Best plan for the GOP? Raise taxes on the wealthy. View another article
by KindOfBlue
 
This might sound like conservative apostasy, and it is in a sense. I'm sure I'll hear it from other commentators on Libradex: The best strategy for the GOP in the lame duck Congress and going forward is to raise taxes on the wealthy. Here's the rationale:


As you may know, we are running a massive budget deficit, every year. This budget deficit is unsustainable and will lead to financial ruin and inflation in the near future.

As we have said elsewhere, we don't have a problem that our taxes our too low; we have a problem because spending is too high. We could double our income taxes this year...and still have a deficit.

But what is the chief weapon of the Democrats, clumsy as it is, against Republicans? Republicans are "for the rich", Democrats are "for the little guy". They don't particularly care about American businesses or even the American economy, they just are angry and don't want Republicans because they are "for the rich".

Well, what better way to counteract that then to raise income taxes on the rich?

Here's how it would work: Democrats can't agree to split the taxes about to expire, so it seems likely that all of them will be extended after the beginning of the year. Republicans should agree to this (after all they are currently in the minority in the House).

Once they take over the House, then they propose that they will raise taxes back to pre-2001 levels, but only for those with income above $1 million.

The reason for $1 million vs. $250,000 is that in many cities, clearing $250K is not "wealthy". It is solid upper middle class, but after schooling for children, housing, health care, other taxes (like property taxes), and other basic expenses, there is not always much to save at the end of the year. It's not "wealthy".

So what will happen after the GOP proposes this? Are Democrats going to reject it, after they have been harping about the "rich" getting a tax cut for 8 years? No chance. They'll have to go along with the REPUBLICAN proposal to raise taxes.

The public rationale for this is purely to tackle the deficit. In reality, the tax cuts for the rich are not a lot of $; tax cuts for the rich is only about $40 billion/year for those making $250K and up, so it's going to be even less than that for those making $1 million and up.

The tax cuts for the rich are less than $40 billion, while our deficit is $1200 billion this year. Clearly they are not a huge issue.

And in terms of effects, I doubt it would have much of an economic effect. A 3% increase in taxes, while certainly not desirable, is fairly modest given our financial situation. And taxing only those that clear $1 million ensures that most of the $ taxed would be simply saved.

But politically, such a thing would move mountains. Republicans can successfully refute that they are the party "for the rich", inculcating them from attacks for YEARS. When Democrats say Republicans are the party "for the rich", we can all answer "But Republicans raised taxes on the rich".

They would also show independents that Republlicans can COMPROMISE and can work toward SOLUTIONS, something independents CRAVE.

And they can use this to demand much more in spending cuts. Republicans compromised on tax cuts, now Democrats, it's your turn to compromise on spending. If Demcorats refuse to cut spending, Republicans can proudly hold their head up and say they tried, but those intransigent Democrats refuse to work toward real solutions to our deficit.

For a small price to pay, Republicans can insulate them from class warfare attacks for years to come, as well as bring over/keep valuable independent voters that are tired of bickering and want solutions. And hopefully Democrats can actually compromise so we can deal with our crushing debt. By making the first move, this puts all the pressure on Democrats.

Although unorthodox from a fiscal conservative position, the potential positive ramifcations outweigh the negative.


Topic How this article applies
Deficit (10)
Bush Tax Cuts (8)
Facts about Bush tax cuts (8)
Economy (10)
Obama (10)
Democrats (10)
Republicans (10)
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