For all the faithful who have believed as the Tea Party-controlled GOP wanted, that our deficit issue was a spending issue and not a revenue issue, the latest news out of Washington reveals a truth that appears to debunk that myth.
The opening lines from an Associated Press article by Charles Babington says it all
News flash: Congressional Republicans want to raise your taxes.
Impossible, right? GOP lawmakers are so virulently anti-tax, surely they will fight to prevent a payroll tax increase on virtually every wage-earner starting Jan. 1, right?
Many of the same Republicans who fought hammer-and-tong to keep the George W. Bush-era income tax cuts from expiring on schedule are now saying a different “temporary” tax cut should end as planned. By their own definition, that amounts to a tax increase.
The tax break extension they oppose is sought by President Barack Obama. Unlike proposed changes in the income tax, this policy helps the 46 percent of all Americans who owe no federal income taxes but who pay a “payroll tax” on practically every dime they earn. SOURCE
This means that the GOP wants to remove the tax break that working people are getting to reduce the deficit while trying to sustain a tax break that benefits mainly wealthy individuals whose income comes largely from non-labor sources like investments in the stock market and capital ventures using other people’s money.
Remember this comment from an Op-Ed piece by billionaire Warren Buffet
“If you make money with money, as some of my super-rich friends do, your [income tax rate] percentage may be a bit lower than mine. But if you earn money from a job, your percentage will surely exceed mine” — most likely by a lot. SOURCE
In other words those who make an income for services rendered in the form of their labor are paying higher rates of taxes than those who “make money with money” such as bankers, investors and hedge fund managers, who among the top 25 in this country benefitted from special tax cuts that put about $4 billion more in their pocket last year. This means working people will be asked to continue making sacrifices for the sake of lowering the nation’s debt while the wealthiest 5% who own nearly 70% of the financial wealth in this country are spared.
I don’t know if there is something in the drinking water that Republicans drink but there has to be something to explain the sheer gall of making such a suggestion just a few short weeks after they threatened to shut down the government and derail any inkling of a recovery by refusing to raise the debt ceiling unless they got a budget that had NO tax increases in it. These are the same people who have signed Grover Norquist’s pledge that demands they not raise taxes in any way, shape or form.
To keep this payroll tax cut in place will cost the treasury another $120 million a year Babington tells us in his report, but this is if you combine all three types of payroll taxes which consist of income tax withholding, Social Security and Medicare taxes and Unemployment taxes. Based on payroll taxes I incurred my last full year of employment in 2008, the income tax withholding was roughly about two-thirds of my total payroll taxes.
It makes sense to reinstate the taxes for Social Security/Medicare and Unemployment benefits during these tough economic times. With high unemployment and the increasing numbers of baby boomers retiring, these two areas need not be cut at this critical point. That leaves the income tax withholding portion, an amount that can easily be covered by ending the Bush tax cuts for the wealthiest 5% in this country.
Is the haze clearing for you yet? The signal I am getting from this willingness by Republicans to reinstate the tax revenue lost by cutting payroll taxes is indicative of someone who sees the need to use tax revenue to pay down the deficit. This goes against the mantra of those on the right that say the deficit is a spending issue, not a revenue issue.
We have people in Congress who claim they want to keep taxes low so it can stimulate the economy but this is cover for those tax cuts that essentially benefit wealthy and corporate tax payers. It was the cutting of taxes twice during the Bush administration that aided in depleting the surplus he inherited from the Clinton administration (see chart above) as it failed to generate any kind of significant job growth over seven years. It did however succeed in handing Obama a $1 trillion budget deficit in 2009. The wealthiest people in this country not only benefit from an over all lower tax rate but see extra benefits from lower estate taxes, capital gains taxes and investment income taxes – all the tax cuts that the large majority of Americans will never find themselves in need of.
The GOP’s heart felt concern for the wealthy has always been transparent and now their lack of concern for the rest of us is equally clear. How else would you describe a need to reinstate the higher poll taxes, which by their own definition, as Babington points out, amounts to a tax increase.