Republicans Are Set To Raise Taxes On 160 Million Members of the 99%

Nov 29 2011 Published by under Uncategorized

The ongoing class war started by Republicans on behalf of the richest 1% of Americans against the rest of the country has been the focus of the Occupy movement since its inception. Throughout the past two months, Republicans have ramped up their assault on the 99% by failing to consider raising taxes on the wealthy to help reduce the deficit and pay for President Obama’s crucial job creation plans. The failure of the super committee tasked with reducing the nation’s deficit lies solely with Republicans who refused to even consider increasing taxes on the wealthy as a balanced approach to deficit reduction, and instead, they proposed decreasing the wealthy’s tax liability while cutting social safety net funding as part of their perpetual slash and burn agenda to preserve the status quo that is increasing the number of Americans living at or barely above the poverty level.

Two of the casualties of the super committee’s failure was extending unemployment benefits for out-of- work Americans and the payroll tax cut that affects every American earning less than $106,800 annually. Congress has an opportunity to extend and increase the payroll tax cut before the Christmas break and Republicans have another opportunity to prove to the American people that their loyalty is not exclusive to the wealthiest 1% of Americans. If recent history is any indication, a good bet is that recalcitrant Republicans will refuse to show due consideration to the plight of Americans struggling in this sluggish economy to protect the wealthy.

In order to procure the current one-year payroll tax cut and unemployment insurance extension, President Obama agreed to extend the Bush-era tax cuts for the wealthy for two years during negotiations last December. The payroll tax cut reduced employee contributions to Social Security from 6.2% down to 4.2% and the result was immediate relief for Americans who most certainly used the extra cash for such luxuries as food, shelter, and daily necessities. This week, a new bill sponsored by Senator Bob Casey (D-PA) will expand and extend the payroll tax cut that provides middle and lower income workers with extra cash in every paycheck that will stimulate the economy and help cash-strapped Americans survive; if they have jobs.

Casey’s bill extends the payroll tax cut for another year as well as increase the cut by more than 50%. The new payroll tax cut is an increase from the current 4.2% down to 3.1%; the regular rate is 6.2% and is a substantial savings for working Americans. The new bill also gives relief to employers who currently pay the regular matching payroll tax of 6.2%, and the new figure cuts their contribution in half at 3.1% for all of 2012 on the first $5 million of payroll. The $5 million limitation affects 98% of all employers and avoids giving giant corporations who are sitting on record amounts of cash more benefits than they already receive. It is difficult to imagine any Republican opposing a tax cut that benefits 98% of all wage earners until one considers the issue of funding the tax cuts.

Democrats have a habit of insisting on funding tax cuts, and unlike the Bush-era tax cuts for the wealthy that were unfunded and increased the nation’s deficit, Casey’s bill uses an approach Republicans will surely reject out-of-hand. It is difficult to be optimistic about Republicans doing anything helpful for 99% of the American people, and the plan to fund the payroll tax cut offers little cause for hope this plan will give a different outcome.

Casey proposes that, like President Obama’s jobs plan, the payroll tax cut will be funded with a tiny 3.5% surtax on millionaires and billionaires. The beauty of Casey’s plan for the richest Americans is that they still get their Bush-era tax rates on income up to $1 million, plus they retain the tax loopholes, cap on Social Security withholding ($106,800), and unfair deductions on investment income. However, for every penny over $1 million in income, they will pay a three-and-a-half percent surtax to fund the cuts for 98% of American wage earners and their employers.

If past attempts at convincing Republicans to increase taxes on the wealthiest Americans to help fund job creation plans is any indication, there is little hope they will agree to the payroll tax cut with anything other than Draconian cuts to social safety nets and programs that benefit the poor, elderly, and children. A failure to pass Casey’s bill will result in an immediate tax increase for 160 million Americans who will pay on average, $1,500 more in taxes than during 2011. That kind of tax increase means the economy loses $100 million working Americans spend as a result of the payroll tax cut, and according to an economist at Moody’s Analytics, will likely send the economy into a recession.

This can be a defining moment for Republicans to demonstrate exactly whose side they are on in the war on 99% of Americans. When President Obama’s jobs plan called for 0.5% tax increase for hiring and retaining teachers, law enforcement, and firefighters, Republicans balked saying the so-called job creators could not afford any tax increase. They also refused to consider a 0.7% tax increase on millionaires and billionaires for jobs to repair the nation’s crumbling infrastructure. There is already criticism of the payroll tax cut because Republicans claim it impedes the wealthy “job creators” from increasing their share of the wealth at the expense of 99% of Americans. It is hard to imagine they will go along with a whopping 3.5% surtax on income over one million dollars annually just to help 160 million Americans regardless of the devastating effect on the economy of losing $100 billion when every dollar injected into the economy helps avoid a recession.

Americans can only sit back and wait for Republicans to put another nail in the coffin of struggling Americans who survive from paycheck to paycheck, and the prospect of sending the economy into a new recession looks more promising with every Republican who claims that taxing the wealthy is detrimental to job creation efforts even though Bush-era tax cuts have produced no jobs. The choice for Republicans is clear; they can help 99% of Americans avoid losing $1,500 of income, or continue standing with 1% of wealthy Americans. One only hopes that Republicans have a change of heart and, for once, actually help 99% of the American people. However, no thinking individual expects Republicans to change and if they do not, they may as well prepare for a backlash from 160 million Americans who will join the Occupy movement in revolt during the 2012 elections to evict every GOP representative who stood up for the 1% instead of the American people.

Anything less than total support for extending and expanding the payroll tax cut with funding from a measly tax increase on the wealthy will give Democrats all the ammunition they need to portray Republicans as vile, un-American plutocrats. It is doubtful Republicans can withstand an all-out assault from employers and working Americans who will lose a substantial payroll tax cut just so the GOP can say they protected millionaire and billionaire “job creators” from a small surtax. Their choice is simple; stand with the one percent, or face the wrath of the 99% in the next election.

Image: duanegraham.wordpress.com

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