Excerpt
JEFFREY BROWN (Newshour): We hear it from even a few Democrats, which is just, this is the wrong time to let any of these tax cuts lapse.
LAURA TYSON, Obama Economic Adviser: OK. Well, I think, let me -- let me distinguish here ideal policy from a compromise policy. My ideal policy would be to allow the top two brackets to expire at the end of this year, to move off of the Bush tax cuts for the top 2 to 3 percent of the American population, to take the resulting additional tax revenue, which is probably in the order of $35 billion to 40 billion dollars next year, and to take that money and spend it on job-creating programs.
The Congressional Budget Office itself has done an analysis of 11 different programs, ways you can stimulate job growth. Retaining the Bush tax cuts for the top 2 percent is number 11 on the list in terms of effectiveness. It's not as effective as giving grants to state and local governments.
It's not as effective as unemployment compensation. It's not as effective as a temporary payroll tax reduction targeted at employment, or spending on infrastructure. So, by all means, we have to worry about the jobs deficit next year reaching into revenues.
JEFFREY BROWN: Exactly. Excuse me for interrupting. I was just thinking that, even though...
LAURA TYSON: Sure.
JEFFREY BROWN: ... even though the argument that we hear often is that among those top earners are small business men and women, who create jobs.
LAURA TYSON: Well, unfortunately, that is a very misleading statement. Sure, there are some small businesses in those top two income brackets.
But the reality is that only about 2 to 3 percent of all small business filings every tax year are in the top two to three -- two or three -- the top two income tax brackets. So we're really talking about 98 percent of small business filings wouldn't be affected by allowing the Bush tax cuts for the top two income tax brackets to expire on schedule.
Please take special note of the last paragraph above.
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