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Transition 2012

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Economy Update: Tax Breaks No Silver Bullet for Voters

by Newsteam Staff
July 11, 2012

Shannon Philbrick of Liberty Tax Services dressed as the Statue of Liberty waves a sign at drivers in Westminster

Four months ahead of the election, President Barack Obama is increasing his campaign trail focus on taxes, calling on Congress to keep Bush-era tax cuts for households making less than $250,000 per year, but analysts say the change is unlikely to help the U.S. economy or the president’s reelection bid.

President Obama says the one-year tax-cut extension would help middle class families and small businesses — two major drivers of the U.S. economy at large. But the president’s plan lacks support in Congress, where House Republicans want to extend the tax cuts for everyone and even some from the president’s own party have come out in favor of a $1 million cutoff for continued tax breaks.

GOP presidential challenger Mitt Romney says Obama’s tax plans would actually be more expensive for small businesses (NYT) and slow job creation, favoring instead a continuation of the current tax rates for all.

At the Detroit Free Press, Stephen Henderson writes that while Obama’s tax plan is good politics, it will not solve the larger economic problems, particularly ones caused by uncertainty. “Extend the cuts for one year, and by this time next year, markets and investors will be uneasy again — not necessarily at the prospect of their expiration, but just the uncertainty about their future,” he writes.

The Atlantic’s Molly Ball points out that even if President Obama does get his way with taxes before the election, voters won’t feel the effects before they head to the polls. “Nor would his proposal, even if Congress acts on it, be likely to do anything to buck up the economy right away,” she notes.

For more on the candidates’ stances, check this issue tracker on The Candidates and the Economy.

Suggested Other Reading:

The conservative Heritage Foundation offers facts and figures on the current U.S. tax code and recommendations for Congress to improve U.S. economic efficiency, including making the Bush-era tax cuts permanent.

Matthew Boesler and Max Nisenat The Business Insider count President Obama and U.S. House Majority Leader Eric Cantor (R-Va.) among the world’s leaders contributing to the international policy paralysis that is causing “the ongoing global economic malaise.”

– Gayle S. Putrich, Contributing Editor

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