The cliche “it’s not rocket science” applies to economics. It isn’t that difficult. When a country is in recession, the government should increase spending and reduce taxes for the people who will spend their money on consumer goods. This is Keynesian economics and it works. If you reduce spending (i.e., lay off 22,000 Post Office workers) and increase taxes, the economy shrinks. (See Britain under Cameron.)
Any economist with a lick of sense knows this, but Congress never got the memo. At the beginning of January payroll taxes increased. That, in turn, means less money for people at the lower end of the income scale. If you earn about $40,000 a year, you will pay about $800 more in taxes annually. That is about $66 a month. For someone earning $40,000, that is a substantial sum.
Result: Chain stores sales have weakened. Consumer confidence is down. We have a dampening of the economy. It really isn’t rocket science.
This was not an increase in taxes, it was an expiration of reduction of the payroll tax that is the funding of our Social Security. I and others have paid into this system all of our working life. Now it is our life blood for survival in life. It was only a temporary relief for two years. If we cannot get things turned in that time then there is something else wrong. Contribute less, get less when you retire. Simple as that.
ReplyDeleteI agree with the exception of the richest Americans. We are in this mess for several reasons but mainly low taxes on the rich and the effects of globalization. We need to get more people working, lower taxes on the middle class and raise taxes on the rich.
ReplyDeleteAfter the great depression, FDR raised taxes on the richest people to a tax rate of 90%. Even in the 1950's the highest tax rates were in the 60% range. So for guys like the Koch Brothers, I say "Tax them like its 1959"!!