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The Republicans own the tax issue. It is the source of their power and their popularity with voters, especially the independents and "Reagan Democrats" who usually give them their margin of victory on the national level. Ask any American which party is most likely to cut their taxes, and there will be no hesitation: the Republican Party.

Ask any American what the Democratic Party has done for them lately, and it may take some time for them to answer. It's been decades since Social Security and Medicare were created. Decades since the Civil Rights Bill.

In the absence of a compelling economic program from Democrats that would make a difference in the average American's checking account, many will simply vote their pocketbooks and vote for the party that will cut their taxes.

But it's not too late. The Democrats can take this issue back from the Republicans and win on taxes, by promoting an aggressive policy of Rise Up Economics.

It won't be easy to take the tax issue back from the Republicans. They have burnished their image as tax-cutters into the collective American psyche. President Reagan's banner domestic achievement was his series of tax cuts and he will forever be associated with them.

Democrats like Tip O'Neill and Dan Rostenkowski's complicity in passing the Reagan tax cuts did nothing to give the Democrats any political gain. Their me-tooism on tax cuts didn't get them very far, while giving Republicans the issue of a lifetime.

President George W. Bush added his own wrinkle to cutting taxes: while most of his tax cuts went to the wealthiest Americans, he made sure that his plan provided some tax relief for everyone, and he even sent tax refund checks in the mail to every taxpayer for $300-$600. How's that for putting money in your pocket?

Both Hillary Clinton and Barack Obama rightly plan to let the Bush Tax Cuts for the wealthiest Americans expire, for which they will be branded as tax-raisers. They both promise vague "middle class tax relief," but with very few specifics. This middle class tax cut gets lost on their websites among a host of other promises.

It will take more than vague promises of cutting taxes on the middle class to differentiate the Democrats from the Republicans on this issue. McCain will run on a platform of making the tax cuts permanent and take every opportunity to paint his opponent as a tax and spender.

To win on taxes in this presidential campaign, the Democratic nominee will need a brash, aggressive new policy of tax cuts and tax credits that makes it crystal clear to the average American that it's in their economic self-interest to vote Democratic.

I propose a policy of Rise Up Economics:

    Make the first $30,000 in income tax free
    Create a $10,000 Economic Security Tax credit

The Democrats should argue that we shouldn't be relying so much on taxing the income of working people to fund our government. We instead should be taxing wealth, pollution, carbon emissions, investment managers' profits, oil company profits, etc.

By making the first $30,000 in income tax free, the Democrats would be proposing an unforgettable tax cut that would benefit the working poor the most. It would make it impossible to paint the Democratic nominee as a tax-raiser, especially if they got specific about what kinds of taxes should replace the tax on working people's income.

Some new, fairer taxes could include:

    CEO Tax: a 10% surtax on all income over $2 million
    Advertising tax: a 10% tax on every commercial and ad you
    watch, hear, or read
    Carbon tax on corporations that contribute to global warming

The $10,000 tax credit would help eliminate poverty by ensuring that all Americans have at least a poverty-level income. It would serve as a major tax cut for the middle class and upper middle class. It could replace welfare, and instead of driving a wedge between the poor and middle class as welfare did, it could bring them together as a policy that helps all Americans regardless of income, the same way that Social Security and Medicare does.

The Democrats have one big issue that they claim will change the lives of every American: health care reform. It will be a major battle in Congress, and based on where both Obama and Hillary have started with their plans, it's likely that we will end up with a new system that still has way too much profit in it for insurance companies and HMOs. Many Americans may not see clearly how it will help them.

And the Republicans will still own the tax issue. Unless the Democrats take bold action on taxes.

Originally posted to RiseUpEconomics on Wed Mar 26, 2008 at 08:41 AM PDT.

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Comment Preferences

  •  Interesting ideas (1+ / 0-)
    Recommended by:

    I'm not sure about the economics of it, but I think something along these lines would work.

    My guess is the "ad tax" might well have some sort of First Amendment/non-profit issue, but I'm not sure.

    Definitely worth talking about, since, as you said, it's not about cutting taxes as much as redistributing them.

    Of course, you forgot to mention that the cap on FICA contributions for Social Security should be raised (to at least $500,000, if not unlimited).

    •  Yes, good point (1+ / 0-)
      Recommended by:

      on raising the cap on Social Security taxes. I'm backing Obama mostly because of his courage on that issue. I just worry that it's not part of an overall vision, and I find the Dems lacking in economic vision. The basics of organizing come down to appealing to the self interest of your audience: why should voters vote for a Democrat? Right now there's no "there" there when Hillary and Obama talk about turning the economy around. We need a bold new vision that will mean real economic security for all.

    •  that would (0+ / 0-)

      change SS from a government pension plan into a welfare plan. Those extra taxes won't become extra  retirement income for the people who paid them.

      They'll simply be wealthy Americans subsidizing the retirements of less wealthy Americans....Robin Hood at work.

      Even a blind nut find a squirrel sometimes

      by buzzsaw on Wed Mar 26, 2008 at 08:57:57 AM PDT

      [ Parent ]

      •  How is that different from when top tax brackets (0+ / 0-)

        were 50-75%?

        Seriously, the concept of a 'social contract', so to speak, is that everyone gives up something so that everyone gets something.

        I could see a reduced rate at some point--say, 3% over $250K--but the current system definitely needs to be tweaked in order to keep it sustainable.

        •  I think the point buzzsaw was making (2+ / 0-)
          Recommended by:
          Samer, buzzsaw

          is that Social Security was essentially sold to the American public when it was passed as a retirement system, where you put in money and you got benefits based on what you put in the system, not based on need.  The higher your income, the more SS taxes you paid, but the higher your SS benefits were when you retired (although the increase is progressive -- i.e., the increase in benefits does not go up as much as the increase in taxes as income goes up).  It was touted specifically that it was not part of the social contract you reference. It was a system where the benefits you received when you retired -- the dollar amount -- bore a relationship to the amount you paid in to the system, not to your need. The more I make, the more I pay in SS taxes, but the more I get in benefits when I retire, without regard to how much money I have when I retire.  It is sort of the "conventional wisdom" among the MSM that SS has such widespread approval exactly because of that structuring and because it cannot be construed as a "welfare plan" (as critics might call it) for less wealthy retirees.  Buzzsaw's point is one that is often made against increasing the cap on SS taxes without also increasing the cap on benefits paid out when you retire.  

          The "top tax brackets" that you refer to are for income tax brackets.  The income tax system was always recognized as a "social contract" system where you paid in based on your ability to pay, but the benefits were spread equally to all without any additional benefits to those who paid in more and, if anything, benefits went a bit disproportionately to those in the most need.  Two different systems, but often collapsed into one by those who pay into both and ultimately see only how much they pay in total to the federal government.

  •  First... (1+ / 0-)
    Recommended by:

    I think "taxes" is from the view of the payer..."revenue" is from the view of the government.  If we want to win this debate, we must call them "revenue sources"...Republicans cut "revenue sources", which has the effect of making our budgets out of balance and force debt financing.  If you call it a tax, since the formation of our union that has been a bad word...

    Giggity giggity giggity...Iraq's a Quagmire

    by TexasDemocrat on Wed Mar 26, 2008 at 08:59:29 AM PDT

  •  $30,000 tax free (2+ / 0-)
    Recommended by:
    science first, dallasdave

    I am not sure what you are suggesting. I am not a tax expert, but I don't think people at the $30,000 level pay much, if any, federal income tax. The federal government can't impact state and local income taxes, so those would remain. Are you advocating no Social Security or Medicare taxes on the first $30,000 of income? Are you suggesting this for just the employee or both the employee and employer portions? Both of these programs face real economic stress, so removing substantial revenues is an issue. However, I believe your idea has merit and would extend it to employers to encourage new job growth.

    "let's talk about that"

    by VClib on Wed Mar 26, 2008 at 09:03:51 AM PDT

    •  Not SS and Medicare (0+ / 0-)

      Just income tax. It's been a few years since I was in the $30,000 tax bracket, but I remember getting a lot taken out in payroll taxes, and then getting some of it back when I filed.

      It would be nice if workers didn't get anything taken out of their paychecks until their gross income for the year hit $30,000. That's a random number I came up with, but if the math works out better for $20,0000 or something like that, so be it.

      The main idea is to do a tax break that will truly impact a worker's life, and that will unite the working poor with the upper middle class. If you make $80,000 a year and the first $30,000 of it is tax-free, then that's a signifigant tax break. Not so signifigant if you make $600,000 a year...

  •  Tax distribution (2+ / 0-)
    Recommended by:
    VClib, jqmilktoast

    In 2005, the latest year for which such data is available, the IRS received 132 million tax filings with positive adjusted gross income (AGI).

    The bottom 50% of such filers had an AGI of less than $30,881. This group paid an average federal income tax rate of 2.98% on their AGI. These payments represented 3.07% of all federal individual income taxes collected.

    The top 1% of such filers had an AGI greater than $364,000.  This group paid an average federal income tax rate of 23.13% on their AGI.  These payments represented 39.38% of all federal individual income taxes collected.

  •  good ideas, rec'd (0+ / 0-)

    but I'd also include increases to the capitol gains tax and the estate tax for estates exceeding $2 million.

    This country does not have the luxury to entertain idiocy as if it is reasonable. --Digby

    by Thought Crime on Wed Mar 26, 2008 at 09:55:06 AM PDT

    •  Thanks! (0+ / 0-)

      And I agree about increasing capital gains tax and estate tax. There's also some loophole regarding investment income being taxed at too low of a rate, I forget what that's called. And also there's plenty of corporate tax breaks and corporate welfare in general that could be eliminated, with the money instead going toward the working people who will spend it and stimulate the economy. I'd just like the Dems or someone to come out and push for swinging the pendulum in the other direction: demand-side economics on a large scale. I just started a website to try to start this: The site is cheap and ugly but it's a start....

      •  Might be a problem (0+ / 0-)

        Cutting personal income taxes and increasing corporate taxes would probably spike inflation right away.  Business passes the tax increases to the consumer (because that's really where all of a business' money comes from anyway.)  Meanwhile, putting more money into the hands of the lower classes pushes up demand for nearly everything, causing a concurrent economic rise in prices.

        Am I missing something?

        Bring the WAR home

        Starve the corporate beast, buy local!

        by EthrDemon on Wed Mar 26, 2008 at 10:42:35 AM PDT

        [ Parent ]

        •  Yes and no (0+ / 0-)

          While there would be more money going to people in the middle and at the bottom of the economic ladder, there would also be less going to people at the top, so it should even out more or less. When Reagan and Bush (W) redistributed wealth upwards with their tax cuts, there were no concerns raised about inflation, even though wealthy Americans would have lots more to spend....

          •  Of course not (1+ / 0-)
            Recommended by:

            Putting money into the hands of the wealthy doesn't do much to increase demand (except, I would imagin on big-ticket niche items) because they already had money to spend.  Putting money into the hands of the poor adds consumers to the pool of people buying things like gasoline and food.

            Bring the WAR home

            Starve the corporate beast, buy local!

            by EthrDemon on Wed Mar 26, 2008 at 11:44:48 AM PDT

            [ Parent ]

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