Taxing The Poor: The Only Tax Increase Republicans Support
Throughout the debate about raising the federal debt ceiling, Republicans have denied deal after deal because Democrats insist on adding new revenues to trillions of dollars in spending cuts. Republicans have opposed repealing oil and gas subsidies, removing a tax loophole for corporate jet owners, letting the Bush tax cuts expire, and all other forms of revenue Democrats have suggested. Raising taxes in a weak economy, they argue, is unthinkable — even if conservative patriarch Ronald Reagan did just that.
But there is one tax increase some Republicans seem to favor: raising taxes on the working poor, senior citizens, and other low-income Americans.
While they fight the expiration of the budget-busting Bush tax cuts, Republicans have continually cited a report that shows that 51 percent of Americans don’t pay income taxes, even admitting that middle- and lower-class Americans need to shoulder a larger burden in deficit reduction efforts. Here is a sample of Republicans who have made that argument:
Sen. Orrin Hatch
(R-UT): In a May 5 appearance on MSNBC, Hatch said, “The place where you’ve got to get revenues has to come from the middle class,” saying the poor needed to understand “that there’s a civic duty on the part of every one of us to help this government to, uh, to be better.” On the Senate floor July 7, Hatch said the poor “need to share some of the responsibility” for deficit reduction.
Sen. John Cornyn
(R-TX): Cornyn also cited the report on the Senate floor July 7, when he said Congress needed to address tax reform to make the system “flatter, fairer, and simpler.” He then cited the report, saying, “51 percent — that is — a majority of American households — paid no income tax in 2009. Zero. Zip. Nada.”
Sen. Dan Coats
(R-IN): Coats echoed the talking point last weekend, saying “everyone needs to have some skin in the game.” He added: “I realize that some with low incomes and not much money are not paying much in taxes. Nonetheless, we all have a stake in this country and what needs to be done. I think it’s important that this burden not just fall on 50 percent of the people but falls on all of us in some form.”
House Majority Leader Eric Cantor
(R-VA): Cantor was among the first Republicans to begin hitting this particular talking point, doing so in April on CNBC’s Squawk Box. “We also have a situation in this country where you’re nearing 50 percent of people who don’t even pay income taxes,” he said.
Republicans, of course, ignore why most of the 51 percent do not pay income taxes and the myriad ways in which they are subject to other forms of taxation. The majority who do not pay federal income taxes simply do not make enough money to qualify for even the lowest tax bracket. But they do contribute through payroll, state, and sales taxes. Less than a quarter of Americans don’t contribute to federal tax receipts, and the majority of those are students, the elderly, or the unemployed.
Meanwhile, the richest Americans are paying less than they were a generation ago, leaving the United States with one of the largest income gaps in the industrialized world.
By: Travis Waldron, Think Progress, July 25, 2011
Boehner’s New Proposal Could Produce Greatest Increase In Poverty And Hardship Of Any Law In Modern U.S. History
House Speaker John Boehner’s new budget proposal would require deep cuts in the years immediately ahead in Social Security and Medicare benefits for current retirees, the repeal of health reform’s coverage expansions, or wholesale evisceration of basic assistance programs for vulnerable Americans.
The plan is, thus, tantamount to a form of “class warfare.” If enacted, it could well produce the greatest increase in poverty and hardship produced by any law in modern U.S. history.
This may sound hyperbolic, but it is not. The mathematics are inexorable.
The Boehner plan calls for large cuts in discretionary programs of $1.2 trillion over the next ten years, and it then requires additional cuts that are large enough to produce another $1.8 trillion in savings to be enacted by the end of the year as a condition for raising the debt ceiling again at that time.
The Boehner plan contains no tax increases. The entire $1.8 trillion would come from budget cuts.
Because the first round of cuts will hit discretionary programs hard — through austere discretionary caps that Congress will struggle to meet — discretionary cuts will largely or entirely be off the table when it comes to achieving the further $1.8 trillion in budget reductions.
As a result, virtually all of that $1.8 trillion would come from entitlement programs. They would have to be cut more than $1.5 trillion in order to produce sufficient interest savings to achieve $1.8 trillion in total savings.
To secure $1.5 trillion in entitlement savings over the next ten years would require draconian policy changes. Policymakers would essentially have three choices: 1) cut Social Security and Medicare benefits heavily for current retirees, something that all budget plans from both parties (including House Budget Committee Chairman Paul Ryan’s plan) have ruled out; 2) repeal the Affordable Care Act’s coverage expansions while retaining its measures that cut Medicare payments and raise tax revenues, even though Republicans seek to repeal many of those measures as well; or 3) eviscerate the safety net for low-income children, parents, senior citizens, and people with disabilities. There is no other plausible way to get $1.5 trillion in entitlement cuts in the next ten years.
The evidence for this conclusion is abundant.
The “Gang of Six” plan, with its very tough and controversial entitlement cuts, contains total entitlement reductions of $640 to $760 billion over the next ten years not counting Social Security, and $755 billion to $875 billion including Social Security. (That’s before netting out $300 billion in entitlement costs that the plan includes for a permanent fix to the scheduled cuts in Medicare physician payments that Congress regularly cancels; with these costs netted out, the Gang of Six entitlement savings come to $455 to $575 billion.)
The budget deal between President Obama and Speaker Boehner that fell apart last Friday, which included cuts in Social Security cost-of-living adjustments and Medicare benefits as well as an increase in the Medicare eligibility age, contained total entitlement cuts of $650 billion (under the last Obama offer) to $700 billion (under the last Boehner offer).
The Ryan budget that the House passed in April contained no savings in Social Security over the next ten years and $279 billion in Medicare cuts.
To be sure, the House-passed Ryan budget included much larger overall entitlement cuts over the next 10 years. But that was largely because it eviscerated the safety net and repealed health reform’s coverage expansions. The Ryan plan included cuts in Medicaid and health reform of a remarkable $2.2 trillion, from severely slashing Medicaid and killing health reform’s coverage expansions. The Ryan plan also included stunning cuts of $127 billion in the SNAP program (formerly known as food stamps) and $126 billion in Pell Grants and other student financial assistance.
That House Republicans would likely seek to reach the Boehner budget’s $1.8 trillion target in substantial part by cutting programs for the poorest and most vulnerable Americans is given strong credence by the “Cut, Cap, and Balance” bill that the House recently approved. That bill would establish global spending caps and enforce them with across-the-board budget cuts —exempting Medicare and Social Security from the across-the-board cuts while subjecting programs for the poor to the across-the-board axe.
This would turn a quarter century of bipartisan budget legislation on its head; starting with the 1985 Gramm-Rudman-Hollings law, all federal laws of the last 26 years that have set budget targets enforced by across-the-board cuts have exempted the core assistance programs for the poor from those cuts while including Medicare among programs subject to the cuts. This component of the “Cut, Cap, and Balance” bill strongly suggests that, especially in the face of an approaching election, House Republicans looking for entitlement cuts would heavily target means-tested programs for people of lesser means (and less political power).
In short, the Boehner plan would force policymakers to choose among cutting the incomes and health benefits of ordinary retirees, repealing the guts of health reform and leaving an estimated 34 million more Americans uninsured, and savaging the safety net for the poor. It would do so even as it shielded all tax breaks, including the many lucrative tax breaks for the wealthiest and most powerful individuals and corporations.
President Obama has said that, while we must reduce looming deficits, we must take a balanced approach. The Boehner proposal badly fails this test of basic decency. The President should veto the bill if it reaches his desk. Congress should find a fairer, more decent way to avoid a default.
By: Robert Greenstein, President, Center on Budget and Policy Priorities, July 25, 2011
GOP Death Wish: Resume The Debt Debate In 2012?
So here’s the new Republican debt-ceiling idea:
Pass a $1 trillion increase in the debt ceiling joined to $1 trillion in spending cuts over the next 10 years, no revenues.
That sounds dramatic. But $1 trillion in spending cuts over a decade is not as big a deal as it sounds, especially if you are allowed to be vague about them. And a $1 trillion debt ceiling increase carries the United States government only into the early part of next year, meaning that this debate will recur in 2012.
House Republicans apparently regard the early renewal of the debt-ceiling debate as a feature, not a bug. It means that they can resume the debate over debt and deficits in the election season.
Except – I thought the 2012 election was supposed to be about the economy? Jobs and the Obama administration’s disappointing record of creating them?
Isn’t that the winning issue?
Why the eagerness to change the subject in 2012 to Republican plans to end the Medicare guarantee for those now under 55?
Isn’t that a big loser?
Republicans and Democrats alike assume that a 2012 debate over the debt ceiling hurts Democrat’s and helps Republican’s. Maybe. But I’d be careful about that assumption. If it means that we spend 2012 debating the Ryan plan all over again – only this time with the big general electorate watching – then the assumption may be wrong.
And if there’s one thing that could alienate younger voters who have begun to drift back to the GOP because of the jobs issue, isn’t a big debate over a Republican plan to end the Medicare guarantee for younger people a good approximation of that one thing? Why frame a national election around that?
By: David Frum, The Frum Forum, July 25, 2011
No Limits To Hypocrisy: Boehner Claims To Be “Worried About The Country”
House Speaker John Boehner (R-Ohio), as expected, is now fully invested in a temporary debt-ceiling extension. He’ll accept $1 trillion in cuts — with no revenue — now, and then consider another extension next year after additional negotiations over taxes and entitlements.
Democrats want one debt-ceiling vote, seeing no need to put the country through this twice in less than a year. Take note of how Boehner responds to this.
Boehner suggested Sunday that by trying to put the next debt ceiling debate off for so long Obama was trying to gain political advantage.
“I know the president is worried about his next re-election, but, my God, shouldn’t we be worried about the country?” Boehner asked.
It’s entirely possible that the House Speaker really is this dumb. With this in mind, I’m trying to think about how to ask the questions in a way John Boehner can understand. How about this:
1. How would the country benefit from two votes on raising the debt ceiling, instead of one?
2. If Republicans are sincerely concerned about economic “uncertainty,” why tell investors, job creators, and international markets that default is a possibility early next year?
3. If getting one debt-ceiling revision through Congress is necessary but difficult, why make lawmakers go through this twice?
Hearing John Boehner claim the high road, claiming to be “worried about the country,” might be the most hilarious thing I’ve seen in a while. We are, after all, talking about a House Speaker who allowed his caucus to launch an insane hostage strategy, threatening to crash the economy on purpose, and then refused to compromise, even after President Obama handed him an overly-generous offer.
“My God, shouldn’t we be worried about the country”? What a good question, John. Why don’t you answer it?
By: Steve Benen, Contributing Writer, Washington Monthly Political Animal, July 24, 2011
American Businesses: Success Is Because Of Government, Not In Spite Of It
While big business whimpers about high statutory tax rates, the effective tax rate paid by most corporations in America is often far lower than most other developed nations (thanks to loopholes and accounting tricks). Meanwhile, corporate tax receipts accounted for 30 percent of US federal revenues in the mid-1950s. In 2009, they made up just 6.6 percent of federal revenue streams.
In other words, not only are big corporations funding a smaller percentage of our shared social safety net, they’re paying a smaller percentage into funding the future infrastructure that they desperately need.
Imagine if big business got its way and corporate taxes were slashed even further. How would businesses suffer?
What would Oprah and Henry Ford have done?
Imagine if, when Henry Ford wanted to start the Ford Motor Company, he had to not only drill for oil himself but also oversee the laying of pipelines and production infrastructure across government-owned land so his cars could have gas to make them go. And when the American auto industry was expanding in the 1940s and 50s creating jobs throughout the nation, imagine if Chrysler and General Motors had to not only build their own factories and assembly lines but actually plan and construct the roads and interstate highways for cars to drive on.
Imagine if Oprah had to regulate the television spectrum for herself and that at random, bandwidth pirates could intrude on broadcasts of the Oprah Winfrey Show because there was no Federal Communications Commission monitoring ownership of and access to the public airwaves.
Imagine if every restaurateur today had to invest in his or her own food safety teams to make sure the meat served isn’t toxic. Imagine if every small business in remote rural communities had to generate its own electricity on site because the government wouldn’t have helped fund the expansion of power lines to those distant places. Imagine if every corporation had to educate its entire workforce from childhood to adulthood because there were no public schools.
Bill Gates would have had to run phone lines.
What if, when Alexander Graham Bell invented the telephone, he couldn’t get a patent from the United States government to protect his idea? Or for that matter, if there had been no laws to protect private property and no law enforcement, Bell might have had to sit up all night with a gun guarding his invention – instead of going out in the world and figuring out how to use it. When Bill Gates wanted to start Microsoft, consider if instead of drawing on the government-created infrastructure of the original Internet (which he accessed early on in high school through the publicly funded University of Washington), Mr. Gates not only had to invent Windows, but also invent the entire World Wide Web and run the wiring for the phone lines that originally connected all his potential consumers.
When Warren Buffet launched his investing career that ultimately earned him billions, imagine if in addition to hiring lawyers to run his business, Mr. Buffett had to hire judges, too, and create entire court systems to oversee and enforce the types of binding contracts on which the stock market relies. For that matter, imagine if Buffet had to print his own currency and negotiate its value against the currencies of all other individual investors.e infrastructure of private sector success
Taxes fund the infrastructure of private sector success
Businesses in the United States don’t succeed in spite of our government, in many ways, they succeed because of our government. Through our taxes, we fund the legal and economic infrastructure of private sector success. By definition, those businesses that get the most out of that infrastructure are those that should give the most back.
At a time when economic conservatives want to slash spending that helps the poor and middle class rather than raise the already-low effective taxes of big business, it’s shameful that corporations like General Electric and Bank of America effectively pay no taxes. In the context of the larger American story, where successful businesses of today support the public infrastructure for the businesses of tomorrow, saying that corporations should pay even less is downright un-American.
By: Sally Kohn, AlterNet, July 22, 2011
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