Economy & Budget

The Big Question: Will the U.S. have to raise middle-class taxes?

Some of the nation's top political commentators, legislators and intellectuals offer insight into the biggest question burning up the blogosphere today.

Today's question:

Will the United States have to eventually raise taxes on the middle class to pay down the national debt?

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Value-added tax wrong medicine for ailing economy (Rep. Leonard Lance)

If President Obama is serious about working with Congress to reduce federal spending and put our Nation on a glide path toward fiscal discipline, he must reject a European-style value-added tax (VAT) that was recently suggested by his senior White House economic adviser Paul Volcker.  
 
Just last week, I led the effort with a group of House Republicans in sending a letter to the President expressing our opposition to a VAT.
 
We took this action in a direct response to press reports that Mr. Volcker suggested instituting a European-style value-added tax here in the United States in order to bring federal deficits under control. We strenuously oppose this approach.

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Clueless in Washington (Dan Varroney)

The sluggish American economy has been at the forefront of the public’s fears for two years. It is well known that we’re in tough times, which is why comments from White House adviser Lawrence Summers on This Week this past Sunday are troubling. Do the President and his team understand what the rest of us have known for over a year?

“We’re in a very different place than we were a year ago. … Now, the progress in job creation has started. We expect that it will accelerate. But we’ve got to do more … We’re in no position to rest, or to be complacent, just because of this jobs report. … We’ve got to focus particularly on small business. If you’ll look at the data, the situation with large businesses is serious. But the situation with small business is devastating. … My expectation would be that the trend is going to be upward. … The first quarter [is] hardly satisfactory, but it is running somewhat ahead of what the administration was forecasting, because our forecasts were conservative. And I’d expect continued progress in job creation.” 

Larry, we’re in the same place we were a year ago: Record unemployment. Stagnant Growth. Little optimism. And we are not seeing meaningful job creation. Let’s look at the Department of Labor’s job report for March. Plenty of counting jobs, but not jobs people can count on.
The nation added 162,000 jobs in March, 48,000 of which were census jobs, the Labor Department reported Friday. The unemployment rate remained stuck at 9.7 percent for the third month in a row, largely because more people entered the work force.

The St. Petersburg Times estimates 292,000 jobs need to be created each month until 2015 to reach the pre-recession unemployment rate of 4.9%. We’re far off this pace, but we must get there. To begin, America’s small business owners deserve to be heard and represented in Washington. The $17.5 billion HIRE Act the President signed into law in March is his second failed attempt to boost the economy. Let’s look the two main provisions, one good, one bad:

  • Delayed Payroll tax relief: A boon for tax accountants, but will do little to spur hiring. Here’s why:, to qualify, the hire must be unemployed for two months; must remain on the payroll for one year; and must submit a signed form attesting all conditions have been met to the IRS. Then, the employee can seek out the tax relief – but only relief from a portion of all payroll taxes – likely not seeing any benefit for two years from now, at the earliest. Not now, when it is needed.
  • A sliver of hope. Allowing firms to fully expense new equipment purchases is a wise move. Exactly why American Solutions included it in the Jobs Here, Jobs Now, Jobs First plan we unveiled in July 2009.

The President has also suggested temporary capital gains relief to a portion of small employers. Temporary tax relief is like offering everyone in one section of a baseball stadium a discount on two hour sun block, while everyone else burns. We need instead across the board and permanent tax relief.

These are band-aids when the economy needs a tourniquet. On Thursday, American Solutions will hold its fifth Real Jobs Summit. We were meeting with Small Business owners in December 2009 at the same time President Obama was holding a White House Summit refusing to include some of the nation’s top employers – small firms. Along with our General Chairman Newt Gingrich, American Solutions has visited Ohio, Mississippi, California and Florida, and on Thursday we will be in Louisiana. At each stop small business owners have been perfectly clear: Get out of our way and stop making it so hard to succeed.
Here’s the plan written by Small Business Owners, for Small Business Owners:

  • An immediate two year 50% reduction in payroll taxes for every worker and every business.
  • Lower the corporate income tax to 12.5%, match China’s capital gains rate of zero to draw new investment into the United States and stop jobs from going overseas, abolish the capital gains tax, and permanently abolish the death tax.
  • Implement a constitutional amendment to balance the federal budget to stop Congress from spending money we don’t have.

We’re urging candidates throughout the country, from both parties, to take up our plan and demand the interests of small businesses are represented in Washington.

We hope you’re listening, Larry.

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Slashing Workers' Wages and Benefits? Why Not CEO's Too? (Rep. John Conyers)

It's a story told so often that we know the ending well before the last chapter. Company suffers losses, bankruptcy looms, and workers sacrifice their rights to collective bargaining, and lose their pension and benefits to save their jobs while company executives not only keep their benefits and pensions, but also receive generous bonuses.

It's a national embarrassment that the same executives who steer a company to the brink of collapse are given preferential treatment with the remaining assets. What's alarming is that current law actually favors this type of activity.

The Bankruptcy Code ranks creditors that have a financial claim against the company in bankruptcy proceedings. The ranking assigned by the Code determines which entity has priority to get paid first from the company's remaining assets. Workers who have pensions with investments in company stock are ranked as shareholders and are, in fact, among the last to be paid.

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The Big Question: Would a VAT make sense for the U.S.?

Some of the nation's top political commentators, legislators and intellectuals offer insight into the biggest question burning up the blogosphere today.

Today's question:

Would a value-added tax make sense for the United States?

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Fixing the foreclosure crisis facing minority populations (Rep. Mike Honda)

The Asian-American and Pacific Islander communities have been particularly hard hit by housing foreclosures. Homeownership rates for Asians, for example, fell 1.2 percent in 2008, compared with a drop of 0.8 percent among Latinos and only 0.4 percent for whites.

Now the Department of Housing and Urban Development has taken an important step by naming a housing counseling intermediary. The National Coalition of Asian Pacific American Community Development is the first federal network of community-based groups focused on offering housing counseling services.

This HUD move is essential, especially in a year projected to hit a record high in national housing foreclosures.

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Federal student loan lending - a scheme that has already failed twice (Rep. Dan Burton)

Decades of dramatically increasing costs, in both good economic times and bad, are threatening to push the dream of a college education out of reach for millions of American students and families. This is a national tragedy since the need for a college education is greater than ever because of global competition in our rapidly changing world.   

President Obama and Democrat Leaders in Congress believe that the solution to this problem is to Federalize the student loan industry. And, on March 30th, President Obama signed into law the “Health Care and Education Reconciliation Act of 2010” – making the Federal government the sole provider of college loans starting on July 1, 2010.

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Stopping runaway Washington spending one seat at a time (Gov. Tim Pawlenty)

Today, the federal government owns or controls the nation’s largest insurance company, two of the three American auto manufacturing companies, the two entities that hold a majority of our mortgages, the entire student loan industry, wide swaths of the banking industry and now a major portion of the American health care delivery system.

Think about it. With his individual mandate, President Barack Obama and the federal government are now forcing Americans to buy a good or service simply for no other reason than they are alive. Their reform will lead to higher taxes and higher premiums – and not reduce the exploding health care costs that are the underlying problem of America’s health care system.

Let me put it bluntly: America is headed in the wrong direction.

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Beware of Greeks bearing bailout plans (Rep. Cathy McMorris Rodgers)

As the Greek Debt Crisis continues, President Obama needs to stand firm: American tax dollars should not be used to bail out Greece – or any country – that engages in reckless government spending and deficits.  And yet, a bailout paid for by U.S. taxpayers remains a real possibility.

This week, leaders of the European Union will be meeting to consider aid for Greece. But instead of using their own money to bail out Greece, it’s more likely the EU will adopt Germany’s proposal to use money from the International Monetary Fund. That way U.S. taxpayers – not just the European Union – will be on the hook for an international bailout.

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