Thursday, March 05, 2009
“Class warfare.”
“Largest tax increase in history.”
Get used to these words. If President Barack Obama’s tax policies come to fruition, his political foes will wring those phrases for every hint of potential.
We know they will, because those are the same words used to assail what Bill Clinton did with taxes.
And, we were warned that if Congress allowed Clinton to do it, well. . . . Let Phil Gramm explain it.
“We are buying a one-way ticket to a recession.”
Yep. That’s what it was way back in the dark days after the “largest tax increase in history.” You recall: such a fiscal cataclysm that swelling federal coffers from a robust economy actually allowed our government to buy back some of its debt.
Key point never mentioned by the critics then: Clinton didn’t raise taxes on Americans in general, just the wealthiest. George W. Bush reversed that, awarding billionaires ungodly gimmes from a Washington increasingly starved for cash — something that happens when you wage two wars at once.
Obama said on the campaign trail that he would return to the general tax policies of the Clinton years. But for the sake of doing what we must, Congress has to go further.
That, Obama says he will — to deal with the millions of Americans who have no health insurance.
The administration proposes to raise $318 billion over 10 years toward that end by ending an inequity in the tax code that — I know this will shock you — benefits the rich.
Current tax law gives wealthy Americans more bang for the buck when they itemize deductions. If you are making $250,000 a year, you get roughly $700 more back for your $10,000 worth of deductions than in the next tax bracket down. Obama’s proposal would close that gap.
Foes will call this “class warfare.” I guess that would apply. With a tax code so tilted to one side, as a member of the middle class I say, “Let’s get ready to rumble.”
So, is it a better use of tax dollars for them to be frittered away for the benefit of the wealthiest Americans through unequal tax treatment, or to construct a health system whereby every working American can have affordable health insurance? Discuss.
Speaking of inequity: With the future of Social Security in doubt, and with tax fairness finally back on the table, we no longer can justify a regressive payroll tax for which only the first $102,000 of one’s income is taxed for Social Security — FICA.
That means every penny of those of us who don’t make $102,000 gets taxed for FICA, but those who make millions pay a ridiculously low rate by comparison. Obama has said he wants to lift that cap.
Oh, and when people tell you that low-income Americans don’t pay any income tax, they generally gloss over the fact that everyone pays that payroll tax.
When the issue is raising taxes, often what we are talking about is seeking equity to pay for things this country needs.
Obama says he’s not going to raise taxes until the economy is better. At some point, though, he should tell the Phil Gramms of society that, you know: Y’all were wrong then. You are wrong now.
John Young’s column appears Thursday and Sunday. E-mail: jyoung@wacotrib.com.
Comments
By Stephen
Mar 8, 2009 9:45 AM | Link to this
John, yes you can rationalize with skewing the numbers that the wealthy receive more bang for their buck in deductions. That is only because every buck is taxed at a much higher rate than those who are in another bracket. Removing the Bush tax cuts will increase taxes on everyone. That is because "everyone" got a cut under the Bush procedures. Even those who pay not tax received credit increases. So the removal means a tax increase for "everyone". My wife and I are not in the over $250k territory but, we suffer because of our income. We are in a position of almost complete loss of the child tax credit for what we earn. We are indeed middle class in terms of income category but, we are made to not get the benefit that others get. By your definition of wealthy, those folks don't get any of the credit. Thus, they are being made to suffer due to class warfare. The current tax code wages warfare on everyone. As you move to a higher level of succes (as measured by income), you suffer one credit or deduction loss after another and, at a much higher rate of taxation per dollar. If you look closely, you will see that there are many people moving from this country to retire in another that is more sympathetic to their tax needs. You will also see more corporations move, perhaps even Exxon as it becomes less profitable for them to remain here. With the highest corporate tax rates of any major country, it just isn't worth it. In the end, it is the feds spending that drives our tax rates higher and higher. Becoming more of a nanny state for every American is going to break the backs of all the taxpayers. Socialized medicine doesn't work, look at France where 86.4% of the people have private insurance to allow them to actually get medical care. The rest of them just stand in line to die.
By mec
Mar 5, 2009 8:53 PM | Link to this
"If you think health care is expensive now, wait until you see what it costs when it's free!" - P.J. O'Rourke
By Robbie
Mar 5, 2009 9:44 AM | Link to this
John, that's very creative writing, but the details of history are prone to disagree with your logic. In 1993, when Clinton's tax increases were implemented, America was coming out of a mild recession. To be more clear, the economy was growing before he implemented the tax increase. The recession, a comparitively mild one, lasted from 1990-91, by 1993, when the tax increases were implemented, we were growing out of it. It wasn't until 1997 that America saw a boom in our economic growth.
What sparked that boom in economic growth? Newt Gengrich's "Contract with America." In 1994, tax increases and economic stagnation led to a Republican insurgence in Congress. By 1997, Congress had passed... tax cuts. Cuts in the tax rates. They came off of the tax increases of 1993 and cut the taxes. Most notable was a cut in the capital gains tax. That led directly to a boom in investing in venture capital, high risk/high reward investments, directly resulting from the cut in the capital gains tax. As a result, our economy more than tripled its growth rate from a stagnant 0.36% to a growth rate of 1.2% annually.
The latest data indicates that the top 10% of wage earners paid over 70% of income taxes while the bottom 50% paid just 2.9%. Obama's tax increases seek to widen that disparity. This is not equity vs. need. This is a massive wealth redistribution. It is taking the income of people who earn it and distributiing it to a vast population who does not. It is a reward for behavior that does not produce. It is a formula for more economic distress. Of course, this should not bother The President who does not pay attention to the "daily girations of the market."
This is class warfare. This market is happening on purpose. This is all by design. The Oval Office is reinforced with a population of minions soaking the fear like a sponge. They're panicking and throwing their faith in a man to save them from their stuggle. It's about building dependents. It's about creating a nation of government enabled peons with a codependency issue with their Democratic leaders.
Moreover, it's about sticking to the man. It's about repressing the wealthy for having accumulated wealth at the expense of the downtrodden and oppressed. It's a vendetta against the people who have the stuff that the little man wants and desires a government to rain down upon them. It's about building social classes against one another so there is supremecy in the political party that "stands by the people."
It's a coy politial move that is working out in Obama's favor. This is the way he wants it. He wants dependent peons flocking to him for their "needs." He cannot build that if the nation is thriving on its own. He cannot do that if we are working independent of government and creating our own wealth without their hand in the pot.
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