President Obama has presented a series of tax proposals that would reduce the federal income taxes of middle class individuals and families and increase the taxes paid by the wealthiest taxpayers.

As soon as the president presented his proposals, Congressional Republicans began to trumpet their opposition, insisting that raising taxes on the rich would weaken economic growth and slow the pace of job creation.

They made exactly the same dire predictions in 2012, when the Bush tax cuts for the highest income individuals ($400,000 a year or more) were allowed to expire.

Contrary to the Republicans’ pessimistic predictions, millions of new jobs have been created in the past two years, at a rapidly accelerating rate. Currently, the U.S. economy is creating jobs at the fastest pace since 1997.

Numerous studies, including a detailed analysis by the non-partisan Congressional Research Service, have demonstrated that increasing the taxes paid by the wealthiest individuals does not weaken economic growth, and reducing those taxes does not stimulate the economy.

What Republican-sponsored tax cuts for the rich have clearly done, however, is greatly increase income inequality. The rich have gotten much, much richer and the middle class has stagnated.

A recent report by the international Organization for Economic Cooperation and Development (OECD) compared the level of income inequality in 22 developed countries, and found that the United States has the second-worst level (Mexico has the worst). This report also found that a high level of income inequality is a significant drag on economic growth.  When a small percentage of the population is receiving a majority of the income, consumer spending for goods and services is diminished and economic growth slows down.

Correcting the severe income inequality in our country is an urgent priority. President Obama’s tax proposals are a step in the right direction.  They deserve the support of every Senator and Representative in the U.S. congress, including Congressman Fred Upton.

 

Larry Feldman

Lakeside