In a transparent effort to pre-empt Republican arguments about tax cuts, President Obama unveiled a proposal today for a one-year cut for all Americans making less than $250,000 per year. While calculated to play well with his faux working class campaign rhetoric, the president’s plan makes no economic sense. Implementing a massive tax increase on those with the capital to invest it and therefore create jobs is not the sort of thing that will help a flagging economy. Nor will it do anything to stem the bleeding that creates job reports such as the one released last Friday that illustrated the country’s unemployment problem. But, as James Pethokoukis writes at the American Enterprise Blog, the president’s dare to Congress to pass such a plan or to implement a simpler tax code is pure political baloney.
As Pethokoukis points out, had he really wished to push through a simplification of the tax code, he could have endorsed the Simpson-Bowles Commission recommendations. More to the point, Obama’s predilection has always been to eliminate all the Bush-era tax cuts, including those on the middle class. If he is re-elected, he may well implement his promise of the continuation of the current rates on those making less than $250,000. But the significant element of this stance is that he is not promising to keep them for his entire second term but only for the first year.
