Fox Echoes GOP's Bogus Claim That Taxes On Wealthiest Will Hurt Economy, Jobs
Fox News guests have repeated House Speaker John Boehner's claim that raising taxes would slow down the economy and hurt job creation. In fact, independent research shows that raising tax rates on the wealthy would have little to no impact on the economy and would decrease the deficit, while lowering taxes for the rich does not boost the economy or create jobs.
Fox Guests Echo Boehner's Claim That Increasing Taxes Hurts Economy, Job Creation
Boehner: Raising Taxes "Would Slow Down Our Economy" As Well As "Our Ability To Create The Jobs Everyone Says They Want." During a November 9 news conference, House Speaker John Boehner (R-OH) said that raising taxes "would slow down our economy," adding: "Raising tax rates will slow down our ability to create the jobs everyone says they want." CBS News reported:
Boehner today maintained that Republicans want to avert the fiscal cliff without raising any taxes and "in a manner that ensures that 2013 is finally the year that our government comes to grips with the major problems that are facing us." Next year, he said, "should be the year we begin to solve our debt through tax reform and entitlement reform."
The speaker added that he had a "cordial," short conversation with Mr. Obama earlier this week and is hopeful that "productive conversations" can begin soon on the fiscal cliff. As he has for more than a year, Boehner said that he's open to creating more tax revenue, by closing tax loopholes and eliminating some deductions, just not raising tax rates.
Raising taxes, he said, "would slow down our economy. The number one issue in the election was about the economy and jobs... Raising tax rates will slow down our ability to create the jobs everyone says they want." [CBS News, 11/9/12 ]
Monica Crowley: "Any Increase In Tax Rates Is Going To Slow Down The Economy And Slow Down Job Creation Even Further Than It Already Is." Following Boehner's news conference, Fox contributor Monica Crowley appeared on Fox News' Happening Now and echoed Boehner, saying that "any increase in tax rates is going to slow down the economy and slow down job creation even further than it already is." Crowley claimed that Obama now wants to raise taxes on those making more than $200,000 a year, "which essentially means the middle class. They are coming after you." From Happening Now:
CROWLEY: He is saying that any increase in tax rates is going to slow down the economy and slow down job creation even further than it already is, so that the Republicans are not going to go for that. He's also saying, look, it's up to the president to lead these negotiations. You can't have 535 members of Congress leading; the president has to do so. We're going to hear from the president in about an hour and a half, and what we're now hearing, Jon [Scott, co-host], is that the president is going to be moving even further to the left. It other words, it used to be the argument, well, let's raise taxes on the super-rich, meaning those making a million dollars or more. Then they lowered that to those making over $250,000. The president, in about an hour and a half, is now going to lower that threshold to those making over $200,000 a year, which essentially means the middle class. They are coming after you. [Fox News, Happening Now, 11/9/12]
Fox Guest Mark Levin Suggests That "Trashing The So-Called Rich" By Raising Taxes On Those Earning $250,000 Or More Will "Have A Hugely Negative Effect On Our Economy." From the November 9 edition of Fox News' Your World:
CAVUTO: There's another theory out there, Mark, that the president wants this to blow up so they can pick from the pieces in the new year and stick it on the Republicans. What do you think of that?
LEVIN: Listen, let me tell you something: If this blows up, it will blow up on everybody. But the truth is, he's president of the United States, he ran to be the leader of the free world, he ran to be in charge of the economy. And the fact of the matter is at the end of the day it's gonna be his fingerprints all over this, and Republicans have got to stop panicking, stop negotiating in public, stop surrendering their principles. If he really felt, Boehner, that there had to be some revenue increases here, then wait. Wait to talk to the president, don't go on ABC News, don't go on ABC News talking about how Obamacare is law and we're prepared to do revenue increases and so forth. That wasn't the decision of the election. Harry Reid -- Harry Reid's out there talking about $19, $20 trillion in debt. My question to everybody, Neil, is this: We get past January 1, we just signed off on $2.5 trillion more in debt. We just signed off on trashing businesses, trashing the so-called rich -- anyone who earns $250,000 or more. It's going to have a hugely negative effect on our economy. What have we achieved? [Fox News, Your World with Neil Cavuto, 11/9/12 ]
But Nonpartisan CBO Found That Letting Tax Cuts For Wealthy Expire Doesn't Hurt Economy, Reduces Deficit
CBO: Allowing Tax Cuts For Wealthy To Expire Would Increase GDP By 1.3 Percent, Create 1.6 Million Jobs. In a November 2012 report, the non-partisan Congressional Budget Office said that allowing the expiration of the Bush tax rates for higher wage earners while maintaining lower rates for those making $200,000 a year and less would increase GDP by 1.3 percent and create 1.6 million jobs. From CBO:
The budgetary cost of extending the expiring tax provisions would be lower if certain provisions were allowed to expire that otherwise would apply to some high-income households. According to JCT and CBO's estimates, if the AMT was indexed for inflation beginning in 2012 and all of the other expiring tax provisions were extended except for the specific provisions affecting high-income taxpayers (and the payroll tax cut), revenues would be lower and outlays for refundable credits would be higher than $288 billion in fiscal year 2013 and by $382 billion in fiscal year 2014, compared with CBO's baseline projections.
CBO estimates that such changes would increase real GDP by 1.3 percent (by 0.3 percent to 2.3 percent under CBO's full range of assumptions), and increase full-time-equivalent employment by 1.6 million (with a range from 0.5 million to 2.8 million) in the fourth quarter of 2013. [Congressional Budget Office, November 2012 ]
CBO: Extending Tax Cuts For Wealthiest Americans Would Cost $350 Billion Over 10 Years. In its November report, the CBO estimated that extending tax cuts for the wealthiest Americans would add $42 billion to the deficit in 2012, $38 billion to the deficit in 2013, and roughly $350 billion over the next decade, while having a negligible effect on the economy. [Congressional Budget Office, November 2012 ]
Wash. Post's Wonkblog: Expiration Of Upper-Income Tax Cuts "Would Do Little Harm" To Economy. The Washington Post's Wonkblog, citing a recent Congressional Budget Office report, explained that the expiration of the Bush-era tax cuts for the wealthy "would do little harm" and would generate "$42 billion in 2013 but hardly hurts GDP at all." The below graph accompanied the post:
[Wonkblog, The Washington Post, 11/8/12 ]
Economists Agree That Lowering Taxes For The Wealthy Does Not Boost Economy Or Create Jobs
CRS: Cutting Tax Rates On Rich Doesn't Booth Economic Growth, But It May Be Associated With Rising Income Inequality. According to a September 2012 report by the nonpartisan Congressional Research Service, "[t]he reduction in the top tax rates appears to be uncorrelated with" economic growth, but "may be associated with greater income disparities":
The top income tax rates have changed considerably since the end of World War II. Throughout the late-1940s and 1950s, the top marginal tax rate was typically about 90%; today it was 35%. Additionally, the top capital gains tax rate was 25% in the 1950s and 1960s, 35% in the 1970s; today it is 15%. The average tax rate faced by the top 0.01% of taxpayers was above 40% until the mid-1980s; today it is below 25%. Tax rates affecting taxpayers at the top of the income distribution are currently as their lowest levels since the end of the second World War.
The results of the analysis suggest that changes over the past 65 years in the top marginal tax rate and the top capital gains tax rate do not appear correlated with economic growth. The reduction in the top tax rates appears to be uncorrelated with saving, investment, and productivity growth. The top tax rates appear to have little or no relation to the size of the economic pie.
However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution. As measured by IRS data, the share of income accruing to the top 0.1% of U.S. families increased from 4.2% in 1945 to 12.3% by 2007 before falling to 9.2% due to the 2007-2009 recession. At the same time, the average tax rate paid by the top 0.1% fell from over 50% in 1945 to about 25% in 2009. Tax policy could have a relation to how the economic pie is sliced -- lower top tax rates may be associated with greater income disparities. [Congressional Research Service, 9/14/12 ]
Tax Policy Center: "Tax Cuts For These High-Earners Will Do Relatively Little To Boost The Economy In The Short Run." In an August 2010 post, Tax Policy Center economist Howard Gleckman explained that "tax cuts for these high-earners will do relatively little to boost the economy in the short run":
The Treasury Department figures that temporarily extending the 2001 and 2003 tax cuts would reduce federal revenues by roughly $200 billion in Fiscal 2011 and $260 billion in 2012. For technical reasons, those numbers may be off a bit, but you get the drift. Of that, about $75 billion would go to top-bracket taxpayers ($35 billion in 2011 and $40 billion in 2012). We know that higher income households are more likely to bank the cash than spend it. As a result, tax cuts for these high-earners will do relatively little to boost the economy in the short run. [Tax Policy Center, 8/31/10 ]
Few Small Businesses Would Be Affected By Raising Taxes On The Wealthy
CBPP: "Only 2.5 Percent Of Small Business Owners" Would Face Higher Rates As A Result Of Raising Taxes On Wealthy. A Center on Budget and Policy Priorities report found that "only 2.5 percent of small business owners" would face higher rates as a result of raising taxes on the wealthy:
Very few small business owners face the top two tax rates. The Treasury study shows that only 2.5 percent of small business owners, and 7.9 percent of filers with any income from small businesses that employ people, face the top two tax rates. Only 0.5 percent of small business owners, and 3.3 percent of filers with any income from small businesses that employ people, make $1 million or more per year. [Center on Budget and Policy Priorities, 7/19/12 , emphasis in original]
Polls Show Americans Support Raising Taxes On Wealthier Americans
Pew Research Center: Two-Thirds Of Americans Support Raising Taxes On Incomes Over $250,000. An October 2012 Pew Research Center survey found that two-thirds of Americans support increasing taxes on Americans making more than $250,000:
Public concern over the debt and deficit, already extensive, is only likely to increase as the so-called "fiscal cliff" approaches at the end of the year. Yet among a dozen specific options for reducing the debt and deficit, only two win majority approval from the public -- raising taxes on annual incomes over $250,000 (64% approve) and limiting corporate tax deductions (58%).
A new national survey by the Pew Research Center for the People & the Press, conducted Oct. 4-7, among 1,511 adults, including 1,201 registered voters, finds that cuts in education spending are particularly unpopular. Fully 75% disapprove of reducing federal education funding and 61% oppose cuts in funding for student loans. [Pew Research Center, 10/12/12 ]
2012 Election Exit Polls: 6 In 10 Voters Favor Increasing Taxes. National exit polling from the 2012 election also shows public support for raising taxes. From Politico:
Six in 10 voters nationwide say they think taxes should be increased, a welcome statistic for President Barack Obama and a sign that the president's attacks on Mitt Romney's proposed tax cuts for the wealthy may have been effective.
Almost half of voters said taxes should be boosted on Americans making more than $250,000 per year, and one in seven voters said taxes should be increased on all Americans.
Only about a third of voters said taxes should not be increased at all, the exit polls showed. [Politico, 11/6/12 ]