Faulty Rationale

By October 18, 2010Taxation

Presidential Advisor David Axelrod was making the rounds on the Sunday morning talk shows yesterday — touting the Administration’s plan on taxes.  “We want a tax cut for the middle class up to $250,000,” Axelrod said. That would be stimulative, because people who need money in their pocket to spend and pay for the things that they need to live would have more money in their pocket. That makes sense.” 

Except – it doesn’t make sense.  There are two problems with Axelrod’s comments.  1.) NOT getting a tax increase isn’t the same as getting a tax cut.  Does he really think that people will spend more because their taxes will stay the same?  2.) The Administration’s plan will raise taxes on small manufacturers – kicking the top rate up to nearly 40 percent.

In this case, we’re in agreement with Axelrod – this will mean more money coming out of businesses – meaning they have less money to pay for things…like wages and benefits.

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