"Tax Inequality"

President Obama wants to extend tax cuts for Americans, but only for those making less than $250,000. Is this appropriate? Paul Krugman thinks so. As he points out, if you combine corporations and people--which are practically synonymous these days--you see that the top 1% have been doing very well over the past 50 years in terms of tax breaks while the middle class have seen their taxes rise.

Federal Tax Rates by Income group from 1960 to 2004

I might point out that the unemployment rate in 1960 was 5.5%.

In fact, if you look at unemployment data and tax rates over time, it becomes pretty clear that there is no direct correlation between unemployment and taxes. Nonetheless, Mitt's campaign was quick to respond to Obama's proposal saying:

Governor Romney knows that job-killing tax increases will hurt our troubled economy even further, and he has a plan to lower the rates and broaden the base without increasing the deficit to encourage investment and job creation.

"Job killing," huh? I don't see it. I'm no economist, but attempting to draw a parallel between taxes and job creation seems to be nothing but rhetorical nonsense (aka politics).

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