The health of our economy depends on what we do right now. Today, President Obama laid out his plan to pay for the American Jobs Act and reduce the deficit by $4 trillion.
AMERICAN JOBS ACT
Short Run –Tax cuts for working and middle class families; tax cuts for small businesses to help them hire and grow; and aid to state governments to prevent the layoffs of thousands of teachers and other public workers.
Long Run –Investments in long-term economic growth areas (education, clean energy, and infrastructure).
Letting the Bush tax cuts expire – Under President Clinton, the marginal tax rate was at 39%, yet we still created more than 23 million net new jobs with about 90% in the private sector in less than eight years! However, under President Bush (with a lower marginal tax rate of 35%), our economy had a net growth of only 3 million new jobs and ZERO in the private sector (not to mention we went from a $200 billion surplus to an incredible $1 trillion deficit).
The Buffett Rule –Asks the wealthiest to pay their fair share.
Although Republicans claim this will hurt businesses, one of the most successful businessmen, Warren Buffett, disagrees. As he discussed in a New York Times op-ed, we need to “get serious about shared sacrifice.”
Typically, the wealthiest Americans derive a lot of income from investments, which are often classified as “carried interest” and later taxed at a lower rate (around 15%) than ordinary income such as wages (around 36%). As a result, they can end up owing a lower percentage of their income in federal taxes than someone who makes far less money. The concept of the Buffett Rule is to prevent this corporate loophole.
With a recent U.S. Census Bureau study indicating that America's poverty rate is now the worst since 1993, with over 46 million Americans living below the poverty line (a family of four earning less than $22,000), the choice becomes evident. As President Obama understands:
"Either we ask the wealthiest Americans to pay their fair share in taxes, or we’re going to have to ask seniors to pay more for Medicare. We can’t afford to do both.
Either we gut education and medical research, or we’ve got to reform the tax code so that the most profitable corporations have to give up tax loopholes that other companies don’t get. We can’t afford to do both."