income in 2005....more than twice as large as its 0.49% share a decade earlier.

....The average federal income-tax rate for the group was 18.23%....well below the average income-tax rate of nearly 30% back in 1995, when Bill Clinton was in the White House.

So there you have it. The top 400 taxpayers, a group so rich and elite that I'd need scientific notation to properly represent their proportion of the population, have doubled their share of income in the past decade or two but have decreased their tax burden by nearly half. Nice work! As you can see, Warren Buffett wasn't exaggerating when he said his secretary paid a higher tax rate than he does. If she pays more than 18% -- not exactly a tough hurdle when you figure that payroll taxes already account for about 8% of that -- she probably does.

It's just so clear that over the past eight years Bush has taken from the poor and middle class to give to the rich. A reverse-Robin Hood, so to speak.

As that NY Times article concludes:

The Bush tax cuts widened income inequality and drove deficits to record levels. Referring to those cuts, Mr. Obama said that "people didn’t need them, and they weren't even asking for them."

Economic fairness and economic growth are sometimes conflicting goals. But not here. Repealing the Bush tax cuts immediately is not just the fairest policy option but is also the most efficient.

Amen. Let's hope Barack Obama and his team follow-up on their promise to raise taxes on the richest segment of the population.

C'mon you Rich folk out there! Your country needs you!

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