Republican lawmakers on Sunday rejected President Barack Obama’s call to raise taxes on the wealthiest of Americans and argued that business taxes should be cut instead to stir economic expansion and job growth.
House budget committee chairman Paul Ryan, a Republican congressman from Wisconsin, characterized the president’s proposal, which was reported by The New York Times over the weekend, as “class warfare” which “may make for really good politics,” he said, “but it makes for rotten economics.”
Ryan, who put out his own plan for tax reform this week, warned on Fox News Sunday that increasing tax rates could reduce tax revenue. “If you tax job creators more, you get less job creation,” he suggested. “If you tax investment more, you get less investment.”
The Republican plan, by contrast, would eliminate tax loopholes and exemptions and lower the corporate tax rate from 35 to 25 percent which approximates the average rate among industrialized nations.
Several Republican presidential contenders also support eliminating taxes on dividends altogether, something Ryan described as a “double tax” on Sunday.
A person who’s paying an income tax is paying the first level of tax on that money and then when you pay capital gains and dividends tax, you are paying that tax again on that money that earns it.
The president argues that raising taxes on millionaires and billionaires merely asks them to contribute their “fair share” to fiscal consolidation but according to Ryan, it is a plan that “seeks [to] prey on people’s fear, envy and anxiety.”
We need a system that creates job and innovation and removes these barriers for entrepreneurs to go out and rehire people.
The Republican leader in the Senate, Mitch McConnell, agreed. “We don’t want to stagnate this economy by raising taxes,” he told NBC’s Meet the Press. He pointed out that even members of the president’s own party are wary of raising taxes while the economy is still in recession.
“The way you get more revenue,” said McConnell, “is getting the economy going.” To do that, he urged the Obama Administration to constrain its regulatory zeal.
Right now, we’ve thrown a big wet blanket over the private-sector economy. We borrow too much, we spent too much, we’re dramatically overregulating every aspect of the private sector in our country and now we’re threatening to raise taxes on top of it! That’s not going to get the economy moving.
Nearly one out of ten American workers is unemployed and the federal government is projected to spend $1.6 trillion it doesn’t have this year. To close the fiscal gap, President Obama is expected to recommend long-term spending cuts on Monday besides the tax increase that was reported this weekend as part of what he believes is a “balanced approach” to deficit reduction.