The New Republican Class War: State Tax Hikes on the Poor to Fund Tax Cuts for the Rich

Last updated on February 8th, 2013 at 12:29 am

Jefferson class warfare

The idea of surrender after losing a defining battle is usually the course of wisdom to save the vanquished from annihilation, and one certainly would not expect the losing side to continue hostilities after a defeat and especially when the odds are stacked against them. After Republicans waged a class war against the people on behalf of the wealthy for two years, it seemed likely they would cease attacking the least fortunate Americans after being defeated in the November election, but apparently they decided to continue their class war by engaging the people in a new theatre; in states with Republican governors and legislatures. After the election, Republicans like Louisiana Governor Bobby Jindal said his party had to appear friendlier to all the people to avoid the appearance of being the party of the one percent, but actions speak louder than a pleasant demeanor, and Republicans are still waging class war against poor Americans to benefit the rich.

The new front in the Republicans class war is just getting underway as Louisiana, Virginia, and Kansas governors are proposing new tax schemes that raise taxes on the poor to fund tax cuts for the wealthy and corporations. The idea of making the wealthy richer at the expense of the poor is not new, but instead of just cutting services and giving the savings to the rich as tax cuts, Republicans are following an ALEC-inspired tactic of “broadening the tax base” that is code for taxing the poor to pay the wealthy and corporations. Throughout the past year, Congressional Republicans Mitch McConnell and Eric Cantor suggested taxing those Americans struggling for basic survival and reducing rates for the wealthy, but they had little chance of success in a Democratic Senate or surviving President Obama’s veto pen. However, states with Republican governors and legislatures do not have constraints on their Draconian measures and are moving forward with ALEC’s plan to give the rich and corporations relief from what they label burdensome tax liabilities.

Jindal’s tax scheme typifies the ALEC model of broadening the tax base by totally eliminating income tax that corporations and the rich oppose, while increasing sales tax that inordinately affects the poor. It is a simple scam that, on first blush, seems innocuous and fair for all, but like anything ALEC  proposes, it is for the express purpose of providing entitlements for the wealthiest Americans. It is still class war, but with a slightly different means to a predictable Republican end; more income inequality, more poverty, and more wealth for Republicans’ favorite benefactors, the rich and corporations.

According to an analysis by the Institute on Taxation and Economic Policy, Jindal’s plan increases taxes on the bottom 80 percent of Louisianans, while cutting them for the richest 1 percent by repealing personal and corporate income taxes and replacing them with a higher sales tax. In Jindal’s plan, the poorest 20 percent of taxpayers, those with poverty level income of $12,000 annually, would see an average tax increase of 3.4 percent of their income,  and the top 1 percent  with an average income of well over $1 million would get an average tax cut of 2.3 percent of their income. Increasing the sales tax disproportionately affects poverty level Americans because the lion’s share of their meager income is spent on basic living expenses as opposed to the rich whose enormous wealth makes the share of taxable expenditures incredibly lower. Jindal is not the only ALEC devotee implementing higher sales taxes that hurt the poor as Virginia Governor Bob McDonnell is taking a similar approach to burden the poor.

McDonnell is touring Virginia promoting a plan to eliminate Virginia’s gas tax and replace it with an expanded sales tax that McDonnell says fixes the state’s dysfunctional transportation funding system, but it makes Virginia’s regressive tax system even worse; for the poor. McDonnell’s plan increases state sales tax that will hurt poverty level households whose share of income buying basic necessities of life like clothing, toiletries, and school supplies higher putting them deeper in poverty. Virginia’s current tax system is already tilted in favor of the richest 1 percent who pay a 5.2 percent effective tax rate, while Virginians making less than $19,000 pay 8.8 percent, and McDonnell’s plan would raise those rates, but in a way that broadens the gap between what the richest and poorest Virginians are paying in taxes. His plan also shifts the responsibility for funding Virginia’s highways from people who most use the roads and highways, including tourists, to poorer residents who are hardly affording a poverty existence, but that has been the goal of the Republican war on the least fortunate for years.

Similar ALEC schemes are being promoted by Governor Sam Brownback in Kansas, Governor Dave Heineman of Nebraska, and Republicans in North Carolina as a way to burden the poor to enrich the wealthy and their precious corporations. This new line of attack on the poor is an ambitious experiment in tax reform that could spread to the national level in the Republican’s never-ending attempt to aggressively cut personal and corporate income taxes for the wealthiest Americans at the expense of the poorest Americans. The ALEC scheme of “an economically efficient tax system with a sensible, broad tax base and a low tax rate” is a Republicans’ dream because “broad tax base” is code for tax the poor and reduce rates for the rich and corporations. ALEC sells the scam as a way states with Republicans in charge can increase wealth and create jobs, but facts (as usual)  belie their claim and only create more wealth for the rich and corporations.

In a 2012 report, “Selling Snake Oil to the States: The American Legislative Exchange Council’s Flawed Prescriptions for Prosperity,” the authors conclude actual data finds Alec’s recommendations not only fail to predict positive results for state economies, the policies they endorse actually forecast worse state outcomes for job creation and paychecks. Why? Because when Americans struggling in a recovering economy and those barely subsisting on poverty level incomes have more of their income taken to support the rich and corporations, they spend less, and less spending means less revenue for business and less hiring. However, the rich and their corporations profit from lower taxes and the Republican cycle of economic despair continues without end as states face reduced revenue that results in defunding public goods such as education, assistance to the needy, and infrastructure improvements which play a major role in economic development for all the people; something so averse to Republicans and their mastermind ALEC, that they have embraced a new class war tactic.

The 2012 election should have been a wakeup call to Republicans that the American people will not abide being assaulted and driven deeper into poverty to enrich the wealthy elite and their corporations, but old habits die hard. At least Republicans have stopped their deeply entrenched abhorrence of tax increases of any sort, but they are still the party that will cut taxes for the rich and corporations to, as McConnell and Cantor said, unburden the job creators by “broadening the tax base” by increasing taxes on working families and those who can least afford it; the poor.



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