A Republican Surtax On Millionaires? Of Course Not

Yesterday Arkansas freshman Rick Crawford introduced a bill in the House, The Shared Responsibility in Preserving America’s Future Act, which the Village media has been breathlessly hyping as a wonderful, almost Broderesque surtax on millionaires. It isn't. It's another call for a Republican Balanced Budget Amendment that Crawford and his cronies would like to balance on the backs of working families by severely cutting back on the social safety net. In return-- and after the Balanced Budget Amendment passes-- Crawford's plan would authorize a 5% surtax on individual income exceeding $1 million annually (income, not wealth). Crawford: "Republicans have long championed a balanced budget amendment to force the federal government to live within its means. Democrats have pushed for new taxes on millionaires to address our debt. This reasonable approach can be the beginning of a new era in Washington where Congress puts the needs of the country first and stops burdening future generations of Americans with immense debt.”

Crawford's district is traditionally Democratic and he has two Democratic opponents, an ultra conservative Blue Dog, Clark Hall and Gary Latanich, a progressive economist. Hall, whose reactionary economic and fiscal views pretty much mirror Crawford's, so his attempt to disguise his corporate views in populist drag yesterday fell flat. “Rick Crawford," Hall said in a press release, "thinks taking all sides of an issue and holding one’s finger up to the political wind will help his election chances. In reality, it’s political cowardice, and the only compromise Rick Crawford has shown willingness for is a compromise of his principles." Gary Latanich took a more comprehensive approach in addressing Crawford's claims to having a plan to resolve the deficit and the debt crisis. "What Congressman Crawford is calling for," he told me this morning, "is an additional tax on those making more than $1 million per year. The suggested tax increase is something slightly more than 2.5%. According to Congressman Crawford, without some form of revenue enhancement, any proposals for reducing the deficit have no chance of passing in the Democratically controlled Senate."

"On this point the Congressman is probably right, without revenue enhancements, which Democrats see as “shared” sacrifice, any deficit reduction proposal is dead on arrival. And while this seems like a major concession by a Republican, it is just political posturing because he also wants it to be packaged with a proposal for a balanced budget amendment.

"Let’s take a closer look at Congressman Crawford’s proposal. He’s interested in an additional tax on millionaires. As far as an additional tax on those at the upper end of the income distribution is concerned, this is most appropriate given the increasingly skewed distribution of income we’ve experienced since the end of the 1970s. The first problem, thought, is with his timing. Now is not the time to raise taxes. Any tax hike at this time will reduce demand, and even though the demand reductions may be small, they are not what is needed at a time when the demand for goods and services is not sufficiently large to significantly reduce unemployment.

"The time for his proposal to be implemented is when the economy is well on the road to recovery, when the nation is nearing the full employment. At that time a comprehensive tax reform should be undertaken. It should include additional tax hikes for those making considerably more than $1 million, and it should also contain relief for those at the bottom of the income ladder. In addition, there should be a closing of tax loopholes, such as the preferential tax treatment of dividends and capital gains, both of which should be taxed as ordinary income.

"But the real flaw in his proposal, the one that makes me think that it is just for show, is its attachment to a balance budget amendment. The annually balanced budget amendment is pro cyclical. That means it will intensify any recession or inflation we enter into. If the annually balanced budget amendment were in place today, it would force the government to cut spending by more the $500 billion, and raise taxes by a like amount. A $1 trillion cut in the federal budget would send the economy into a Greek style nose dive, which in the end, would leave us in the same condition that we were during the Great Depression.

"The annually balanced budget amendment always forces the government to do exactly the wrong thing at the wrong time, cut spending during a recession making it worse, or raise spending during an inflation making it worse. Nice try Mr. Crawford, but you economics is still wrong for Arkansas and the nation."

Last year Sen. Bernie Sanders (I-VT) and Jan Schakowsky (D-IL) introduced a real millionaires surtax bill in each House. Conservatives killed the bills, of course, but the Congressional Progressive Caucus is planning on reintroducing their ideas as part of their budget proposal this year. Sanders proposal was paired with his legislation eliminating tax breaks for Big Oil. “It would be morally wrong for the United States to balance the budget on the backs of the most vulnerable people in our society while asking nothing from the wealthiest," he said at the time. In fact, he says it all the time. It's been a hallmark of his career-- which is why he's the only incumbent Senator on the Blue America Senate page. Bernie's bill called for a 5.4 percent surtax on adjusted gross incomes over $1 million would raise as much as $50 billion a year. “In the midst of the worst recession since the Great Depression, America's middle class and working families have already paid a very heavy price in terms of lost jobs, lost homes, lost wages, and lost opportunity,” Sanders said. “The time has come to ask the wealthiest in our society and the most profitable corporations in America to help our nation address its deficit crisis.”

Superficially, the Beltway media may equate what Crawford is proposing with what Sanders and Schakowsky tried to get passed. But the two things aren't really alike. Crawford further penalizes working families and helps entrench plutocracy in this country. Bernie's legislation would strike a blow for economic justice and for democracy itself. That simple.