A tax cut for these guys? That's a tax cut. A tax cut for the middle class? "Washington spending."
It's a foundation of American political debate: Republicans love tax cuts. It's almost an addiction, like catnip for felines. Economic conditions are irrelevant to the debate. If the economy is soaring and there are surpluses, Republicans say that it's time for a tax cut to put more money into the hands of the people. But if the economy is doing poorly, they say, the ideal way to give it a jump-start is through a tax cut. No matter what the economic question is, the Republican answer is always "tax cut." Heck, it's probably the answer to non-economic questions too. Asteroid hitting the earth? Tax cut. Drought ravaging the nation? Tax cut. You get the idea. It doesn't even matter if tax cuts have been proven not to work: If Republicans see that other states are getting ravaged by excessive tax cuts, their only real response is just to cut their own taxes more slowly.
One would expect, then, that President Obama's recently announced plan to provide a major tax cut for working families would have found some popularity among a conservative wing that usually believes that people know how to spend their own money better than the government does. Instead? The plan is a "non-starter."
More below the fold.
Republican opposition would at first seem surprising, given how many people would be receiving a tax break under Obama's plan:
Families earning less than $210,000 a year would be able to claim at least part of a new "second-earner credit" that would top out at $500 a year. The maximum child tax credit would triple from $1,000 to $3,000, while the Earned Income Tax Credit for low-income workers would also expand. That's not all:
The administration wants to extend the American Opportunity Tax Credit, the administration’s signature higher-education tax benefit that’s scheduled to expire at the end of 2017, while making it more valuable to low-income students. Obama also wants to fix an issue in which those who join a government program that forgives student loan debt after borrowers make payments for 20 years can be socked with unexpected — and big — tax bills. That’s because the IRS considers forgiven debt to be equivalent to income and taxes it. Under the administration’s plan, that would end. Other parts of the administration’s plan would exempt Pell grants, which go to students from low-income families, from taxation.
Think about everyone who would be helped. Dual-income families where partners work would receive a windfall that could make a dent in household expenses. Parents would receive triple the tax break for children. And the American Opportunity Tax Credit, which
provides a break of up to $2,500 per student for people paying for qualified education expenses, would be extended past its current 2017 sunset.
These are tax credits that should especially appeal to the current strains of the Republican Party. The objectivists and social Darwinists should appreciate a reward for the efforts of two-income households, and the social conservatives should value any reform to the tax code that makes having children more affordable, whether it's a tax credit for dependents or one for covering tuition expenses. Instead, Republicans consider the plan dead on arrival, simply because the money to pay for the tax cuts from the middle class would come from an increase in taxes that are paid most often by the wealthy, including the closure of a loophole that allows for avoiding paying capital gains taxes on inherited stock.
It's bad enough to espouse the position of Sen. Marco Rubio (R-FL) against increasing taxes on the very wealthy to pay for middle class tax breaks, even at a time when the top one-tenth of 1 percent holds roughly the same percentage of total wealth in the U.S. as the bottom 90 percent. Even worse is using messaging that seems to imply that middle-class taxpayers aren't even getting a break. Here's what Rep. Jason Chaffetz (R-UT) told CNN about the plan:
"We're not just one good tax increase away from prosperity in this nation," Chaffetz said. "More government, a 300-plus billion dollar tax bill from Barack Obama is not the formula for this country to succeed."
See, it's not a tax break for the middle class; it's just a "300-plus billion dollar tax bill. And even worse, this is what a spokesman for former vice-presidential nominee Rep. Paul Ryan (R-WI) had to say about it:
"We lift families up and grow the economy with a simpler, flatter tax code, not big tax increases to pay for more Washington spending," said spokesman Brendan Buck.
At last we have found a situation in which Republicans are not in favor of tax cuts: when the taxes being cut affect the middle class. In that case, it's not a tax cut—it's "government spending." For Republicans, apparently, tax cuts are only a panacea when it's the wealthy who get to skim even more off the top.