Tax-Happy Dems Jeopardize U.S. Economy

by Deroy Murdock: Now that recession-warning lights have begun to blink, Democrats should give tax hikes a rest. As tax-happy Democrats might have noticed, the stock market resembles a kindergartner on a swing set: half-giddy, half-scared, and hyperactive. Meanwhile, payrolls sagged by 4,000 positions last month. Not since August 2003 has America created no new jobs. Fifty-two economists in September 13’s Wall Street Journal offered a 36% average probability of recession by next September, up from 28% in August. Oil hit $81.93 per-barrel Wednesday - hardly good news. And the tumultuous home-mortgage industry suffered 243,497 foreclosure listings last month, up 115% versus August 2006, RealtyTrac.com reports. This mess triggered 12,000 layoffs, just at lender Countrywide Financial Corp. To prevent tight credit from suffocating the economy, the Federal Reserve Board Tuesday hastily administered a 0.5% federal-funds-rate reduction.

Amid these worrisome omens and genuine human suffering, the last thing America needs is for congressional Democrats to stuff a pillow over the economy’s face. But they can’t control themselves. “Through 2012, the Democratic Congress’ new budget raises taxes $217 billion,” the National Taxpayers Union’s Pete Sepp calculates. “If no surpluses appear that year, another $175.5 billion tax hike automatically kicks in.” This $392.5 billion includes a halving of the per-child tax credit, restoration of the marriage penalty, a 50% leap in the low-income tax bracket (10 percent under Republicans; 15%under Democrats), and the resurrection of the Death Tax - from 0 to 55% . . . .

Foreign economic ministers understand these lessons and are lowering taxes . . . Sweden and Russia last year eliminated their estate taxes because they said the tax was economically counterproductive,. . . . In Germany under Chancellor Angela Merkel, the corporate tax rate has been reduced to less than 30% from 39%. Poland recently chopped its business tax from 27% to 19. Even Hanoi gets it! . . . While America’s corporate tax levitates at 35%, seven European Union nations have lowered business levies this year. The EU-average corporate tax is 24.2%. Further corporate tax rate cuts are being implemented in Germany, Estonia, Spain, and the United Kingdom, and rate cuts are being discussed in the Czech Republic and France . . .

Democrats thus resist global pro-market trends, even among progressive governments long on social solidarity and short on “reckless cowboyism.” But, for most Democrats, these facts and numbers are irrelevant. Taxes are not about merely funding vital government duties and basic public services. They are meant to punish the wealthy, “correct” personal behavior, and distribute universal largesse. Thus, Democrats itch to raise taxes on highly lucrative private-equity partnerships, from 15 to 35%. . . . While America’s economy clings from a ledge, Democrats dance on its fingertips. When the donkey party promises “change,” it delivers - good and hard. . . . [Read More]

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