Republicans Set To Raise Taxes On Middle Class?

By Justin Gardner | Related entries in Democrats, Republicans, Taxes

Republicans don’t want the Bush tax cuts to expire for the wealthiest, but they’re fine with letting the payroll tax cut that Obama passed last do so?

Hmmm…

The tax break extension they oppose is sought by President Barack Obama. Unlike proposed changes in the income tax, this policy helps the 46 percent of all Americans who owe no federal income taxes but who pay a “payroll tax” on practically every dime they earn.

There are other differences as well, and Republicans say their stand is consistent with their goal of long-term tax policies that will spur employment and lend greater certainty to the economy.

So how much are we talking?

At issue is a tax that the vast majority of workers pay, but many don’t recognize because they don’t read, or don’t understand their pay stubs. Workers normally pay 6.2 percent of their wages toward a tax designated for Social Security. Their employer pays an equal amount, for a total of 12.4 percent per worker.

As part of a bipartisan spending deal last December, Congress approved Obama’s request to reduce the workers’ share to 4.2 percent for one year; employers’ rate did not change. Obama wants Congress to extend the reduction for an additional year. If not, the rate will return to 6.2 percent on Jan. 1. [...]

Social Security payroll taxes apply only to the first $106,800 of a worker’s wages. Therefore, $2,136 is the biggest benefit anyone can gain from the one-year reduction.

So why are they against one, but not the other?

Republicans cite key differences between the two “temporary” taxes, starting with the fact that the Bush measure had a 10-year life from the start. To stimulate job growth, these lawmakers say, it’s better to reduce income tax rates for people and for companies than to extend the payroll tax break.

“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,” said Sen. Lamar Alexander, R-Tenn., when asked about the payroll tax matter.

House Majority Leader Eric Cantor, R-Va., “has never believed that this type of temporary tax relief is the best way to grow the economy,” said spokesman Brad Dayspring.

Long term tax relief for the wealthiest isn’t the best way to grow the economy either. Well, in general, neither are tax breaks. Infrastructure spending is much more stimulative in the long term.

Still, it’s pretty clear what’s going on here. If the idea comes from Obama, it’s bad. If it comes from Republicans, it’s good.

And so it goes…


This entry was posted on Sunday, August 21st, 2011 and is filed under Democrats, Republicans, Taxes. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

10 Responses to “Republicans Set To Raise Taxes On Middle Class?”

  1. kranky kritter Says:

    Sounds like a tax increase to me, based on what I know about the Norquist Standard.

  2. Tillyosu Says:

    House Majority Leader Eric Cantor, R-Va., “has never believed that this type of temporary tax relief is the best way to grow the economy,” said spokesman Brad Dayspring.

    Well, is he right? According to the WSJ he is:

    In December the White House touted a Deutsche Bank economic analysis predicting that the tax holiday would increase output by 0.7 percentage points and boost overall year-over-year GDP growth to 4%. They weren’t even close. Instead the economy decelerated and growth in the first six months averaged 0.8%, down from 3% in 2010.

    This is just a stupid political ploy on the part of Obama. If he was really serious about using payroll taxes to encourage job growth, he’d reduce the employer rate as well and make them both permanent. In fact, the republicans should challenge him to do just that.

  3. Mike A. Says:

    “In fact, the republicans should challenge him to do just that.”

    Yes, and then if he tried to do so, they would refuse to support it.

  4. Tillyosu Says:

    To be fair, it’s not just republicans who oppose Obama’s plan.

    Justin could have included this little tidbit from the AP hit piece:

    Many Democrats also are ambivalent about Obama’s proposed tax cut extension. They are more focused on protecting social programs from deep spending cuts. Some worry that a multiyear reduction in the tax designated for Social Security could undermine that program’s health and stature.

    But of course, that wouldn’t fit his narrative.

    BTW, is it just me or does everyone else have to refresh CAPTCHA like 5 times to get something that’s actually legible?

  5. kranky kritter Says:

    I didn”t support this tax cut in the first place because it hastens social security’s insolvency. I don’t mind if it expires.

    Notwithstanding that, allowing this tax cut to expire is a clear and undeniable infraction of the republican policy to oppose all tax increases.
    And that strongly suggests that the GOP’s primary ideological bias is not to tax increases, but to President Obama.

    PS: it only takes you 5 refreshes? I am unsurpised to face double digits. I’d rather go with PW at this point.

  6. Tillyosu Says:

    allowing this tax cut to expire is a clear and undeniable infraction of the republican policy to oppose all tax increases.

    Is it? Here is the actual text of the tax pledge signed by most republicans:

    Taxpayer Protection Pledge
    I, _______________, pledge to the taxpayers of the _____ district
    of the state of__________, and to the American people that I will:

    ONE, oppose any and all efforts to increase the marginal income tax rates for individuals and/or businesses; and

    TWO, oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rate

    Emphasis added. To be sure, I checked the GOP’s website to see if any such policy exists, and couldn’t find it there either.

    Not so “clear and undeniable” is it?

  7. kranky kritter Says:

    Sure. Agreed.

    As long as none of these folks has also at any point in recent times gone around simply saying “no new taxes!” _or_ “I won’t raise taxes” on anything like that.

    In that case, they’ll have gone beyond the written pledge by using a simpler blanket prescription for the sake of political gain. And so would deserve to be held to THAT promise, regardless of the qualifications in the pledge whose details they’ve not taken care to publicize.

  8. centerist cynic Says:

    I would prefer infrastructure bills to this tax break. getting the unemployed back to work should be the priority. Payroll tax decreases also put the struggling Medicare system under more strain.

    All that said, Obama’s hands are tied by the Republican House. Obama will have to take what he can get.

  9. kranky kritter Says:

    modera^(&%^&$*))

  10. Priscilla Says:

    Wasn’t this thing a “tax holiday”? Kinda like a “tax rebate”?

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