Feature

Taxing the rich: Why the GOP is just saying no

The GOP refuses to sign on to a deficit-reduction plan that makes $3 in cuts for every $1 in new tax revenue.

“Has the GOP gone insane?” asked Paul Krugman in The New York Times. “Why, yes, it has.” As the standoff continues over raising the debt ceiling, President Obama has offered “extraordinary concessions” to congressional Republicans, with a deficit-reduction plan that “consists overwhelmingly of spending cuts”—$3 in cuts for every $1 in new tax revenue. Yet because he’s proposed raising revenue by closing tax loopholes for hedge-fund managers, big oil companies, and the owners of multiple mansions, the GOP is refusing to sign on, even if it means a catastrophic default on the U.S. national debt. “The argument not to tax” the wealthiest Americans—that they’re “job creators”—is patently false, said the Pittsburgh Post-Gazette in an editorial. No jobs are being created, and middle-class salaries are in decline—while over the past two years, the average pay of top executives rose an astounding 23 percent, to $10.8 million a year. Why, then, are Republicans threatening to push the country into default, rather than asking the most fortunate among us to share some of the pain?

The rich may be getting richer, said Michael Franc in NationalReview.com, but they’re also paying “a disproportionate share of the overall tax burden.” Our progressive tax code now asks little of the lower half of wage earners. As a result, the share of all federal taxes paid by the top 1 percent of wage earners has doubled over the last three decades, to 38 percent. Is it fair to demand that 1 percent carry even more of the burden? The GOP has no choice but to take a stand, said Jennifer Rubin in Washingtonpost.com. Obama and the Democrats will raise taxes endlessly to pay for bigger and bigger government; Republicans “want smaller government and are unwilling to provide the taxes to fuel an expansion of federal power.” It’s a matter of principle—and strategy.

Ah, but let us consider the impact of Republican principle on real Americans, said Andrew Leonard in Salon.com. “Supply side” conservatives have been arguing since the Reagan administration that cutting taxes on the rich inevitably inspires them to invest in new businesses and hire new workers—the “trickle down” theory. But in the past year, corporate profits have not only rebounded from the recession—they’ve hit record highs. Real national income has soared $528 billion—but with only 1 percent of that growth going to workers. As anyone not blinded by ideology can see, big corporations and the rich “are doing just fine, but absolutely nothing is trickling down.” Nothing trickled down after George W. Bush cut taxes for the rich, either, said Robert McElvaine in The Washington Post. Yet GOP hard-liners recklessly keep pushing the failed supply-side theory, “and the more it fails, the harder they push it.”

Republicans now face a defining choice, said John Avlon in TheDailyBeast.com. They could regain their “moral authority” by returning to their old identity as the party of fiscal responsibility—“a tradition rooted in Eisenhower and Reagan.” But that means being willing to consider closing loopholes and increasing some taxes as part of the effort to cut future deficits—just as Reagan did. Republicans need to realize when they’ve won, said Ross Douthat in The New York Times. Despite controlling only one chamber of Congress, they’ve persuaded a Democratic president to “close the deficit primarily with spending cuts.” That’s a great achievement. But “in trying to turn that ‘primarily’ into a ‘completely,’” the GOP risks squandering its victory—and making President Obama look like “the Last Reasonable Man in Washington.”

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