... Yet it inevitably comes:
If rewards for America's entrepreneurs and firms are reduced through higher marginal tax rates, their incentives to earn, invest and create jobs will be diminished. Americans will have less incentive to save, and firms will have less incentive to pay dividends. Tax avoidance will become more profitable. A smaller capital stock will mean a less productive economy and lower wages for middle-class and other workers. These disincentive effects also mean that the revenue gain is likely to be smaller than Obama envisions.Even assuming it ever becomes reality, where in recorded human history have the wealthy thrown up their hands and stopped trying to make money because they faced a 4.6% income tax increase? When in recorded history did a <40% tax on a nation's highest income earners (before deductions) cause entrepreneurs to close up shop?
Despite the authors' effort to offshift the notion onto Obama, there's also a huge element of "Who is Obama to interfere with our free lunch" in this type of argument. Obama's tax and spending proposals are not consistent with what I would do. I wouldn't struggle to slash spending or balance the budget during a recession, but my long-term view would be toward fiscal responsibility. Yet by all accounts, McCain's proposals are even worse for our long-term fiscal picture - the Tax Policy Center estimates that McCain's tax plan will add $5 trillion to the national debt while Obama's plan will add $3.4 trillion.
It also gets into the pie-eyed wishful thinking that we can deficit spend, in increasing amounts, forever. If we're to support McCain's larger deficits because Obama will impose a modest tax increase on the wealthy, this argument isn't, "We can't raise taxes on the rich." It's, "We can never raise taxes at all, and we should deficit spend until the end of time." They argue that middle class tax cuts must be accompanied by spending cuts - but leaving aside the short-sightedness of that notion as we enter what appears to be a serious recession, haven't they notices the giant hole that their boy, G.W., burned in our pocket? Or the even bigger hole McCain is eagerly proposing to burn? You don't even get into Grover Norquist-style nonsense about drowning the government in a bath tub - the authors aren't even pretending to oppose McCain's out-of-control spending proposals and massive deficits.
Funny... it took three people from the American Enterprise Institute, a fount of low-quality anti-Obama hit pieces, to write this claptrap. Three? And this is the best they can do? Well, if it's good enough for Fred Hiatt and the Washington Post, it should be good enough for everybody. Right?