The problem with stimulating our economy will not be addressed by simply having the government throw more money at the problem. In fact, according to economists Jason E. Taylor and Richard K. Vedder, "stimulus efforts of modern times, perhaps most notably that of Japan during the 1990s...actually led to reduced economic growth and long-term higher unemployment."
The true engine of American economic growth and job creation is small businesses. In the last decade, small business created two-thirds of the net new jobs. The success of these organizations is tied directly to individual tax rates. According to the National Federation of Independent Businesses, 75 percent of small businesses are organized as pass-through entities, meaning their taxes on business income are based on individual tax rates. In the state of Oklahoma, small business accounts for 97.4 percent of the state's employers.
Congress should permanently extend all of the tax cuts due to expire at the end of this year. When uncertainty exists in any market, business is reticent to build capacity or additional jobs. Over the past year, this Democrat-controlled Congress has completely rewritten the rules for the financial services and healthcare industries, with years of rulemaking left to go. This, in addition to the looming expiration of the Bush tax cuts, certainly creates an economic environment of uncertainty.
Extension of current tax policy for all is not a Republican issue. In 2001, the House passed the first rounds of cuts 240 to 154, with 28 Democrats joining the Republican majority. Democrat Senators Jim Webb, and Evan Bayh have already announced their support for extension of the Bush tax cuts. With elections only a few short weeks away, taxes and the economy will be in the forefront of the public's mind. Let's work to legislate on behalf of the American people and put partisan differences aside.