December 2, 2010
Do You Want a Tax Hike on New Year's Day?
By James Wilson

Quote of the Day: ""Politicians will always spend every penny of tax raised, and whatever else they can get away with." - Milton Friedman

Unless Congress acts, on January 1, 2011, your taxes will go up.

New Year's Day is when the 2001 Bush tax rates expire.

The White House and Congress are negotiating a "compromise" that may involve . . .

* A temporary extension of those rates, and/or
* A tax hike on the "wealthy"

As our sample letter below shows, if no agreement is reached, and the tax cuts expire . . .

* You'll have less money to pay your bills
* Marginal companies will be driven under by the higher taxes, increasing unemployment
* Many new ventures will NOT be attempted because of the higher tax costs
* And worst of all, your children will be worse off because the federal deficit will actually increase

Here's the crucial thing to understand . . .

* Tax increases don't reliably raise actual tax revenues
* Tax revenues always run about 19% of GDP, no matter what the tax rate is
* Congress always spends as much as it can get through taxes, AND as much as it can get from borrowing
* So raising taxes WON'T decrease spending or reduce the deficit

It's a fact . . .

Congress has a spending surplus, not a tax deficit.

Please tell Congress to permanently extend the Bush tax rates and get spending under control.

You may borrow from or copy this sample letter . . .

First, spending should be slashed. Then, taxes should be CUT.

But I'm not writing for a tax cut. You're about to increase taxes by default -- by inaction. I'm asking you to do something proactive, but very simple, that would . . .

* Prevent devastating tax hikes on the middle class
* Allow "the wealthy" to invest in the economy and create jobs

I'm asking you to _maintain_ the Bush tax rates.

Pleased take note of the time-tested FACT that tax hikes do NOT shrink the deficit. As W. Kurt Hauser points out in the Wall Street Journal . . .

* None of the personal income tax or capital gains tax increases since World War II raised the projected tax revenues, because . . .
* Taxpayers divert their effort from pro-growth productive investments to seeking tax shelters, which dampens growth and job creation

Also, tax hikes just encourage Congress to spend more! For every $1 in tax increases, Congress spends $1.17.

A tax hike now, even if it's just on "the wealthy," will make America less competitive in the world market. This will mean . . .

* Fewer jobs and declining wages
* Less consumer spending and a smaller GDP
* An increased national debt to burden our children.
* Higher interest payments
* More risk of catastrophic defaults by the federal government

Permanently extend the Bush tax rates. Then work to cut the size, scope, power, and cost of the federal government.


You may send your letter using's Educate the Powerful System.

And please share this with your friends and Digg it on our blog.

Jim Babka
President, Inc.

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