Friday, April 20, 2012

Looking for Class Warfare in All the Wrong Places

It's time for me to set some things straight. In the House GOP budget, the overall tax burden on the poorest Americans (making less than $30,000 a year) will rise, while that on the richest (above $1 million a year) will fall by hundreds of thousands of dollars.

In addition, as I've said before, the vast majority of cuts in the budget fall on programs that benefit lower or middle-income Americans. Why is this the case? Well, according to Rep. Pat Tiberi (R-OH), it's because they don't have any "skin in the game." He said that it was "hard to lower taxes on people who don’t pay taxes." Basically, he's pushing the same GOP myth that something like half of Americans don't pay income taxes, therefore they somehow don't pay taxes at all. This is blatantly dishonest.

For as much as Republicans like to talk about taxes, they seem to gloss over the fact that there are other types of taxes. Exhibit A: the payroll tax. According to Citizens for Tax Justice, poorer Americans  only pay slightly less than their share of income in taxes. That is, the total income of poorer people in the economy is only slightly more than their total amount of taxes paid. So no, poor people don't get away with paying no taxes at all. For the sake of visualization, here's a chart showing it:

Yes, poorer people pay slightly less taxes than their share of income, while wealthier people pay slightly more in taxes than their overall share in income. That's called a progressive tax rate, and that's been the basis of mody modern tax systems. But to purport that poor people somehow are "lucky duckies" because of this is, at worst, insulting. They aren't a bunch of freeloading deadbeats coasting through life on your hard work. They pay taxes and work hard, too. In fact, in 2010, payroll tax revenues totalled $865 billion, while income tax revenues were a hair higher at $899 billion. So just to be clear, two-thirds of Americans who don't pay income taxes pay a large portion of their incomes in payroll, state, and local taxes. The ones who don't, those "lucky duckies" that have no "skin in the game," are by and large either elderly and retired (so they used to pay taxes), students, or simply so poor or sick that they simply can't pay taxes. Freeloaders, they are not.

The great irony in the Republican budget is that it calls itself "the path to prosperity," but who is that prosperity for? The poor and middle class get their programs cut, the elderly get pushed into paying more for medical care, and the wealthy meanwhile get huge tax cuts, despite the fact that inequality in the U.S. is at historic highs and the wealthy's tax burdens are near historic lows. Haven't they heard of the diminishing marginal utility of money?  It says that in general, as you get richer, you value money less. Cutting taxes on people who value money the least doesn't seem that economically stimulative to me. The way I see it is that their plan effectively purports that if we cut programs for the poor and middle class and give rich people even more money, then we'll all somehow be rich. I'm not exaggerating when I say these things--that's what the budget basically does. This kind of underpants gnome economics is disturbing. It wouldn't be as disturbing, except that we've tried this before, remember? Those Bush tax cuts that brought us that super duper job growth?

Oh, wait.