September 2nd, 2011 10:04 EST
Republicans Favor the Rich over Poor When it Comes to Taxes?ï»¿
If there was ever any lingering doubt that Republicans favor the rich over poor and middle-class Americans, it should be removed by the GOP`s opposition to President Obama`s proposal to extend the payroll tax cut for another year.
Let`s face it: Republicans oppose almost everything advocated by the nation`s first Black president. And Republican leaders have made it clear that their top priority is defeating Obama in 2012, even if that means wrecking the country in the process.
Whether it was coming up with a budget compromise last December or the most recent round of deficit haggling, Republicans have adamantly refused to roll back the tax rate for the wealthiest 2 percent of Americans to the pre-George W. Bush level. That move alone would cut the federal deficit by half. GOP leaders also refuse to close tax loopholes that allow some U.S. companies to pay little or no federal taxes.
Last year, Congress approved President Obama`s 1-year plan to reduce the share of payroll taxes designated for Social Security from 6.2 percent to 4.2 percent. Now, Obama is proposing adding another year, a move that would affect 46 percent of all taxpayers, saving the average family $1,000.
But Republicans, who, until now, had never met a tax cut they didn`t like, are balking.
Republican Sen. Lamar Alexander of Tennessee said: "We don`t need short-term gestures. We need long-term fundamental changes in our tax structure and our regulatory structure that people who create jobs can rely on."
A spokesman for another Republican, Eric Cantor, told the Associated Press, that the House majority leader "has never believed that this temporary tax relief is the best way to grow the economy."
Republicans are conveniently ignoring the fact that the Bush tax cuts, enacted in 2001 and 2003, were supposed to be temporary. When they were set to expire, both Republicans and President Obama extended them.
When he was a candidate, Obama pledged to end the Bush tax cuts for the top 2 percent of taxpayers - individuals earning at least $200,000 a year and couples making $250,000 or more. Under pressure from Republicans, however, Obama agreed last December to extend the cuts.
According to Citizens for Tax Justice, 52.5 percent of the Bush tax cuts benefit the richest 5 percent of taxpayers.
David Stockman, the budget director in the Reagan administration, called for letting the Bush tax cuts expire and said the rich are getting richer while the poor are getting poorer. In an interview with 60 Minutes, he said: "In 1985, the top 5 percent of the households, the wealthiest 5 percent, had a net worth of 8 trillion dollars, which is a lot. Today, after serial bubble after serial bubble, the top 5 percent have a net worth of 40 trillion."
Republican National Chairman Ed Gillespie defends the GOP`s defense of the wealthy by contending that 80 percent of the tax relief to the rich goes to job-creating small businesses. FactCheck.org debunks that myth.
"It may be true that 79% of upper-income taxpayers have some income from business, but Gillespie`s definition of `small` business actually includes big accounting firms, law firms and real-estate partnerships, and `businesses` that are really only sidelines - such as occasional rental income from a corporate chief`s condo," it said. "In fact, tax statistics show that upper-income taxpayers get more of their income from salaries, capital gains, stock dividends and interest than they do from small business."
The Tax Policy Center found that slightly more than 22 percent of income reported by the wealthy will be derived from business income.
According to the Congressional Budget Office, providing tax cuts to the wealthy is the least effective way to stimulate the economy because rich people are more likely to save the money. A more effective way to encourage spending is by placing money in the hands of poor and middle-class citizens, people more likely to spend the funds.
And that`s exactly what President Obama seeks to do by extending the payroll tax cut, which would benefit almost half of all Americans. If it is not extended, it will expire Jan. 1.
Social Security payroll taxes apply only to the first $106,800 of wages. Many people are unaware that the rate was reduced by 2 percent last year because they pay little attention to their pay stubs. The employer`s share was not reduced from its rate of 12.4 percent for each worker.
Many Republicans have put themselves in a box by pledging to never raise taxes. Over the past 25 years, Grover Norquist, president of the conservative Americans for Tax Reform, has encouraged Republicans to sign a pledge that they won`t raise taxes. More than 200 members of Congress have signed that pledge.
Republicans have voted against letting the Bush tax cuts expire because, according to their reasoning, that would amount to a tax increase. Many of those same Republicans, however, object to extending the payroll tax cut proposed by Obama. It shows how far Republicans are willing to go to protect the wealthy, to oppose Obama, and to be insensitive to the poor and middle-class.
George E. Curry, former editor-in-chief of Emerge magazine and the NNPA News Service, is a keynote speaker, moderator, and media coach. He can be reached through his Web site, www.georgecurry.com. You can also follow him at www.twitter.com/currygeorge.