So we’re reduced to debating which tax cuts we are for. “Oh no, I’m not for those bad tax cuts for the rich. I’m for those good tax cuts for the middle class”.
Certainly it is true that Democrats have historically embraced some tax cuts as a form Keynesian stimulus by targeting cuts to those at the bottom of income distribution, as they are most likely to spend it. But for months now we have been treated to endless stream of tax cutting proposals from our own side, very few of which actually target low income Americans.
The President’s “compromise” is a perfect case study of the phenomenon. Almost everyone is for the “middle class” tax cut. But did you know that this portion of the tax cut also disproportionately favors the rich. 60% of the savings in the President’s original proposal (including Estate tax changes – which would have decreased the rich’s share and EITC, Child care and tuition credit which increase the share for lower income groups) would have gone to the top 20% income group.
Under the compromise that rises to 70%.
Even the payroll tax holiday disproportionately benefits the rich as the maximum benefit goes to everyone who makes $106,000 or more. This is unlike the President's "making work pay" tax cut that was progressive.
As an added poke in the eye there is the giveaway to corporate America in the form of write offs for certain capital expenditures. Corporate America is currently sitting on $1.7 trillion dollars. They aren’t investing in new jobs because there is no demand. Why would we increase the deficit to fatten corporate profits?
Years of being hammered as the tax and spend party have apparently beaten Democrats into submission. Now we all seem to have jumped on board the tax cut bandwagon despiteoverwhelming evidence that tax cuts have been bad for everyone but the very rich.
Tax policy is how we re-distribute income in this country. For the last 30 years we have been engaged in a tax cutting orgy with Federal taxes reaching their lowest point in 60 years. It is not a coincidence
that wealth inequality has now reached its highest levels in 80 years. The top one per cent have increased their share of our wealth from 8% to 34% over the last 30 years.
For the same reason we should target tax cuts to the lower income folks, we should be concerned about income distribution. The rich don’t spend as much. Their massive accumulation of wealth fuels speculative bubbles. They often invest overseas. A fairer income distribution means more demand, which in turn grows our economy that is dependent on consumer spending.
Democrats support taxing and spending because it is a way to direct our resources into more productive investments that spur future growth. We support income supports for the poor and elderly, investments in scientific research and education, all things that mean general prosperity. We shouldn’t be helping the Republicans starve government to aid the super rich.
At the end of the day circumstances may require the acceptance of the President's compromise as the only way to stimulate an economy that clearly needs it. But Kossacks need to stop cheerleading for tax cuts or calling this crap a "good deal".