Eric Cantor, the Republican House
majority leader, signed Grover Norquist's "no tax pledge.” But apparently his
pledge doesn’t apply to the 45 percent of workers who make so little money that
they don't owe federal personal income taxes. At a private event hosted by Bank
of America, Cantor said
we “have to discuss the issue” of increasing personal income tax rates for
these workers so that he can lower tax rates for everybody else. The rationale: to get the economy
growing again.
Cantor’s appeal continues the
Republican opposition to tax relief for the middle class, despite their
vigorous opposition to raising taxes on the wealthiest Americans. As these actions
demonstrate, the agenda embraced by the Republican Party and fully supported by
Mitt Romney is misguided and deceitful.
Cantor's remarks can only be
interpreted as suggesting that the rich are over-taxed and the middle class is
under-taxed. In fact, data
compiled by the nonpartisan Institute on Taxation and Economic Policy shows
that when all taxes are taken into account, our tax system is barely
progressive. In 2011, the share of taxes paid by the top one percent (21.6%)
matched their share of the country's income (21.0%). The top one percent paid 29% of their income to taxes;
the rest paid nearly the same amount, 27.5%.
Not only do the wealthy not
pay higher average tax rates than others, but taxes for them are at the lowest
levels in more than 50 years, thanks to Republican policies that have
dramatically lowered rates on the highest income brackets, and preferentially treated investment
income that goes mostly to the wealthy.
Republicans want us to
believe that lowering taxes for the rich will trickle down and help the middle
class. It's not true. Over the past three decades, per capita income has grown no
faster in the U.S., where top tax rates were cut substantially, than in
European countries that did not cut their top rates. Long ago, President George Bush called supply-side economic
theory for what it is, “voodoo economics.”
What is true is that the Republican
tax agenda has benefitted the wealthy enormously. The Congressional Budget Office reported that from 1979 to 2007,
household income for the top one percent rose 275 percent, while for bottom
fifth of households, it increased just 18 percent. As the middle class struggles with the aftermath of the Bush-era
Great Recession, most of the gains are going to the ultra-wealthy. As the
economy recovered in
2010, nine out of every ten dollars of additional income versus 2009 went
to the top one percent. That equated to a 12% increase in income for those
fortunate few, while the bottom 99 percent gained, on average, just an extra
$80!
That hasn’t stopped Republicans
from pushing policies, cloaked as job building, that help the wealthy even
more. The House Republican leadership has introduced The
Small Business Tax Cut Act, which lets most small businesses (those with
less than 500 employees, hardly the definition of small) deduct up to 20
percent of their income in 2012, a $46 billion expense to taxpayers. According
to the independent Tax Policy Center, nearly half of the cuts will go to people
making more than $1 million. What's worse, it will do little to create jobs. The economic impact is “so little as to
be incalculable,” according
to the official analysis by the Congressional Joint Tax Committee. More reason not to believe Republicans and
Romney when they talk about the wisdom of their policies for lowering the
deficit and growing the economy.
Companies don't have to hire
new workers to receive the credit, one of the reasons that an analysis by the Congressional
Budget Office ranked business income tax cuts as the second-most expensive way
to create jobs among those evaluated.
It isn't taxes (or regulation) that are keeping businesses from growing. Rather, it is lack of demand, as
reported in a survey
conducted last fall by the National Federation of Independent Businesses.
What's the most tax-efficient
way to create job growth? According
to the CBO, it is payroll tax cuts and unemployment insurance that put money
into the hands of those who need it most, and will stimulate the economy by
spending it. Precisely the two
middle class-friendly policies that Republicans have stood in the way of since President
Obama took office.
Rhetoric aside, the facts are
clear: the Republican agenda is about
making the wealthy richer, not putting Americans back to work. On this point, Eric
Cantor is clear:
“I've never believed that you raise taxes on those who have been successful.”
