Economists: Extending Tax Cuts Will Aid Recovery

(CBS)  Wall Street is watching two things very closely, the calendar and Congress. Will Congress allow the Bush tax cuts to expire at the end of this year?

The recession hit Dave Campbell's lumber yard in Darien, Conn., hard. Letting the Bush tax cuts expire, he says, would cut even deeper.

"It just takes cash out of our business," he says. "It's less people we can hire. It's a big deal."

Many economists agree that it's a hit the economy can't take right now.

"I think if the tax cuts expire for everybody, then we'll be back in recession, no doubt. It would be a huge policy mistake," says Moody's chief economist Mark Zandi.

President Obama has proposed extending the cuts for individuals making less $200,000 and couples making less than $250,000, but under his plan the top two income tax rates, now 33 and 35 percent, would revert to the levels before the bush administration of 36 and nearly 40 percent, reports CBS News business correspondent Anthony Mason.

David Zervos of Jeffries and Company says, "[Letting the Bush tax cuts expire for the top income tax rates] would actually have a pretty detrimental impact."

The reason, he says, the top three percent of households account for a quarter of all personal spending.

"The easiest path is probably some sort of kick the can down the road strategy," says Zervos.

Zandi says, "I would extend the tax cuts for everyone, at least in 2011. I wouldn't raise the taxes next year when the recovery is so fragile."

But extending tax cuts for the wealthy would cost $700 billion over the next decade, according to the Congressional Budget Office. Former Federal Reserve chairman Alan Greenspan, who originally supported the Bush plan, says we can no longer afford it.

He told "Meet the Press" recently that "I'm very much in favor of tax cuts, but not with borrowed money."

Dave Campbell, whose taxes as small business owner would jump, says he needs the money to invest and hire.

"Just leave us alone and let us do our business and don't worry about raising taxes at this point," he says.

A recent survey of economists found that 54 percent support extending the tax cuts. So do Republicans. Democrats hope to bring a vote up on the issue before the November elections.

[peteg2]

Warren Buffett, a billionaire, pays a total (fed, state, local) tax rate is 0.2% of his income and investment gains, while a typical working, middle-class family pays 28% on its wages, about a 150-fold higher tax rate. Mr. Buffett pays a tax rate of 0.02% of his net worth, while a typical middle class family pays 36% of their net worth, about a 2000-fold higher tax rate. From http://fairsharetaxes.org

The top 1% in the US have gone from owning 22% to 40% of the nation's wealth in the last thirty years. This is largely due to the tax cuts for the wealthy investor class, started under Reagan 30 years ago. They were supposed to encourage investment and strengthen the economy. Instead average GDP growth during that 30 years was 2.7%, 25% lower than the 3.6% average for the 30 prior years. During those 30 prior years the top federal income tax rates were 50-92%, compared to 35% now.

The favored tax treatment for investments and the wealth concentration that resulted has lead to the demand for investments exceeding the supply of worthy investments ... Investment bubbles ... recessions ... all but the wealthiest are at risk of losing their jobs, homes, opportunity to educate their kids, and retirement savings.

For more, including a proposal for comprehensive tax reform which would have everyone pay their fair share, cut middle-class taxes, reduce the deficit, improve the economy, and strengthen the nation as a force for good in the world. http://fairsharetaxes.org

[babooph]

I have been up nights worrying about the US rich ,in need of "recovery"I hope the lobby grubbing politicians will take the cash & continue that tax cut for all those rich trust fund parasites& continue their "recovery"good that we have these brilliant economists to bring this to my attention....

[stevador39]

Impeaching Obama for violation of Article IV of the U.S. Constitution would help. That Article section 4, says it is the duty to defend the U.S. against invasion. There are twelve to thirty million illegal immigrants who pay no taxes. They need to be out of here.

[gig76]

Now, your statement is the most illogical one yet. These illegal immigrants were here when Bush was President. Therefore, we should be able to retrograde and hold Bush accountable. Bush is the leader of Republicans who was so chummy with illegal immigrants from Mexico.

[footdr2]

The fact is that the Dems have nearly tripled the budget dificit since taking control of the house and senate in Jan. 2007. Here is some information I have been able to find.
The US current account deficit reached $850?875 billion in 2006
By John Brinsley - October 11, 2007 12:46 EDT
Oct. 11 (Bloomberg) -- The U.S. government posted the smallest budget deficit in five years as tax revenue reached a record and spending rose at the slowest pace in George W. Bush's presidency.
The deficit narrowed to $162.8 billion in the fiscal year that ended Sept. 30, the third straight annual decline and lowest since $158 billion in 2002, the Treasury Department said today in Washington.
Total spending rose 2.8 percent for the year, compared with an average annual increase of 6.8 percent since 2001, the year Bush took office. Revenue in 2007 increased 6.7 percent, helping to reduce the annual budget gap more than one-third from $248.2 billion last year.
The Congressional Budget Office projects the federal deficit for fiscal 2008 (which ends September 30) at $407 billion for fiscal 2008, more than double last year's figure. Next year's deficit is currently projected at $438 billion -- that's before taking into account Fannie Mae and Freddie Mac.

The final tally for fiscal 2009, which ended Sept. 30, was nearly $1 trillion greater than the $459 billion deficit for fiscal 2008.
And now, the CBO estimates the fiscal year 2010 deficit to be near 1.47 trillion.

Seems that Bush didn't do quite as bad as the Democrats want us all to believe.

Do your own research on yearly Budget Deficits. Remember that the Budget Deficit reported by the Administration and CBO is far different from the U.S. Debt.

Regarding this article, the Bush tax cuts helped the lower and middle class far more than those families earning between $250,000 and $500,000.00, as it added a 10% tax bracket, gave many credits than increased the number of individuals/families that owe NO TAX more than anytime in recent history. If they want to raise taxes then raise them on capital gains, that will hit the wealthiest the hardest. Don't raise it on Ordinary Income, as this income represts income earned by actual work or revenues from small, unicorporated businesses. Ordinary income is earned income not income earned by interest or increase in capital investments such as stocks, bonds and the like.

[skepticalJM]

Yeah, let the rich pay less taxes that's going to help us all! That's what freedom based on money gets you.

[McRib1]

This slight majority of economists who think tax breaks for billionaires are stimulative -- do happen to be in the employ of billionaires? Do they work at the Cato Inst or the Heritage Foundation or any of more than a hundred right-wing think tanks designed to provide fake journalism to lazy corporate "news gatherers" like CBS?

[mecury69]

This is such BS. Conservatives only scream about reducing the deficit, like now it's their only concern (ignored during the Bush years).

Oh, but then oppose increasing taxes (REVENUE) to actually do it!

Only an idiot would not realize that after 10 years of WAR, a bloating deficit that you HAVE to increase taxes.

It's just basic common sense.

[peteg2]

This is journalism? Your headline: "Economists: Extending Tax Cuts Will Aid Recovery: Many Economists Think Letting the Bush Tax Cuts Expire Will Harm the Fragile Economy" Yet the story quotes only one identified economist and a bunch of very rich people who (big surprise) don't want to pay their fair share of taxes. This "story" belongs on the opinion page .... of the Podunk Gazette.

Warren Buffett, a billionaire, pays a total (fed, state, local) tax rate is 0.2% of his income and investment gains, while a typical working, middle-class family pays 28% on its wages, about a 150-fold higher tax rate. Mr. Buffett pays a tax rate of 0.02% of his net worth, while a typical middle class family pays 36% of their net worth, about a 2000-fold higher tax rate. From http://fairsharetaxes.org

[naturaltwo]

It is amazing the lies some of the commenters believe. Deport the ignorant.

The tax cuts have been here for seven going on eight years and where are we? Give me a frigging break. If they haven't crerated jobs in seven years they ain't gonna.

Gfreedy pigs. Why is there a coalition of the top 100 richest people that are calling for the Bush tax cuts on the wealthiest to expire?

Because they understand it is the common man that makes a country great.

Deport the elitist pigs that think America wants to eat out of their trough.

They economically destroyed America during a time of war.

A bunch of frigging traitors that do not deserve America.

Their property needs to be confiscated and they and their families deported to the Congo.

There are plenty of entrepreneurs in America willing to step in and take their places with or without tax breaks.

[aftinc]

Well you sound a little mad about something. For me, a very average tax payer, we're all paying to much. Between federal, state and local it is just to much money. More so when you look at the way they are all spending it. So I'm for more tax breaks across the board for all not less. Last year we paid 24G's and then over 12g for health care and then there's local and state tax on top, so what are't you getting?

[democracy5]

aftinc: If you truly paid 24k in federal taxes last year, you're not exactly starving. BTW, the tax cuts that Obama wants to expire apply only to those making a quarter of a million or more per year. Boo hoo hoo!

Taxes under Eisenhower (the last decent Republican President) went up to roughly 90% in the late 1950s. And nobody was starving then. Businesses were still able to provide jobs and the middle class had a solid ground under it. How is it that we could manage that then, but we can't do it now? 'Splain, Lucy!"

You've been drinking the Reagan "Voodoo Economics" kool-aid for 30 years.

[thy-one-king]

Obama attacks Americans, one more time ..........

Obama Administration Reverses Course, Forbids Sale of 850,000 Antique Rifles

Obama wants to destroy these treasures ...

To many the M1 Rifle has a classic elegance and grace characteristic of a bygone era, when steel was forged in white heat and walnut was carefully shaped for both form and function. "There will never be again such a rifle, so brimming with the genius of an individual mind, so well constructed to outlive us

[thy-one-king]

The South Korean government, wants to sell nearly a million antique M1 rifles that were used by U.S. soldiers in the Korean War to gun collectors in America.

Obama wants to destroy these American treasures.
These American rifles are antiques, use in WWII,
Korea, and Vietnam. It would be ashame for these
antique rifles to be destroyed.

[miami_don]

by thy-one-king September 2, 2010 8:26 AM EDT
The South Korean government, wants to sell nearly a million antique M1 rifles that were used by U.S. soldiers in the Korean War to gun collectors in America.

Obama wants to destroy these American treasures.
These American rifles are antiques, use in WWII,
Korea, and Vietnam. It would be ashame for these
antique rifles to be destroyed

-----

Send in the clowns. Come on - 2 of every 15 Americans is out of work and some rich guys want to get richer at their expense and you want to talk about Gerands? Get back on your medication.