The Coming Choice
We will be treated this year to a stark contrast in visions for America. That contrast cannot be made clearer than by considering a pair of tax proposals before Congress this week.
Republicans in the Senate blocked consideration of a Democratic proposal known as the Buffett Rule, which would have codified a clearer progressive income tax, and would have resulted in an estimated $36.7 billion per year in additional federal revenue. (Correction: the estimated $35 — $47 billion is for a ten-year period.) Virtually simultaneously with that act, Republicans in the House announced a new tax cut proposal, which would increase the deficit by almost exactly the same amount as the Buffett Rule would have reduced it. (Correction: the Republican proposal would increase the deficit by about $40 billion in a single year.)
That’s right…after spending three years whining about the deficit, the Republican reject a bill that would have made at least a token move in the right direction, and recommend instead an increase in the deficit.
Why would they engage in such blatant self-contradiction? The reason is simple. The Buffett Rule would have raised taxes on wealthy people. The Republican proposal would lower taxes on wealthy people. It’s really that straightforward.
It’s been obvious for a while where the interests of the Republican Party truly lie. On October 20, 2000, while running for President, George W. Bush gave a speech at the annual Al Smith Dinner for charity. As part of his remarks, he said, “This is an impressive crowd — the haves and the have-mores. Some people call you the élite; I call you my base.” It was meant to be a joke, of course. But the callousness of the humor is part of a pattern.
While running for president in 2008, John McCain couldn’t recall how many houses he owns. Mitt Romney has made one such élitist gaffe after another. But it’s not just about the arrogant personal attitudes of Republican standard-bearers and their inability to connect to the average American. Those are just symptoms of a deeper problem. For many years, Republicans have been engaged in what can only be called all-out class warfare.
It isn’t exactly news that income disparity in America is nearing an all-time high, eerily similar to the disaster year of 1928. What is amazing, however, is the unbridled eagerness with which Republicans are seeking to increase that disparity.
Take this week as a case in point. The proposed Buffett Rule would have ensured that Americans with annual income over $1,000,000 would pay a minimum marginal tax rate of 30 percent. The competing Republican tax plan in the House, specifically proposed as an alternative, would give a one-year 20 percent tax reduction to “small businesses” with fewer than 500 employees. This includes most professional sports teams, thousands of millionaire stock traders, and Paris Hilton, all of whom are “small businesses.” In fact, roughly 49 percent of the proposed $35-billion-plus tax giveaway would go to millionaires.
It could be argued that, besides helping to enrich the wealthy, giving some of that money to actual “small businesses” would help create jobs. Republicans don’t have much credibility on that argument, after defeating nearly every aspect of the American Jobs Act. It would be possible to target actual small businesses for tax assistance — for example, by giving cuts to businesses with average salaries under $100,000 and total revenue under $10,000,000. The Republican plan doesn’t do that. It’s designed to provide a particular windfall to wealthy individuals who have incorporated, and to use “small business cuts” as a Trojan Horse in order to do it.
Republicans aren’t interested in creating jobs, or in improving the economy in any other way — at least, not before they make another round of electoral gains. We know this. John Boehner told us so.
In point of fact, simply reducing income taxes for small businesses tends to reduce investment. How can this be? Because income taxes are assessed after businesses expenses (including employee salaries) have been paid. Income taxes are assessed on money that isn’t reinvested in the business. By reducing corporate income taxes for small businesses, we encourage business owners to take money as profit rather than using it, for example, to hire more people. It discourages investment.
Is this what the Republicans wish to have happen, or is it a case of unintended consequences? There is a pattern of where wealth has been going for the last three or four decades, particularly over the last quarter century. Recent Republican proposals would increase the wealth gap even more.
The Ryan Tax Plan — the plan that Romney called “marvelous” — would eliminate the security of Medicare, slash Pell grants, maintain $40 billion in tax giveaways to oil companies, and give $3 trillion in additional tax cuts to the wealthy and to huge corporations. Would it at least balance the budget after all that? No, it wouldn’t:
The Tax Policy Center looked into the revenue loss associated with House Budget Chairman Paul Ryan’s plan to cut the tax code down to two rates of 10 percent and 25 percent. They estimate the changes would raise $31.1 trillion over 10 years, or 15.4 percent of GDP. That’s $10 trillion less than the tax code would raise if the Bush tax cuts were allowed to expire, and $4.6 trillion less than it would raise if all of the Bush tax cuts were extended.
It increases the gap between receipts and expenses by $4.6 trillion dollars more than keeping the disastrous Bush tax cuts in place.
If Republicans are uninterested in creating jobs, and don’t care about the deficit, what are they after?
It’s been mentioned several times already. They’re desperate to reduce taxes on the most wealthy, eager to eliminate our social contracts such as Medicare and Social Security, anxious to dismantle environmental protections, consumer protections, and assistance for college students. Romney wants to get rid of the Department of Housing and Urban Development. During the Republican presidential debates, the candidates tried to outbid each other in listing federal departments they would eliminate, from the EPA to the Department of Education.
House Republicans even want to cut food stamps for America’s most needy, in order to avoid the cuts they agreed to last year in the Pentagon’s budget — cuts that resulted from their refusal to pay for the spending they wanted.
Observe the pattern — cutting programs that benefit average Americans or the poor, while insisting on tax cuts that benefit the wealthy. Their programs and proposals would maintain immense deficits and use those deficits as an excuse to slash programs that help 90 percent of Americans, while yet again cutting taxes on the wealthy. All this, while the wealth and income gap soars to historic levels.
I’ve concentrated here on economic issues. But there are social issues involved as well, and the pattern continues, an élitist pattern of restricting the many while benefiting the few — restricting access to health care, restricting the right to vote, restricting the right to marry, restricting the right to collective bargaining.
There is class warfare going on in America. In November, we’ll be presented with a very clear choice. The good and hopeful thing about America is that We the People are self-governing. We do not have to surrender our rights and our wealth to a privileged few. We certainly can do that if we want to. But it’s within our power to reverse the trend.
(I thank our reader GROG for bringing to my attention the matters indicated above as “Corrections”.)
- Despite GOP Claims, Buffett Rule Would Only Affect 1 Percent Of Small Businesses (thinkprogress.org)
- ‘Buffett Rule’ Fails Procedural Vote in Senate (newsy.com)
- The math and politics behind the Buffett Rule (blogs.ajc.com)
- Seven U.S. Zip Codes That Prove A Need For The Buffett Rule (thinkprogress.org)
About dcpetterson (198 posts)
D. C. Petterson is a novelist and a software consultant in Minnesota who has been writing science fiction since the age of six. He is the author of A Melancholy Humour, Rune Song and Still Life. He lives with his wife, two dogs, two cats, and a lizard, and insists that grandchildren are the reward for having survived teenagers. When not writing stories or software, he plays guitar and piano, engages in political debate, and reads a lot of history and physics texts—for fun. Follow on Twitter @dcpetterson