Wednesday, October 6, 2010

It's the Business Capital, Stupid!

Check out this video showing a fantastic Kudlow Report debate over the ramifications of allowing the Bush tax cuts to expire. It features conservative pundit Herman Cain, liberal pundit Mark Walsh, and free market economist Donald Luskin.

Cain and Luskin make an extraordinarily strong case for extending the tax cuts in their entirety, including the top-end earners. Cain in particular argues (starting at 4:02) that raising taxes on the top bracket will cost Americans jobs: "Small business people—two thirds of them—file their taxes as sub-S corporations."

Cain hits the nail on the head!

Increasing taxes increases the cost of business, thereby leaving less capital for business owners to use to hire (or maintain) their employees. And by what voodoo economics will

Walsh responds by making the terribly false assertion that this will tax business owners' incomes, not their working capital. Absolutely untrue. Sub-S corporations do not file tax returns; instead, their shareholders report the corporation's profits and losses as personal income. If you don't believe me, look up Section 1363 of the Internal Revenue Code.

It's pretty simple: taking money away from job creators kills job growth.

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