Instead of funding the president’s jobs plan by ending subsidies for oil companies or closing tax loopholes that benefit those making over $250,000, the Democrats went full populist and proposed a 5.6-percent surtax on millionaires.
This isn’t good policy, but it sure is good politics. The Republicans will look like the devil incarnate if they oppose this plan. A Bloomberg-Washington Post Poll showed that two-thirds of Americans and even 53 percent of Republicans support tax increases on the wealthy. However, a millionaire’s income is extremely volatile. Consider this: In 2008, they paid $318 billion in taxes, but in 2009, they paid only $177 billion. These figures instill the notion that we can close our deficit by soaking from the rich, but there simply aren’t enough of them — they are the 1 percent, after all.
This is a concession by the Democrats that being rich is not making over $250,000 — it’s making over a million. The boldest lie uttered by Republicans is that $250,000 is middle class, and the Democrats basically accepted it. Guess what? The median household income is about $50,000. If a couple makes over $250,000, they’re rich and all their complaints need a firstworldproblems hash tag.
Tax rates need to return to the Clinton-era levels for everyone once the economy has recovered, jobs plan or no. This isn’t even “class warfare” — I want both rich and poor to suffer under the oh-so-burdensome tax rates of the ’90s that produced a 3.2 percent annual GDP growth rate. We also need to close the thousands of special interest deductions. What do video game companies, the horseracing industry, and beer makers have in common? They all get generous tax breaks from Washington.
And the Republican frontrunner’s solutions are the same garbage recycled from the Bush administration: deregulation and tax cuts. Deregulation will lead to economic recovery, a lesson we all surely learned from the financial crisis. It was because the banks weren’t free enough that they committed irresponsible credit default swaps! One Florida Republican legislator even claimed laws against dwarf-tossing are job-killing regulations. And tax cuts? Part of the reason we have such a gaping deficit is because of irresponsible tax cuts that have especially favored the wealthy. Some of the Republican presidential candidate’s plans are wacky. Herman Cain’s 9-9-9 plan sounds like a pizza deal, not a means of economic recovery or deficit reduction.
Taxing millionaires is bad policy, good politics; taxing everyone is good policy, bad politics. Once unemployment reaches a certain threshold during the recovery, it will be time for fiscal consolidation. It won’t be easy, but it’s the least we can do for this nation after the wild spending and tax-cut orgy of the past 10 years.