October 29, 2006

Darcy Burner, and Other Democrats, on Taxes

Republicans would like you to believe that Darcy Burner and the Democrats want to take money out of the hands of the average, middle class or lower income family. They'd like you to believe that the Republican dominated 109th Congress, of which Dave Reichert is a loyal footsoldier, has made life better for most Americans. It would be choosing politeness over truth to describe this as anything other than a lie.

Darcy Burner explains here who the Republicans are really worried about benefitting:

... On the tax side, I think we need to figure out a way to ease the burden on the middle class and poor. In real terms for most of those families at this point, their disposable income has gone down. The cost of housing is so much higher than it used to be, wages are stagnant. The average tax break for families in this country under the Bush tax cuts was all of $50 a year and the increase in healthcare costs alone has more than eaten that up. Much more. So families are worse off now than they used to be. The middle class and the poor are worse off than they used to be. But for people who make more than a million dollars a year in income, the Bush tax breaks were worth an average of more than $43,000 to them. I do think we need to take a look at ensuring that the very wealthy and corporations pay their fair share, while reducing the burden on the middle class and poor. ...

She also points out what Republicans do with the tax money they get:

... We know there are billions of dollars that have gone missing in Iraq. Billions. Probably tens of billions of dollars that have gone missing in Iraq. We could identify what they’ve been spent on and who’s pocketed them or what they’ve been used for, right? That is an enormous waste. The fourteen and a half billion dollars in tax subsidies to the big oil companies that the Congress voted into place last year, that are taking effect during a period in which the oil companies are making more in profits than any companies ever in the history of the planet, is a waste of taxpayer money. The no-bid contracts to Halliburton represent huge wastes of taxpayer money. And we say that we can’t afford to do critical things that we clearly ought to be doing. ...

Republicans like to focus on a couple, specific taxes to say that Democrats want to take more money overall, but they refuse to look at the big picture because it doesn't substantiate their claims. Congress has given themselves several raises over the decade that they've refused to raise the minimum wage. As they've created an economy in which the cost of living goes up, tuition goes up, utilitiy costs rise, fuel costs skyrocket, medical and insurance bills go through the roof They raise the alarm that Democrats want to increase payroll taxes, never saying that what Democrats want to do about payroll taxes is discussed here by labor organizer Nathan Newman in the context of how to fund Social Security:

... But if any "solution" is needed, the simplest is the fairest. Currently, while a minimum wage worker pays 6.2% of his income into the social security trust fund -- $12.4% if you include the matching employers portion -- a CEO paid a $1 million dollars pays only 1% of his salary into the system. And Bill Gates pays nothing into the system from his billions in stock income.

This all stems from the fact that wage income above a certain level -- $87,000 per year in 2003 -- is completely untaxed by social security. Eliminating this so-called "cap" would raise plenty of income to help out the system. Only 83% of all wages paid are subject to social security taxes, so this would increase annual social security revenues 20%, or roughly $100 billion per year, plenty

This is hardly a radical idea-- the "cap" used to apply to the payroll taxes funding Medicare, but the 1993 tax bill removed the cap and now every dollar of wage income is taxed to help fund the Medicare system. There's no reason not to do the same for social security.

A "New" Tax on the Wealthy?: Now, conservatives will scream that this is an additional tax on the wealthy, but in reality it would be applying the same tax already paid by poorer working families to everyone the same way. Every dollar earned, whether by a minimum wage worker or by a CEO, would be taxed the same 12.4% (6.2% of employee income, an additional 6.2% from the employer). ...

When conservatives wail about Democrats wanting to raise the payroll tax, what they're complaining about is that people who make more than $87,000 per year will have to pay the same tax as everyone else on every dollar they earn. This 'radical' idea of extending the payroll tax to all income is shared by none other than investment magnate Warren Buffett, who also lays out the fact that "less than 2 percent of all estates pay any tax. A couple million people die every year, 40,000 or so estates get taxed." Republicans have done a very good job of selectively omitting certain facts from their arguments to give the impression that payroll tax increases, like estate taxes, would affect the typical household in a big way. It just isn't true.

In fact, one of the most important recent tax cuts for Washington voters has been the sales tax exemption, which was championed and spearheaded by Washington Democrats, Sen. Maria Cantwell and Rep. Brian Baird. It's an exemption that keeps more money in Washington State, more money in the hands of Washington families. But it wasn't a priority for the White House, and Republicans almost let it expire.

Back to the big picture, Republicans also passed bankruptcy legislation that severely penalizes average citizens who fall on hard times, while making it as easy as ever for corporations to get out of onerous debt. Though this article was written before the bill was passed finally into law, these are the tender mercies shown by Republicans towards their fellow Americans:

... About 50 percent of all families who are forced to file for bankruptcy do so as the result of medical expenses. And three quarters of those have health insurance. Another 40 percent have suffered a death in the family, lost their job, or gotten divorced, or suffered some combination of these factors and medical costs. Almost everyone who files for bankruptcy does so as a last resort. Sixty-one percent of those who do so have gone without medical care that they needed but could not afford. Fifty percent have failed to get prescriptions filled. A third have had their utilities shut off. Twenty-one percent have gone without food. Seven percent have moved their elderly parents to cheaper care facilities.

... This time around, the Senate and the Senate Judiciary Committee voted down that amendment and numerous other amendments aimed at making this bill less than utterly disgusting.

These included amendments to:

– close off the trusts loophole for millionaires,

– limit the homestead exemption,

– create a minimum homestead exemption to save the homes of the elderly,

– protect employees and retirees from corporate practices that deprive them of their earnings and retirement savings when a business files for bankruptcy,

– discourage predatory lending practices,

– exempt debtors from means testing if their financial problems were caused by identity theft,

– limit the amount of interest that can be charged on any extension of credit to 30 percent,

– preserve existing bankruptcy protections for individuals experiencing economic distress as caregivers to ill or disabled family members,

– exempt debtors whose financial problems were caused by serious medical problems from means testing,

– provide protection for medical debt homeowners,

– require enhanced disclosure to consumers regarding the consequences of making only minimum required payments in the repayment of credit card debt, and for other purposes,

– protect service members and veterans from means testing in bankruptcy, to disallow certain claims by lenders charging usurious interest rates to service members, and to allow service members to exempt property based on the law of the State of their premilitary residence.

Each of these amendments was proposed by a Democrat, and each was voted down by the Republican majority.

Similar amendments were voted down in the House Judiciary Committee on March 16, including:

– An amendment by John Conyers (D-MI) protecting military personnel from predatory payday lenders,

– An amendment by Mel Watt (D-NC) exempting tuition costs from the expense calculation in the means test

– An amendment by Adam Schiff (D-CA) protecting people whose bankruptcy is due to identity theft

– An amendment by Howard Berman (D-CA) protecting bankruptcy filers who file due to medical crises

– An amendment by Jerry Nadler (D-NY) which would make debts arising from civil rights violations non-dischargable in bankruptcy. ...

The Republicans would like to scare the very voters that they've pushed to the financial edge with the boogeyman of higher taxes. They'd like the public to forget the prosperity of the Clinton years, when government spent far more of the money it did have on programs that benefitted the typical working family and the employment market was booming. They would like the public to forget how much money they've wasted on no-bid contracts for friends of the administration. They'd like you to forget that, even as tuition has increased, they cut funding for student loans. They'd like you to forget what huge tax breaks they've given to wealthy corporations and individuals, while it's become for the typical American to hold on to the lifestyle they had just five or six years ago, let alone think about getting ahead. And it isn't just your family; household debt has increased to new highs across the board as Americans struggle with a Republican economy and stagnant wages.

When it comes time to vote, the Republicans hope you'll forget all this, or that you'll never have known in the first place. The oil companies that Rep. Dave Reichert voted to subsidize are banking on it.

Posted by natasha at October 29, 2006 03:40 PM | WA Politics | Technorati links |

I worked on Social Security in two of my jobs, one in the Senate and one at a non-profit. Eliminating the ~$90,000 cap on income taxed for Social Security (the 12.4% payroll tax, split 50-50 between employers and employees) is both the single most popular change we could make to the program and the single most effective one. In fact, the concentration of income has gotten so bad that some organizations think that change alone would fund the program's entire 75-year deficit. Plus, that change would make the payroll tax flat, instead of regressive.

Unfortunately Congress doesn't have the political will to upset the richest 6% of us (that's right: 94% of us would see no tax increase at all).

Posted by: Sandwich Repairman at November 6, 2006 03:02 AM