Yes, yes, I am once again (and I think for the last time???) returning to last week’s House Republican Budget Alternative to point out another stroke of unmitigated idiocy. When I first wrote about the report, I was so disgusted by the ridiculous 70-year economic projections that I swore I wouldn’t read the damn thing. After all, I had stuff to do: laundry to wash, groceries to buy, diapers to change.
But truth be told, I did ultimately read the report. Call me a sucker, but deep down I wanted the report to have something, anything to indicate the GOP has economic expertise behind them. As far as I can tell, they don’t.
Yesterday, I wrote about the report’s stooooopid tax proposal that offers a two-tier flat-tax plan because (according to Republicans) only flat-tax plans are fair but that allows taxpayers to take advantage of current, progressive taxation if it turns out their taxes would be lower this way. (In many, many, many cases they would be for the top 2% of American households.) Nevermind the effect on overall revenue the highest income earners paying lower taxes would have. Let’s just say, the happy green line of stable revenue for the next century projected by Republicans would be a little less happy and a little less stable.
Today, let’s unwrap the gift to wealthy Americans promised by the Republican budget alternative. Tacked on to the end of the section called “Federal Tax Reform” is this gem:
Temporarily Suspends Capital Gains Taxes. This budget eliminates capital gains taxes for the balance of 2009 and all of 2010. That would immediately increase the after-tax rate of return on capital, which would help stabilize the market and establish a floor on equity prices. The capital gains tax essentially lowers the return on risk-taking and discourages investment – much needed activities in the current market environment. Temporarily lifting this tax would give a significant boost to confidence and would unlock much-needed private capital that has been sitting on the sidelines throughout the credit crunch an economic recession.
I have know idea what mushrooms one has to eat to believe an 18-month suspension of the cap-gains tax will magically “give a significant boost to confidence and [will] unlock much-needed private capital.” But I certainly can be stone-cold sober to see oodles and oodles of investors dumping their stock holdings to avoid taxes after December 31, 2010. Not all stock investments are in the red right now. Millions of Americans have money parked in the market, money that has been there for years and years, and even in today’s below-8,000 Dow, that money is now profitable. Suspending the cap-gains tax gives investors a fantastic reason to sell, sell, sell and get on the T-bill bandwagon at least until things stabilize … and, of course, stabilization is just around the corner with a crashed stock market, right?
Oh, and let’s not forget the wealthiest-of-the-wealthiest Americans who earn their income not from wading through 9-5 office drudgery but from capital gains. The Republican plan would give these few Americans who control a disproportionate amount of the wealth in this country 18 months or so of tax-free living.
Once again, Republicans are relying on the reasoning they used when railing against the stimulus bill: ACK! ***Only*** tax cuts will stimulate the economy!!!! … !!!!!!!!!!!!!! … !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Remember, the House Republican Budget Alternative is the official party answer to Obama’s budget. We can take the cynical view and say that Republicans were faced with an exercise in futility, that it didn’t matter what they said in their plan, cruel Democrats would persecute them anyway, so it is better, politically, to appeal to righteous partisanship. I believe, though, it was the righteous partisanship of the plan that ensured the futility of the exercise.
Not surprising, I support Obama’s plan, but that does not mean I would have shied away from intelligent debate. Sadly, Congressional Republicans’ offered a reactionary budget alternative that contorted itself in all manners to protect the status quo, rendering intelligent debate an impossibility.
Nevermind the effect on overall revenue the highest income earners paying lower taxes would have.
Yeah…less revenue for the fed….that’s terrible.
Why does it always seem that protecting that revenue is the highest priority for liberals?
Posted by Mike at The Big Stick | April 7, 2009, 8:43 amin order to make the magical republican budget alternative work, revenue had to be a the same, stable level.
it’s not my “formula” … it’s the gop’s plan. they project this beautifully stable, perfectly straight line of consistent revenue for 70+ years. they have to have this level to make their claims of deficit and debt reduction “work.”
are those revenue levels calculated assuming everyone participates in their two-tier flat-tax plan (probably) or do they make a realistic consideration for the many incomes who will opt for the current, progressive taxation schedule? ultimately, we don’t know because the report lacks specifics on how the numbers are created.
Posted by didionsmommy | April 7, 2009, 8:58 amWell there’s a good argument that with a flat tax you would have a more consistent revenue stream.
The point I was trying to make though is that the liberal obsession with taxing the rich to pay for everything is going to have to come to grips with reality at some point. If you all want to change the world and move us in a more social program oriented direction, everyone is going to have to start paying the bill.
Posted by Mike at The Big Stick | April 7, 2009, 10:25 amI mean the reality is that money for federal spending will always come from the rich rather than the poor.
There’s a reason why we don’t take money from the poor. It hurts their day to day living, and doesn’t really help the coffers.
Posted by Oneiroi | April 7, 2009, 1:51 pmI’m not talking about the poor. I’m talking about the middle class. Y’know the ones who like to play Robin Hood? Why aren’t they more willing to pay for the social programs that they enjoy as well?
Posted by Mike at The Big Stick | April 7, 2009, 3:23 pmUm…. because as things stand, rich people and large corporations aren’t paying their share of the bill?
Posted by Gulik | April 7, 2009, 4:31 pmFine, close the tax loopholes. And then…let the middle class pay as well.
Posted by Mike at The Big Stick | April 7, 2009, 8:08 pmSame thing still applies. Albeit to a lesser extent.
Posted by Oneiroi | April 8, 2009, 2:20 amAnd that’s why the tax code needs to be changed. Voters are going to think a lot more clearly about what programs they press for when they are footing the bill. It is too easy to demand things when you know someone else is paying for them.
Posted by Mike at The Big Stick | April 8, 2009, 8:34 am