This week, the National Association of Manufacturers issued a statement against HR 4853 (the Middle Class Tax Relief Act), which extends the Bush tax cuts for all income under $250,000 a year. Instead, they support extending the Bush tax cuts for all income. They state:
Manufacturers strongly support extending the 2001 and 2003 tax rates for all taxpayers. According to the non-partisan Congressional Budget Office, fully extending the 2001 and 2003 tax cuts would add between 600,000 and 1.4 million jobs in 2011 and between 900,000 and 2.7 million jobs in 2012.
There’s just one problem. The CBO job numbers they quote are compared to not extending the tax cuts for anyone, not compared to the jobs created by HR 4835.
In fact, the CBO did estimate the jobs created by the compromise HR 4853, and found that it would create between 500,000 and 1.2 million jobs in 2011. So in the best possible case, extending the Bush tax cuts for all income will create an additional 200,000 jobs. At the same time, this will cost $4 Trillion over the next 10 years, and will cost $61 Billion in 2011.
So lemme see … $61 billion divided by 200,000 jobs means that even in the best case, those jobs will cost $305,000 each. Yow! I can think of far cheaper ways to create jobs. And isn’t it ironic that if you just handed $305,000 to 200,000 people, that would give them enough income to qualify for the higher tax rate.
Not only that, but the Association is cherry picking their data. Note that they only quote the job numbers for 2011 and 2012, because the CBO went on to say that job creation would sharply fall off after 2012 because of the ballooning deficit. According to PolitiFact “CBO found that the economic benefits from a permanent repeal for all taxpayers are higher in the first two years, but that policy comes with troublesome side effects after that.”
UPDATE: As a commenter points out, HR 4853 does give a tax cut to all Americans, rich or poor, but only on income below $250,000 a year. If someone earns $250,001 in a year, they would only pay the higher tax rate on one dollar. And even then the highest tax bracket is only 4% higher, so it would cost you 4 cents in extra tax (compared to keeping the lower tax rate for all income).