The Mesa County commissioners got the jump on national policy makers this week. They voted unanimously to cut the county share of the business personal property tax despite the half-million dollar hit that will mean to the county budget.
This at a time when the county is also cutting its budget, forcing major staffing reductions in the Sheriff’s Office and other county operations.
The decision was part of the county’s “Open for Business” initiative that, according to a county release, “aims to boost the local economy by encouraging development and business growth.”
Said Commissioner Craig Meis: “Putting these dollars back into the hands of local business people helps keep area businesses healthy, and puts money back into our community.”
Similar arguments are being proffered in Washington, D.C., this week, as Congress considers whether to extend the Bush tax cuts that are set to expire at the end of this year.
Allowing the cuts to expire would mean trillions of dollars more for the federal treasury over the next decade, at a time when deficits are at record levels. But many people of all political persuasions fear that raising taxes at this juncture, especially on the middle class, will further jeopardize the fragile economic recovery.
President Barack Obama has proposed extending tax cuts only for those with incomes of $250,000 a year or less, along with a package of business tax incentives.
Some Republican leaders have demanded the tax cuts be permanently extended for all income levels, and say they’ll fight Obama’s limited tax-extension plan. However, House Minority Leader John Boehner flummoxed Democrats and Republicans alike Sunday when he said he would vote for extending cuts to the $250,000 income level if that is the only option available.
Other options are also being discussed this week, such as extending the tax cuts to those making up to $1 million a year. More support seems to be gathering for temporarily extending the cuts to all income levels for one or two years. By then, it is hoped the recovery will be on much firmer footing.
Such a temporary extension, of course, only delays a critical decision. But it would be far better than allowing all the cuts to expire and enacting a massive tax hike in the midst of serious recession.
It’s difficult to see how allowing the income tax rate for the wealthiest Americans to return to the level it was during the prosperous years of the Clinton administration will significantly slow the economic recovery. However, raising taxes on those making more than a quarter million a year produces far less money — about $800 billion over 10 years, compared to $3 trillion by raising taxes on those making $250,000 or less.
Like the Mesa County commissioners, politicians in Washington must weigh that lost revenue against the potential benefit to the economy of allowing taxpayers to keep and spend more money.
Reaching compromise in a contentious election year will be tough. But it would be a mistake, a stain on both parties, if no action is taken and average Americans find their tax bills have increased next year, while the economic recovery remains stalled.