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The GOP’s Bizarre, Disturbing Passion for Raising Taxes on the Poor

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James Kwak, co-author of 13 Bankers and White House Burning: The Founding Fathers, Our National Debt, and Why It Matters to You and the popular economics blogBaseline Scenario, rightly Congressional Republicans for wanting to increase taxes on the poor while making certain the rich see not one dime of tax increase.

Eric Cantor

As Bruce Bartlett reminds us in his latest Economix column, leading Republican figures, including Eric Cantor, as well as a majority of party members, argue that taxes should go up … on the poor. They are talking about the famous “47 percent” who don’t pay federal income taxes.

This overlooks several facts. One, which Bartlett points out, is that many people don’t pay income tax because of the child tax credit and the earned income tax credit, both of which were increased in the Republicans’ 2001 tax cut. (The child tax credit also originated in the 1997 budget bill, when Republicans controlled both houses of Congress. The earned income tax credit has a longer history, but has been periodically expanded by both political parties.)

Another is that focusing on federal income taxes is misleading, especially now that payroll taxes bring in almost as much money as the individual income tax. If you include payroll taxes, it turns out that only 18 percent of households pay no direct federal taxes.

The “47 percent” figure also ignores the question of why some people don’t pay direct federal taxes. The majority of people who don’t pay either income or payroll taxes are the elderly–largely because (a) Social Security benefits aren’t taxable for most beneficiaries and (b) many of the elderly no longer work. If Eric Cantor wants to solve the “problem” of people not paying federal taxes, he should push to make Social Security benefits taxable. Good luck with that.

Almost all of the other households that don’t pay direct federal taxes make less than $20,000 per year. So, it turns out, the only people that Republicans want to raise taxes on are the very poor — and they want to do it so much that they are willing to consider breaking the Pledge.

Kwak argues that this dramatic change in Republican tax policy results in Class Warfare against the poor and those struggling in this economy.

Two explanations jump to mind. The first is that the modern Republican Party is funded by the very rich. Since the 1970s, electoral politics has gotten much more expensive (in real terms). As political scientist Thomas Ferguson and others have argued, modern political parties have adapted by granting leadership positions to those members best able to bring in large contributions–a strategy pioneered by Newt Gingrich but since slavishly imitated by the Democrats.

The result is that the parties’ platforms now reflect the wishes of their major funders, not their median voters. This is why Republican presidential candidates spent the primary season competing to offer the most generous tax breaks to the rich–while Paul Ryan’s budget slashes Medicare, a program supported by the Tea Party rank and file. For the rich people who call the shots, it’s simply in their interest to lower taxes on the rich and raise them on the poor. End of story.

The other, even-more-disturbing explanation, is that Republicans see the rich as worthy members of society (the “producers”) and the poor as a drain on society (the “takers”). In this warped moral universe, it isn’t enough that someone with a gross income of $10 million takes home $8.1 million while someone with a gross income of $20,000 takes home $19,000.* That’s called “punishing success,” so we should really increase taxes on the poor person so we can “reward success” by letting the rich person take home even more. This is why today’s conservatives have gone beyond the typical libertarian and supply-side arguments for lower taxes on the rich, and the campaign to transfer wealth from the poor to the rich has taken on such self-righteous tones.

This just goes to show how pathological the Republican Party has become. It would be so much simpler, more logical, and more politically appealing if they would just draw a line against higher taxes for anyone. That’s what the Taxpayer Protection Pledge does, and it makes a certain amount of sense, even if I think it’s bad policy. The fact that Eric Cantor feels compelled to go out of his way to talk about raising taxes on the poor shows how the nasty instinct for class warfare is undermining what should be a simple, small-government agenda.

*Those are at 2011 tax rates, including the employee’s share of payroll taxes, assuming that the rich person makes $2 million in salary and $8 million in capital gains. Note that the effective rate of 19 percent is still significantly higher than those of Mitt Romney and Warren Buffett.

Personally, I find increasing taxes on the poor so they have “some skin in the game” morally offensive. Increasing taxes on poor people quite literally means taking food out of children’s mouths or clothes off their backs. What kind of morality is that says poor families should suffer even more, especially the innocent children?

If Republicans and others are really concerned poor people not paying any taxes, then why aren’t they working to increase the educations and skills of poor people so those people can get better paying jobs? Why aren’t Republicans pushing to increase wages for the lowest paying jobs so low income people can afford to pay taxes without harming the health and welfare of their children?


Written by Valerie Curl

June 8, 2012 at 8:47 AM

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