Republican members of Congress were so adamantly against taxes they brought the U.S. government to the brink of default earlier this month rather than agree to raise taxes. They believe the Bush-era tax cuts for the rich must be extended basically forever.
But now, less than a month later, some Republicans have changed their mind about raising taxes. It’s OK to raise taxes — as long as its on poor and middle-class Americans who actually work for a living.
At issue is a tax that affects the vast majority of workers: the 6.2% of their taxes designated for Social Security. (A worker’s employer pays an equal amount, for a total of 12.4% per worker.)
As part of a bipartisan spending deal last December, Congress approved Obama‘s request to reduce the workers’ share to 4.2% for one year; employers’ rate did not change. Obama wants Congress to extend the reduction for an additional year. If not, the rate will return to 6.2% on Jan. 1.
Tax cuts for the rich must be extended or the economy will collapse and the world will come to an end, the Republican legislators have thundered for many months.
But when it comes to workers? Well, maybe that’s OK, some of them now believe.
As Andrew Leonard noted in a recent post on Slate:
The very same Republicans who have fought tooth-and-nail to keep George W. Bush’s tax cuts for the wealthy from expiring are now in favor of doing away with a tax cut that will primarily [help] wage-earners — people who actually have to work for a living, people who are struggling to pay their mortgages and wincing every time they fill up their gas tank.
There’s not even any attempt to hide the hypocrisy.
“It’s always a net positive to let taxpayers keep more of what they earn,” says Rep. Jeb Hensarling, “but not all tax relief is created equal for the purposes of helping to get the economy moving again.” The Texas lawmaker is on the House GOP leadership team.
The theoretical basis for this argument, such as it is, is based on the assumption that keeping taxes low on the “job-creators” — the rich, and corporations — will spur investment and hiring. The empirical evidence for this theory has always been slim — some of the strongest economic growth rates of the last century in the United States occurred when taxes on the wealthy were at their highest rates — but it’s particularly absurd right now, after two years in which corporate profits have been high, taxes have been low, and employment growth has been paltry.
On the other hand, there’s little doubt that raising taxes on American workers during a slow economy will further depress consumer demand — which is exactly the wrong way to spur economic growth.