Wrong time to increase taxes

First things first. Economic recovery is needed before raising taxes to fight deficits. All of the so-called Bush tax cuts should be extended, not because Republicans want it that way, but because it’s the best course for the country.

All evidence indicates that the country’s economy is still staggering, the most important indicator being a 9.6 percent unemployment rate, and now is certainly not the time to allow for any tax increases.

Should that happen, we believe it would amount to sort of an anti-stimulus with potential to push the economy into a double-dip recession.

Currently, Republicans and Democrats are playing a dangerous game of chicken, the GOP holding out for extending all tax cuts and the other side claiming that middle-class tax cuts are being “held hostage” for the benefit of millionaires and billionaires.

That type of hyperbole does not hold up, because Democrats want to extend tax breaks only to those who earn less than $250,000 — not exactly the world-chewing fat cats they are painting with their rhetoric. 

Sure, $250,000 is a lot of money, but it isn’t filthy rich — not in this day and age. And yet the Democratic proposal target those people. Income tax rates would increase, a tax credit for children would expire, a deduction for married couples would expire, the capital gains tax would increase, taxes on dividends would increase, and a repealed federal estate tax would return to 55 percent.

If all that happens to those who earn more than $250,000, there most certainly will be undesirable consequences for the economy. Soaking “the rich” amounts to soaking many types of small business owners who might otherwise consider investing and hiring.

Those who want the expiration of tax breaks have trotted out the defense that the extra revenue is desperately needed to turn around a deficit that is careening obscenely out of control.

For one thing, there are no guarantees that extra revenue would be directed at deficit reduction. But there is indeed a need to seriously engage the deficit crisis with long-term, effective remedies. Hopefully, voters will be looking toward congressional candidates who are committed to regarding this as a high-priority matter.

In the meantime, Congress and the Obama administration should be imposing fiscal austerity measures on at least some parts of the federal government. They should be following the lead of states like New Jersey, where Gov. Chris Christie has stood up to powerful interests to reduce spending without tax increases.

Democrats in power don’t have to emulate a Republican governor though; they have a good example among their own in Montana Gov. Brian Schweitzer, who has also pursued a variety of spending reduction measures while managing to hold the line on taxes.

Again, tax increases of any type will be economic poison at this time. All of the breaks currently in place should be extended, if even temporarily. Fortunately, there are no less than 31 U.S. House Democrats who have signed onto a letter calling for an extension of all tax relief currently in place. They seem to understand that the economy is the priority, not government revenue.

And that creates a rare opportunity for a bipartisan solution instead of more bickering.