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Rowley: Go Back to the Tax Policies of the 1800s

Thursday, June 02, 2011

 

As progressive Democrats make their latest case for raising taxes on upper income earners, one consistent justification for the proposal is continuously posed – Democrats only want to revert back to the income tax rates of the 1990s.

The argument is certainly meant to preempt any Republican criticism that may characterize the tax hike as extreme and imprudent. But it is primarily an attempt at pacifying the citizens. After all, things were wonderful in the 1990s. So what’s the worry?

Well, the first point is this: Democrats are incapable of imagining the prosperity that is forbidden by any level of taxation. Elected representatives should have been working to lower income taxes in the 1990s as well. But as long as the economy is healthy, Democrats assume it is operating under the most optimum of conditions. And the 1990s was one of those periods.

Representative Larry Valencia (D), buttressed by unions and progressive activists, has taken the lead in Rhode Island on this issue, joining a chorus of Democrats nationwide by downplaying his proposed tax increase by explaining that it doesn’t even reach “the tax rates of the Clinton years.”

Reminiscent of Vice President Joe Biden calling tax hikes on people earning over $250,000 “patriotic,” Valencia is calling his bill “A Civic Responsibility Tax Plan.” For some reason, Valencia believes that it’s the “responsibility” of high income earners to pay for the failed government that unions and

Democrats established here in Rhode Island. So he has offered up a plan that would eradicate the Bush tax cuts on the state level, raising state income taxes 4.1 percent on individuals making over $200,000 per year, and couples making over $250,000.

If the feds won’t take your money, well, then Larry Valencia will!

The Current Economy Matters

The second point is this: As seductive as Valencia’s statement may be, especially in a time when lawmakers are struggling to balance the state budget and small business owners are resisting Governor Chafee’s sales tax proposal, it is truly demonstrative of Democrats’ childish failing to comprehend basic economic realities.

The power and size of an economy fluctuates. Therefore, it can’t always withstand identical policies of the past. In the midst of this prolonged recession, the American economy continues to wince and recoil. The solution is not to extract even more wealth from the private sector – especially from job creators.

Even President Obama admitted in 2009, “The last thing you want to do is raise taxes in the middle of a recession. Because that would just suck up, take more demand out of the economy. And put businesses in a further hole.” In agreement is Obama supporter John Talbott, the author of Obamanomics and a believer in “bottom-up economics,” who says that raising taxes “would not be the right solution in a recession.”

And we are certainly still rutted in a recession.

The New York Times had to swallow some progressive pride this week and confess in their Monday editorial, “The growth estimate [remains] stuck at an annual rate of 1.8 percent, compared with 3.1 percent at the end of last year. More troubling in the latest figures, consumer spending – the largest component of the economy – was especially slow. Stagnant wages and higher prices for gas and food are squeezing family budgets, while falling home equity hurts consumer confidence. That suggests more bad news to come…A recent Labor Department report showed a greater-than-expected rise in the number of people claiming jobless benefits even as private-sector economic forecasts are being revised downward – both very bad omens for continued job growth...The housing market is still awful, and state and local government budgets are still a mess.”

Wow. Even after all that stimulus!

Rhode Islanders Must Reject Class Warfare

Valencia and company will continue to fan the flames of class warfare, attempting to have as many poor and middle class voters feel hatred and envy for higher earners. In a recent press conference, Rep. Valencia referred to people making over $250,000 as “those who caused [the current economic pain].” And president of Ocean State Action Kate Brock is amusingly insisting that the wealthy are failing to pay their “fair share.”

People most offended by Chafee’s sales tax plan shouldn’t fall for this predictable progressive counter-proposal, which would seem to alleviate them from Chafee’s tax assault. Disproportionately taxing the rich, especially during economic downturns, will only further erode Rhode Island’s business environment at a time when the job supply is dwindling.

Perhaps business owners need only remember this: At the union solidarity rally several months ago held at the RI State House, two groups were holding signs that read “Tax the Rich.” The first group was the unions. The second was the International Socialist Organization.

Is this who small business owners want to be in agreement with?

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Travis Rowley (TravisRowley.com) is chairman of the RI Young Republicans, and a consultant for the Barry Hinckley Campaign for US Senate.
 

 

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