The old GOP pony, Tax-Cuts, died during the John McCain campaign because Barack Obama developed a tax plan that was more beneficial for middle class Americans. In the Obama plan middle income Americans saved more than a $1000 on their tax bill, while Under the McCain plan they only saved about $320. Lower income Americans would save nearly $900 under the Obama plan while the McCain plan would have provided little more than $100.
The GOP immediately started complaining that even fewer Americans would be paying taxes. Of interest the states that that have the highest percentage of people who don't pay taxes are the red states in the south and the west. Many of these states are the same ones that receive more in federal tax revenues than they pay in.
The Republicans are rolling out the new pony, Taxachussets, with the hope it will help them recover independents. Taxachussets is named after the state of Massachusetts, the most heavily taxed state in the US.
Taxes can be broken into two types: progressive and regressive. Republicans don't like progressive taxes because as income goes up, the tax percentages increase. The tax issue really does define a central difference between the two parties. The Democrats prefer progressive taxes and the Republicans like the regressive 'fair taxes' or 'flat taxes.'
Which of the following taxes do you think are progressive in the US according to CBS News?
5.tolls and permits
7.gift or inheritance
Only seven through 10 are progressive. One through six are regressive. Social Security is one of the worst regressive taxes with its cap at $98,550 on income. With the wealthy getting such a sweet deal on this tax, George W. Bush still tried to 'reform' social Security by privatizing it. Margaret Thatcher was successful in doing this in the UK, but the privatization scheme was later abandoned when the stock marker tanked in the British Isles.
Nearly 60 percent of Americans don't know the difference between a tax credit and a tax deduction, according to a survey by the Tax Institute at H&R Block. Seventy percent were not aware of recent tax code changes that could affect their return next year. Seventy-eight percent didn't know for certain which tax bracket they were in. In addition, 84 percent of those surveyed did not know they could go back three years to amend a return.
Seventy-six percent of taxpayers fail to list "knowledge of current tax laws" as an important trait when picking a tax professional. Instead, one of the top traits chosen by survey participants was location.
The GOP prefers regressive taxes because it has less impact on the affluent and corporations. They talk about the 'white man's burden of the affluent' who pay the bulk of US taxes. What they don't talk about is that the US has the worst distribution of wealth and income of the industrialized nations.
A CEO in a large corporation can make in one day what a typical employee of that corporation makes in the entire year. A progressive tax system makes perfect sense in the US. The first advocate for a progressive tax system in the US was Theodore Roosevelt, a Republican president. Only 22 nations use a flat tax such as Russia and some of its former client states.
Obama deftly took this issue away form the GOP when he promised the middle class tax cuts. The Democrats talked about a Social security 'donut' as well that would shift the burden of Social Security onto affluent Americans.
Middle class Americans making less than $250,000 a year would be exempt from paying the Social Security payroll tax. If this is done, you will hear howl of protests from the GOP for the next century. Such a change would lift a payroll burden from the middle class and the poor. Social Security was created in 1935. The burden of this tax has been on the middle class and the poor since then. Turnabout would be fair play.
The Democrats now have the bully pulpit' and Obama needs to educate the public on taxes. During the Reagan revolution the Republican cut the top two tax brackets and splintered the middle class. The Republican cut taxes which had been the lifeline to the middle class and the poor. The GOP preferred that affluent keep and bank these tax cuts.
The US infrastructure is now 30 years out of date because of these tax cuts. Bridges, roads and levees need to be repaired. The US secondary school system is no longer world class. It too has suffered because of the selfish tax cut policies of the GOP and the preference for military programs over domestic.
These tax cuts have produced a record national debt of $11 trillion that started during the Reagan era. Bush even cut taxes during a war, something no other US president has ever done. The US is a debtor nation again.
Sooner or later the GOP circus will show up in your town with their one trick pony: Taxachusetts. It probably have their old war horse, Tax-cuts, stuffed by now so you will be able to see him as well. The GOP master of ceremonies may want to listen to you or re-educate you. Listen closely and get concrete information on these Republican ideas. Compare them to the new Democratic programs of the Obama administration.
Tax cuts are pointless if the budget cannot be balanced and the national debt cannot be paid down. The era of coddling the rich with tax cuts may be finally over. It will probably be just a matter of time before Taxachussets gets hoof and mouth disease and dies like Tax-Cuts did.
As George W. Bush has stated:
"There's an old saying in Tennessee - I know it's in Texas, probably in Tennessee - that says, fool me once, shame on - shame on you. Fool me - you can't get fooled again."