Monday, June 11, 2012

How Right Wingers Plan To Squeeze More Taxes From The Middle And Working Class


History is pretty clear that Republicans, despite their rhetoric, don't downsize government... not ever. They just shift the burden of paying for it from the wealthy to working families. Before we get into the latest GOP trick for squeezing more money out of ordinary American workers through an internet sales tax, let me use Joshua Holland's research-- from his book The Fifteen Biggest Lies About The Economy-- to back up the above assertion
On the GOP’s Web site, a common refrain from the Right:

America’s producers can compete successfully in the international arena-- as long as they have a level playing field. Today’s tax code is tilted against them, with one of the highest corporate tax rates of all developed countries. That not only hurts American investors, managers, and the U.S. balance of trade; it also sends American jobs overseas.

In the real world, however, looking at the total U.S. tax burden, we’re in great shape compared to our competitors. Out of the thirty countries that belong to the Organization for Economic Co-operation and Development (OECD)-- sometimes called the “rich countries’ club”-- the United States comes in fourth from the bottom. And although we have relatively high corporate income taxes, the overall rate that “America’s producers” pay-- corporate taxes combined with taxes on capital gains-- ranks twentieth out of the thirty OECD countries.

[T]he share of the economy represented by government spending (at the local, state, and federal levels combined) has also been remarkably consistent during the last forty years or so, regardless of which party controlled the White House or Congress. In the two years that Gerald Ford presented budgets, government spending as a share of the gross domestic product averaged 31.4 percent; in ultraliberal Jimmy Carter's four years, it dropped to 30.7 percent; Ronald Reagan, the patron saint of fiscal conservatism, came into office, and it rose to 32.2 percent. It nudged slightly higher during the first George Bush's term in office, then dropped to an almost Nixonian 30.3 percent during the Clinton years, before rising to 31.6 percent during the second Bush administration (that's the average of the first of his seven budgets-- as of this writing, the data only go up to 2008).

Looking at the other side of the ledger, overall government revenues have also remained relatively stable, but the pattern is reversed. The government’s take, as a share of GDP, dropped during the Ford era, rose again under Carter, and fell again under Reagan. Revenues rose by almost 2 percent under Clinton and fell by a percent and a half under George W. Bush. (The only exception: government revenues rose from 27.3 percent of GDP during the Reagan years to 27.6 percent under George Herbert Walker Bush.)

So although the government taxes and spends at fairly similar rates, under Republican leadership the nation shells out a bit more for government services and takes in just a bit less in taxes. With a $15 trillion economy, those little differences add up to pretty big deficits, and this, rather than hot school lunches for poor kids, is responsible for a large chunk of our federal debt. Yet conservatives have managed to convince the mainstream media and much of the country that they’re the fiscally responsible ones who are always ready to step in and clean up the nation’s budgetary mess.

One of the most popular ways for conservative politicians (of both parties) to increase taxes on working people, while lowering the already far, far too light burden on their wealthy campaign contributors, is to replace progressive income taxes with regressive sales taxes. Although this is classic GOP strategy, right-wing Democrats are just as enthusiastic about the tactics. (This week we're looking at Nick Ruiz's primary opponent in Florida, Jason Kendall, whose entire platform is based on shifting the burden of taxes away from the wealthy and onto the backs of the middle class this way.)

The most recent culprits are the Republican governors and state legislatures-- most of whom have come to power in the last couple of years-- who are all gung-ho on charging sales taxes on online purchases. And it isn't just New Jersey reactionary Chris Christie anymore with his reverse Robin Hood policies. Even out-and-out teabaggers like Maine's Paul LePage are salivating over the chance to charge people sales taxes on online purchases. Class war fanatics like Michigan's Rick Snyder and Indiana's Mitch Daniels are on the front line of increasing taxes on the middle class as well. And the latest to weigh in is Iowa's right-wing governor, Terry Branstad.
In a letter sent Thursday, Branstad encouraged his home-state senators to support a solution that he said would close a longstanding loophole.

“I understand that the coalition supporting this legislation is now very broad which gives me hope that, under your leadership, this legislation can be passed yet this year,” Branstad wrote to Sens. Chuck Grassley (R) and Tom Harkin (D).

“The Internet is now a robust, mature and dynamic marketplace that does not warrant special protections,” he added. “The application of sales taxes only to ‘brick-and-mortar’ retailers, many of which are small businesses, puts those very entities at a competitive disadvantage.”

That’s the same argument other GOP governors have made-- that the legislation would level the playing field between online operations and brick-and-mortar shops while giving states more tools to balance budgets and enforce tax laws.

Retail groups, which are clamoring for congressional action, say the growing support from GOP governors is having an impact on the debate.

“I think it adds to the pressure for Congress to act,” said Jason Brewer, vice president of communications and advocacy for the Retail Industry Leaders Association. “It bodes well for us that more governors are encouraging their delegations to support the bill.”

Still, supporters face not only a ticking clock, but also stiff opposition from some conservatives.
Congress is not expected to do much legislating before November’s election, and the post-election lame-duck session will likely be crammed with big-ticket issues like the expiring Bush-era tax rates and looming automatic spending cuts.

The chairman of the House Judiciary Committee, Rep. Lamar Smith (R-Texas), has said his panel will hold a hearing on the issue next month, but the House GOP did not include online sales tax in a memo that spelled out their floor priorities for the summer.

Even if Congress did have the time, it’s not clear a sales tax measure could garner enough support to pass. Some Republicans say the online sales tax proposals offer them a difficult choice.

On the one hand, many Republicans are reluctant to back anything that would cause constituents to pay more in taxes and can be construed as a tax increase.

Prominent conservative lawmakers, including Sen. Jim DeMint (S.C.), and organizations, such as the Heritage Foundation, argue online sales tax proponents have the issue backwards.

“As a general proposition, states should focus on cutting their spending rather than seeking more money in taxes as the means to balance their budgets,” Heritage’s David Addington, a onetime top aide to former vice president Dick Cheney, wrote in April. “Especially in a weak economy, state governments should generally pursue pro-growth, job-creating tax policies rather than taking more money out of the private economy in sales tax collection.”

But some GOP lawmakers are sympathetic to the complaints of hometown retailers, and to the states-rights argument in favor of the legislation.

Because of a 1992 Supreme Court decision, states cannot require companies that don’t have a physical location within their borders to collect sales tax revenue.

Supporters of bipartisan bills in the House and Senate, which would allow states to collect from certain out-of-state sellers, say consumers already owe taxes on online purchases and that states themselves would be able to decide how, or if, to collect.

“For conservatives and Republicans, the biggest federal issue is states rights,” Sen. Lamar Alexander (R-Tenn.), a key sponsor of the Senate bill, told The Hill. “I don’t want Washington telling Tennessee it needs to have an income tax, or not to have a sales tax.”

Democrats, desperate for any income to fund social and economic justice programs and hold society together, will easily be persuaded to jump on he bandwagon when what they should be doing is taxing billionaires out of existence. An Eisenhower-era (high economic growth era, I might add) 90% tax on the highest wage earners is the solution not just to the immediate economic issues facing the country, but to the severe political ones as well. Society will be far healthier-- as it has been in the past-- if wealth gaps are narrowed drastically. There is no place for billionaires in a civil society. Anyone who can't be satisfied with a few hundred million should probably move to China or Russia.

Labels: , ,


Post a Comment

<< Home