The tax increase nobody talks -- or asks -- about

By Dan Froomkin
froomkin@niemanwatchdog.org

David Cay Johnston writes on tax.com about the tax increase nobody seems to care about.

Last December’s big tax compromise, widely hailed for its extension of the Bush tax cuts for the rich and its payroll tax cut, nevertheless raised taxes on 51 million taxpayers. That’s because the elimination of President Obama's Making Work Pay tax credit raised taxes on single workers whose wages come to $20,000 or less, and married couples with less than $40,000 in wages.

Here’s the data showing whose taxes went up and whose taxes went down. Roberton Williams wrote for the Tax Policy Center at the time about how the replacement of the “Making Work Pay (MWP) credit with a temporary reduction in the Social Security payroll tax from 6.2 percent to 4.2 percent” was “a good deal for high earners, who got nothing from MWP (thanks to an income phaseout), but a bad deal for those making $20,000 or less.”

And yet, as Johnston writes, there’s been no accountability:

Amazingly, the people who raised taxes and supported raising taxes on the poor insist they are universal tax cutters.

Last September, Senate Republican Whip Jon Kyl of Arizona said his party's senators had gathered to discuss taxes and that "every Republican was absolutely supportive of the idea that there shouldn't be any increases in taxes."

A week later Senate Minority Leader Mitch McConnell, R-Ky., said, "No one should pay higher income taxes next year."

McConnell spoke as he introduced a bill that extended the Bush tax cuts, but not Obama's. Yet not one reporter asked McConnell about why he was seeking to raise taxes on the working poor. Of course, if the working poor are considered "no one," then what McConnell said makes sense, especially for a man who inherited his wealth, which his disclosure statements put at between $7.1 million and $32.8 million.

Or how about House Majority Leader Eric Cantor, R-Va.? "We don't feel that there should be anyone suffering a tax rate increase right now while we've got nearly 10 percent unemployment," Cantor told Bloomberg Television in November. In January he said, "Taxes shouldn't be going up on anybody right now."

But, thanks in good part to Cantor, they did for a third of Americans.

Are Republicans really only concerned about tax increases for the rich? And don’t Democrats care about tax increases on the poor? Revisiting the December compromise (which the White House is holding up as a model for upcoming budget negotiations) might just offer a bit of clarity on those two issues.

Comments

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Let them eat cake Posted by Don Greenwood 03/01/2011, 03:24 PM What Mitch McConnell coyly (or obtusely) ignored in terms of tax fairness, was echoed in a different form by John Boehner (who has stated that the act of reducing federal spending, and thereby eliminating the jobs of federal workers, is a mere "so what?"), reveals the true attitude of Senate and House Republicans. I seriously doubt that they truly care about the average or struggling American worker. The caving in of the Obama administration on the extension of tax cuts for those earning over $250,000 adds to the frustration of this phony attitude. Main line Republicans now sit at the throne of the mainly white, retired grumpy Tea Party advocates, who claim to want limited government, while holding on tight to their retirement benefits, which include Social Security and Medicare. With the freshmen Republicans, who refuse to be controlled by the traditional Republican guard, thrown into the mix, the door to a giant Pandora's box has been thrown wide open by politicians such as McConnell and Boehner. Jump to top of list