Tax Law

Call Their Bluff, Mr. President

Will President Obama cave on yet another of his campaign promises, this time by giving in to Republican demands to extend all of the temporary Bush tax cuts? The president signaled this on his Asia trip when he said his principal concern was retaining the middle-income tax rates.

Republican congressional leaders have said they will let all of the Bush tax cuts expire unless the president bows to their demand that the top 3 percent of Americans be included in any tax cut extension.

Obama should call their bluff.

I don't think the Republicans are so stupid that they would let all the Bush tax cuts expire if they cannot continue tax cuts for billionaires and the affluent on all of their income. But let's assume that the Republican leaders on Capitol Hill are that dumb, or so beholden to the antitax billionaires funding their campaigns, that they would force universal tax increases.

This is a fight that Obama can win, and win handily, if he has the backbone to stand up for the vast majority and sound tax policies, and to take on the antitax billionaires who are piling up huge gains while unemployment, debt, and fear stalk our land.

. . . .

By calling the Republicans' bluff, Obama can get us talking about taxes and the future of America, instead of protecting what the richest among us already have.

The president could speak about Wall Street handing out record bonuses this year -- an estimated $144 billion to a relative handful of people, many of whom get richer by destroying wealth, including assets of state and local government pension funds whose losses we have to make up for with more taxes.

Those bonuses, by the way, are about 2.4 times expected Wall Street profits.

How about a presidential lecture on entitlements focused on Lloyd Blankfein, whose firm's bad bets taxpayers paid off at 100 cents on the dollar? The Goldman Sachs boss whines about making only $9 million last year because of his "sacrifice" and plans an extra-big payday this December to make up for last year.

The president could change the terms of our economic debate by talking about how much the vast majority props up many of those at the very top, starting with Blankfein. He could tell people about the trillion dollars a year of tax favors for corporations and the rich, as documented by the Shelf Project. (For the article, see Tax Notes, July 5, 2010, p. 101.)

Obama should explain how soak-the-middle-class and sink-the-poor policies damage economic growth.

Obama could also talk about how America has stopped being number one in many other categories because of tax policies that are hollowing out our nation's economy and destroying the commonwealth on which private wealth building relies.

. . . .

The question on the table for Obama is this: Will you do the job you asked people to elect you to do?

With a tough, clear message, the president could move our country forward toward the kind of debate we need to have, about how best to tax ourselves in the 21st century, about how to make our country's infrastructure safe, our education first-rate again, and our research laboratories cutting edge.

But will he?

And if the Republicans cave, then what? Then the president will find his approval ratings soaring, because the public loves a winner, the majority wants him to win this one, and he will have saved us from borrowing $700 billion to give to the richest among us, which is not just more than we can afford, it is crazy, stupid, and economically destructive.

When it comes to taxes, will Barack Obama prove himself a profile in courage or a coward who lacks the courage of his convictions?

View TaxAnalysts' David Cay Johnston's opinion in its entirety on TAX.com.

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  • Yes he is quite courageous.  Go Obama, please soak the businesses and risk takers so we can pay for your insame programs.  Keep up the good work and we'll see you next shellacking.