Dr. Eric Grosse
Why Taxes Should Not Go Up The fast approaching fiscal cliff has raised many concerns in the minds of American taxpayers, and as one of those tax payers I am exercising my constitutional right to have my voice heard. In the words of Benjamin Franklin, “It would be a hard government that should tax its people one-tenth part of their income.” In the past 150 years we have far exceeded the “one-tenth” mark that once seemed unthinkable, and it appears taxes will be going even higher. The average American has 25% of their income taken out of every paycheck in taxes, and now our government wants to take more? This report will show how a raise in taxes will affect the middle-class, job markets across the country, consumer confidence, and our entire economy.
Bush-era tax cuts started expiring last year, and many remaining tax cuts will expire at the end of this year. One may say that these tax cuts were the cause of the deep recession that impacted our country over the past six years, however, this report will show that is simply not true. One of the biggest impacts for expiring tax cuts will be the lower and middle tax bracket families, and the effects could be disastrous. Families and singles who previously were in the 10% tax bracket will find themselves in the 15% tax bracket. If you were in the 25% bracket before, you will find yourself in the 28% bracket. As of 2004 the average median income in $45,000, and this would mean that the average person is paying 3% more in taxes per paycheck (Bischoff). That’s an extra $1,350 per year, and an extra $50 out of every single paycheck. For those living paycheck to paycheck this could mean the difference between buying groceries and not buying groceries each month.
Considering that the cost of living has grown at a rate that is not commensurate with the rate of wage growth, any raise in taxes could be bad news for the average American. Over the past four years the average cost of living in the US has gone up 15%, and the average wage has increased 8%. This disconnect came from corporations not feeling comfortable enough with their earnings to pay their employee’s at a higher rate, and has led to an issue with consumer confidence which will be discussed later in this paper. Could the same corporate greed that led to the real-estate crash in 2008 be to blame for the size of pay raises for the middle-class American? Combining all of these things with gas prices that have doubled over the past four years, and food prices which have climbed almost 5% in the past year alone; you begin to see the picture of trouble painted on the horizon. (See Figure 1.) Regardless of the cause of higher inflation and gas prices, there is no possible way that paying $50 less in each paycheck caused the issues facing our economy today. Why would raising taxes to pay $50 more be considered as a possible solution?
Other tax cuts evaporating will include harsher penalties for those who are married and filing jointly. Currently there is a tax cut in place that lessens the penalty for married couples and they pay about double the standard deduction as a single person. If this particular tax cut does not get extended, they will be paying a standard deduction that is 167% of that of a single person. This opens the door for more tax fraud, and more struggles for the average American family. It just doesn’t make sense to penalize hard working American families (Bischoff).
The Jobs Market The past four years have been filled with talks about unemployment, and the state of the jobs market in America. Tax cuts are not to blame for the current condition of the jobs market, but an increase in taxes could definitely make the issue much worse. Companies hire new employees when there is a demand, and that demand comes from an economy purchasing goods and services. Recent talks about ending a tax