Americans for Tax Reform

No New Taxes! (Except for the Poor and Middle Class)

You might remember, if you haven’t forced it from your memory, that a few weeks ago Congress participated in some nerve-wracking brinksmanship over a routine but necessary raising of the debt ceiling, risking a disastrous default and ultimately causing the first downgrade of U.S. credit in history.

The reason for that debacle was that that Republicans in Congress were looking for leverage to pursue drastic cuts in government services while refusing any and all revenue increases as per the no-exceptions “no new taxes” pledge the majority of them have signed at the bequest of Americans for Tax Reform's Grover Norquist.

Well, it turns out the GOP’s “no new taxes” pledge might actually have an exception – when it comes to raising taxes on the working poor. Last December, Congress approved President Obama’s request for a temporary reduction of the payroll tax paid by working people with the lowest incomes. The cuts are now set to expire, and unlike George W. Bush’s incredibly costly tax cuts on the wealthy, the GOP is happy to see this tax relief for the poor and middle class go.

Slate’s David Weigel writes that the push to make low-income people pay more taxes while shielding the wealthy and corporations from new tax burdens is part of a changing tax orthodoxy in the GOP, with leaders like Michele Bachmann and Rick Perry advocating for pressing new income taxes on people – largely the elderly and the working poor – who are currently exempted from them:


This isn't a new theory. In 2002 and 2003, long before it got Huntsman in the room, the Wall Street Journal editorialized that poor people who didn't pay income taxes were "lucky duckies." The poor slob with a low income and child tax credit would get a small or nonexistent tax bill, not one that would "get his or her blood boiling with tax rage." The problem here wasn't that the poor slob wasn't paying any taxes; the problem was that his meager tax bill failed to foment enough anger to reduce taxes on other people. Tax cuts for the rich—tax cuts for anyone, really, but the Journal has always been concerned about tax cuts for the rich—require a broad base of outrage.


Republican politicians didn't make this argument—until the Obama era. What changed? For decades, the "lucky ducky" number, the percentage of Americans that pay no taxes, never rose above 30 percent. The Bush tax cuts pushed it over 30 percent, but not too far over. Then, in 2008 and 2009, the economy collapsed. The government responded with, among other things, new tax deductions.


The result: The percentage of people paying no income taxes spiked up to 47 percent and stayed there. When the Tea Party started rallying in 2009, it wasn't protesting higher taxes, because federal income taxes were lower, with more loopholes. It was protesting the perception that productive Americans were shelling out for an ever-expanding class of moochers. And Republicans have taken the Tea Party's lead.


Of course, the increase in taxes on the working poor and the middle class that is currently on the table might not exactly follow the letter of the Americans for Tax Reform anti-tax pledge that the majority of GOP members of Congress have signed. But does it not count when it’s the incomes of the poor and the middle class that are at stake? The Washington Post’s Greg Sargent has put in an asked Norquist’s group if the payroll tax increase violates the pledge, but hasn’t heard back from them.
 

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