Two votes hap­pened in the U.S. Sen­ate last Wednes­day, votes which high­light how Repub­li­cans and Democ­rats feel about tax rates.

Sen­ate Repub­li­cans voted to raise taxes on all Amer­i­cans. Sen­ate Democ­rats voted to avoid rais­ing taxes on all Amer­i­cans. A Democratic-​​sponsored bill that lim­its tax increases was passed, despite Repub­li­can oppo­si­tion. Repub­li­cans are now insist­ing that the bill the Sen­ate passed has no chance in the Republican-​​controlled House. In other words, Repub­li­can votes could force everyone’s taxes to go up.

How in the world will Grover Norquist spin this?

That’s not the most amaz­ing part. Democ­rats have been try­ing to make the argu­ment that Repub­li­cans only care about the super-​​rich. Repub­li­cans have been try­ing to deny this charge. So to demon­strate their posi­tion, Sen­ate Repub­li­cans forced a vote on a bill to lower taxes on the super-​​rich as the quid pro quo for avoid­ing tax increases on every­one, appar­ently not notic­ing that this proves the Democ­rats’ point.

Let’s review how we got into this pecu­liar situation.

In 2001, the Republican-​​controlled Con­gress under Pres­i­dent Bush enacted a series of mas­sive tax cuts, which (along with two unfunded wars and an unfunded tax give­away to insur­ance com­pa­nies called Medicare Part D) turned Pres­i­dent Clinton’s $236.2 bil­lion sur­plus into a nearly $400 bil­lion deficit in only two years. Con­gres­sional Democ­rats opposed what has come to be known as the “Bush tax cuts,” and Democ­rats in the Sen­ate threat­ened a fil­i­buster. In order to force the bill through, Sen­ate Repub­li­cans used the Bud­get Rec­on­cil­i­a­tion process, which allowed them to pass the bill on a sim­ple major­ity vote.

Repub­li­cans at the time did not actu­ally have a major­ity in the Sen­ate. In the 107^th Con­gress, the Sen­ate was evenly split, with 50 Democ­rats and 50 Repub­li­cans. In order to have a major­ity, Vice Pres­i­dent Cheney had to cast a decid­ing vote. The Bush Tax Cuts passed the Sen­ate 51 to 50, using a pro­ce­dure Repub­li­cans would, in March of 2010, con­demn as the end of democracy.

The arcane rules of the Sen­ate, how­ever, allowed these tax cuts to stay on the books for only ten years — mean­ing 2001 through 2010. They would expire at the end of 2010, and would have to be renewed if they were to continue.

These tax cuts did a num­ber of things, includ­ing low­er­ing income taxes on all Amer­i­cans, low­er­ing cap­i­tal gains taxes, low­er­ing estate taxes, and reduc­ing a num­ber of other levies as well. Most of these tax cuts affected very few peo­ple. For instance, only a tiny per­cent­age of Amer­i­cans pay cap­i­tal gains taxes, and most Amer­i­cans are never sub­ject to estate taxes, since they apply only to estates worth over $1 million.

In the 2010 lame-​​duck ses­sion of Con­gress, Pres­i­dent Obama mas­ter­fully nego­ti­ated a num­ber of bills, includ­ing an $850 bil­lion tax-​​cuts-​​and-​​stimulus deal (which con­tained, among other things, an exten­sion to unem­ploy­ment ben­e­fits and a tem­po­rary reduc­tion of the Pay­roll Tax), the repeal of DADT, the Defense Autho­riza­tion bill, a con­tin­u­ing res­o­lu­tion to keep fund­ing the fed­eral gov­ern­ment, the START treaty, and a his­toric food-​​safety bill. Part of the price of all this was a two-​​year exten­sion of the Bush Tax Cuts, which are now set to expire on Decem­ber 31, 2012.

If Con­gress does not act, on Jan­u­ary 1, 2013, tax rates will return to what they were at the end of Pres­i­dent Clinton’s tenure. That was a good time. Under Clin­ton, the econ­omy boomed, over twenty mil­lion jobs were cre­ated, and Amer­ica saw a fed­eral sur­plus for the first time since Lyn­don John­son. The top mar­ginal tax rate on the wealth­i­est Amer­i­cans was 39.6 per­cent. The Bush Tax Cuts low­ered it to 35 per­cent. Note that this is the tax only on the por­tion of income over $288,350. The first $288,350 was (and is) taxed at a lower rate.

We can argue about how much impact the tax rate had on the Clin­ton boom. What we can­not rea­son­ably claim is that a top mar­ginal tax rate 4.6 per­cent­age points higher than it is today stunted the Clin­ton econ­omy. Repub­li­cans insist we should not raise taxes on “job cre­ators” (by which they appar­ently mean peo­ple whose incomes exceed some high thresh­old) — yet they also claim these “job cre­ators” are not cre­at­ing jobs, since they com­plain there hasn’t been suf­fi­cient job cre­ation in the last three years. (It is unclear why we should expect the “job cre­ators” to sud­denly start cre­at­ing jobs if we don’t let their tax cuts expire on Decem­ber 31.)

Bear in mind, the last 27 months have seen about three times as many jobs cre­ated as dur­ing the eight years of Pres­i­dent Bush. One would think Repub­li­cans could use this as an argu­ment for leav­ing the tax struc­ture alone, since that’s what they want to do any­way. But admit­ting that jobs are being cre­ated would go against the nar­ra­tive they want to tell about Pres­i­dent Obama, so Repub­li­cans are will­ing to deprive them­selves of this argument.

Dur­ing nego­ti­a­tions in 2010, Democ­rats argued that the tax cuts on peo­ple with the high­est incomes should be allowed to expire — that is, the top mar­ginal tax rate (the rate for the por­tion of income over a cer­tain amount), and cap­i­tal gains and estate taxes, should be allowed to return to Clinton-​​era lev­els. Rec­og­niz­ing that we’re still not out of the woods as regards the Bush Great Reces­sion, Democ­rats also argued that the tax rates on the por­tion of income lower than a given amount should remain at the Bush lev­els. Leav­ing the rate lower for lower incomes means that more peo­ple would have more money avail­able for buy­ing con­sumer goods, thus act­ing as a stim­u­lus to eco­nomic growth.

Var­i­ous cut­offs were pro­posed — per­haps incomes over $250,000 would return to Clin­ton lev­els, maybe incomes over $1,000,000. Repub­li­cans wanted not only to see the Bush Cuts extended on all income, but wanted to make them per­ma­nent. In the end, the Bush Tax Cuts were extended in their entirety, but for only two years.

Here we are, two years later, and the Bush Cuts are again fac­ing their sun­set. Once more, Democ­rats are sug­gest­ing that all Amer­i­cans should con­tinue receiv­ing the lower Bush rates on income up to some max­i­mum amount. Once more, Repub­li­cans are demand­ing that all tax cuts for all lev­els of income should be extended.

Accord­ing to the 2010 lame-​​duck law, all rates will return to Clin­ton lev­els about five months from now. What we’re talk­ing about is whether Amer­i­cans will receive a tax cut on Jan­u­ary 1, 2013 — and, if so, how much.

About a week ago, Sen­ate Major­ity Leader Harry Reid made a deal with Minor­ity Leader Mitch McConnell. Both the Repub­li­can plan for Jan 1, and the Demo­c­ra­tic plan, would be put up for a vote. Nei­ther vote would be sub­ject to a fil­i­buster. Both would be allowed to pass or fail by a sim­ple major­ity. I don’t know about you, but I can’t think of any­thing more fair, nor any­thing that would more fully present the opin­ions and pri­or­i­ties of our elected rep­re­sen­ta­tives in the Senate.

Bear in mind that all but seven Repub­li­can sen­a­tors have signed the Norquist Pledge to never vote for any tax increase, ever, under any cir­cum­stances. Bear in mind also that Repub­li­cans have been insist­ing that a vote to allow the Bush Tax Cuts to expire is a vote to increase taxes. By this logic, all sign­ers of the Norquist Pledge must vote to keep in place any or all pro­vi­sions of the Bush Tax Cuts.

That’s not how it worked out. The Demo­c­ra­tic plan to extend the Bush Tax Cuts for all income under $250,000 passed the Sen­ate by a vote of 51 to 48, with all Repub­li­cans vot­ing against. That means that every Repub­li­can in the Sen­ate voted to raise taxes on all Amer­i­cans. There is no other way to inter­pret this vote. Every Repub­li­can in the Sen­ate voted to increase taxes on all Americans.

The com­pet­ing Repub­li­can plan, to extend all of the Bush Tax Cuts, was defeated, by a vote of 45 to 54.

Remem­ber, the Demo­c­ra­tic plan gives tax relief to every­body. The Repub­li­can votes deny tax relief to every­body, unless we treat the wealth­i­est Amer­i­cans bet­ter than every­one else. Repub­li­cans will allow Amer­i­cans to receive tax cuts on incomes under $250,000, only if peo­ple who make more than that amount also receive extra spe­cial tax cuts.

Accord­ing to Repub­li­cans, Amer­i­cans should only get tax relief if the most wealthy Amer­i­cans — the top two per­cent — get more tax relief than every­one else.

In many ways, these were merely sym­bolic votes (just like the vote in the House a short time ago — after more than thirty com­pa­ra­ble votes — to repeal the Afford­able Care Act). The Con­sti­tu­tion requires that all laws regard­ing taxes must orig­i­nate in the House, not the Sen­ate, so nei­ther of these bills would have passed Con­sti­tu­tional muster (though there are ways to finesse that if Con­gress had wanted to). I sus­pect this was one of the two rea­sons Mitch McConnell allowed the votes to hap­pen with­out a fil­i­buster (the other being that I hon­estly don’t think he knew how the votes would turn out).

Nev­er­the­less, these were impor­tant votes, despite this being only a bit of sym­bol­ism. In fact, espe­cially because these votes were only sym­bolic, they were impor­tant. Even know­ing that nei­ther of these bills would become law, Sen­ate Repub­li­cans could not bring them­selves to vote for a tax bill that didn’t give extra spe­cial ben­e­fits to the wealth­i­est Americans.

Even know­ing this was only a state­ment of intent, Repub­li­cans can­not say they are in favor of help­ing all Amer­i­cans, unless the rich­est Amer­i­cans are treated bet­ter than any­one else.

We need to take this les­son to heart. It tells us a lot about where the Repub­li­can Party is today, despite the faux–pop­ulist Teaper rhetoric. This needs to be an issue in the Novem­ber elections.

(Cor­rec­tion made: the arti­cle orig­i­nally misiden­ti­fied John Boehner, rather than Mitch McConnell, as the Sen­ate Minor­ity Leader.)

Related arti­cles

• Repub­li­cans Shouldn’t Cave on the Bush Tax Cuts — Bloomberg (blog) (bloomberg​.com)
• Who Deserves a Tax Break? (nytimes​.com)
• Sen­ate to vote on com­pet­ing Demo­c­ra­tic, GOP tax plans (cnn​.com)
• Sen­ate Passes Mod­i­fied Tax Break Exten­sion, Crapo and Risch Vote ‘No’ (boise​weekly​.com)
• Sen­ate Dems Jam House Repub­li­cans, Pass Bush Tax-​​Cut Exten­sion For Mid­dle Class (tpmdc​.talk​ing​pointsmemo​.com)