During the 2008 campaign, Obama claimed that the rich didn’t “need” the Bush tax cuts. Despite an economy that hasn’t responded to his record deficit spending – otherwise known as the “stimulus” – Obama and his talking heads still oppose maintaining the Bush cuts. Any such opposition, however, is rooted far more in demagoguery than in economics. In truth, the coming tax hikes will hurt the economy in many ways, including exacerbating the foreclosure crisis and ensuring a bad economy for years on end.

Of course, it has long been the strategy of the Democrats to engage in class warfare when it comes to tax cuts. Obama’s belief that the Bush tax cuts were for people who “don’t need them and didn’t even ask for them,” is just the latest incarnation of that tired theme. In today’s economy, which features an ongoing foreclosure crisis unlike any other over the last 40 years, nothing could be further from the truth.
Common sense thinkers, including Reagan, JFK and Keynes, well know that lower tax rates lead to greater incentives and greater economic activity and therefore greater tax revenues over time. Tax increases, on the other hand, reduce incentives and economic activity and therefore result in less tax revenue. During a bad economy like today, the latter effect can be accelerated and the current foreclosure crisis is a dangerous case in point.
Consider, if you will, Contra Costa County, California, which is some 30 miles east of San Francisco. Most would consider it a well to do area. Indeed, by the numbers, those living in Contra Costa have the 5th highest per capita income of all California counties and 45th in the nation. To be sure, among the over one million residents of Contra Costa, there are many Contra Costans who Obama would consider “rich” – and therefore who don’t “need” the Bush tax cuts.
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