An interesting phenomenon within a month of Barack Obama’s Presidency was the tea party that began complaining they were “taxed enough already,” and it prompted them to break out the Revolutionary War flag with the words “don’t tread on me” at their rallies. Republicans are wont to complain that Democrats raise taxes as a matter of course, and they have not been remiss to accuse President Obama of unfairly taxing the American people, and claim it is the reason for the sluggish economy and why the wealthy cannot create jobs. Adolf Hitler’s propaganda minister, Joseph Goebbels, once said “If you repeat a lie often enough, it becomes the truth,” and no-one can accuse Republicans of not repeated the lie that the President raised taxes on the American people. The problem for Republicans though, is that this time there is more than ample evidence that their assertion is a lie and beginning to fall apart in front of the American people thanks to the President.
During the same month angry racists donned tri-cornered hats and adorned them with teabags to protest burdensome taxation, the President signed the American Recovery and Reinvestment Act (stimulus) that included a $289.6 billion tax cut, or 36% of the stimulus. Despite an immediate tax cut for every American, the Republicans have spent the past three-and-a-half years assailing the President for burdensome taxation and as a debate rages over extending the Bush-era tax cuts for all Americans, Republicans are still complaining the President is continues raising taxes.
First and foremost, the President’s proposal to extend the Bush tax cuts for all Americans on the first $250,000 of income is for every income earner. There is no class warfare and everyone is treated exactly the same with a one-year extension of the Bush tax cut on the first $250,000 of income. The President could do a better job of articulating the fact that even millionaires and billionaires keep their Bush tax cuts up to $250,000, but it may be too complicated for arithmetic-challenged Americans. For example, if a person earns $260,000, their tax rate will only increase on $10,000, so they still get a tax cut. It is not hard to comprehend, but Republicans are claiming the President is proposing raising taxes on all income earners to garner support for their plan to extend the tax cuts permanently to protect the wealthiest 2% of income earners. It is also important to remember that the Bush tax cuts were only meant to last 10 years, and it was Republicans who were astute enough to understand that at some point in time, the necessity to increase revenue meant the tax cuts could not continue into perpetuity.
Yesterday, a new Congressional Budget Office report said that in 2009, taxes were at their lowest rate in 30 years and that does not include the other tax cuts this President enacted since 2009. In fact, President Obama’s historically low taxes were less than Bush I, Clinton, Bush II, and Reagan administrations, but Republicans will never admit that inconvenient truth, but there’s more.
At the end of 2010 when the Bush tax cuts were set to expire, the President compromised with Republicans and extended them for two years in exchange for a payroll tax reduction of 2% and unemployment benefit extension that incurred the wrath of many on the left. What the whiny left failed to acknowledge was that the two-year extension included every wage earner and not just the wealthy. The payroll tax reduction benefitted Americans who earn a paycheck and paid Social Security tax (FICA) that is deducted from paychecks. The wealthy whose earnings are from investments were not affected by the payroll tax cut, but those that actually earned wages received the cut even though their rate is reduced to zero after the first $110,100. That was December 2010, and still no tax increase from this President.
Republicans claim the President’s current plan will hurt small business owners, but according to the Congressional Joint Tax Committee estimates, only about 940,000 taxpayers would have enough business income to surpass the $250,000 ceiling, and still they would only pay additional taxes on any amount exceeding $250,000. The GOP is also remiss to mention the various tax credits employers and employees receive to offer or purchase health insurance as a feature of the Affordable Care Act Republicans claim is the largest tax increase in the history of the world. The individual mandate portion of the ACA is said to be a devastating tax increase on all Americans, but less than 1% of the population will pay the mandate/tax only if they can afford to buy health insurance and refuse. The mandate assures that those who can afford insurance and will not purchase it have at least contributed something for their own medical treatment.
The GOP is mired in protecting the wealthiest 2% of income earners who not only avoid paying their fair share in taxes, many of them conceal their investment earnings in offshore accounts that cost the average taxpayer approximately $400 annually because the rich avoid taxes on their hidden money. The President’s tax proposal does not address the offshore accounts of men like Willard Romney or his wealthy elite cohort, and it is one of the tax reform issues that must be resolved to help pay down the deficit. President Obama is picking a good election year fight over increasing taxes on the 2%, because the American people overwhelmingly support raising the wealthy’s tax rate to hire more teachers, firefighters, and police officers, and to invest in repairing the nation’s infrastructure as well as pay down the deficit.
Republicans are already balking at the President’s proposal and intend to hold 98% of American’s tax cut hostage to keep the wealthy’s tax rates at their current levels. As part of their standard argument, Republicans like Paul Ryan, Eric Cantor, John Boehner, Mitch McConnell, and Willard Romney argue that it is unfair to eliminate the Bush tax cuts for the wealthy because the rich are suffering enough from the President’s burdensome tax rates. The Paul Ryan Path to Prosperity budget and Willard Romney’s tax plan give the wealthy tax cuts of 10-20% on top of their Bush-era cuts that will increase the deficit by $4 to $6 trillion at the same time they increase taxes on the middle class and, unbelievably, the working poor who are struggling to feed their families.
It is right time for Democrats and President Obama to hold the line on letting the Bush tax cuts for the wealthy expire regardless if Republicans complain about a tax increase or not. The nation needs revenue to repair our crumbling infrastructure and hire back hundreds-of-thousands of public sector workers that in turn will stimulate more jobs, tax revenue, and economic recovery. President Obama has presided over the lowest tax rates in at least three decades and the Republicans still decry debilitating taxation, so he may as well follow the will of the American people and make the rich pay their fair share. The GOP is picking a fight they cannot win and if they hold 98% of income earners’ tax cuts hostage just to protect the wealthiest 1-2%, their recalcitrance will raise taxes on the entire country. President Obama promised to stand firm on rejecting tax cuts for the wealthy, and the voters will make Republicans pay in November if everyone’s taxes increase just to protect the 2%. Republicans really have to make a decision to either adhere to their Grover Norquist pledge of never raising taxes, or follow the will of the American people and allow the wealthy’s tax cuts to expire according to their 2001 legislation. If history is any indication, they will obey Norquist and protect the wealthiest 2%, but this time, the American people are ill-inclined to accept another set of entitlements for the wealthy, or the Republican mantra that President Obama has raised taxes more than any President in history because this time, Barack Obama has the American people behind him.