President Obama is proposing to extend the temporary cut in payroll taxes beyond this year, lower it even more and pay for it by assessing people who earn $1.0 million or more a special 3.25% tax.
The Republicans say that they’re open to extending the payroll tax break, which put about a thousand dollars in the pockets of the average tax-payer in 2011, most of which was spent and thereby boosted the economy. But under the plan that Republicans announced yesterday, the payroll tax cut extension would be funded mainly by reducing the number of federal workers, extending a pay freeze for them for three more years and tightening eligibility requirements on unemployment and food stamp benefits.
Rather than tax the wealthy, who have had an easy tax ride for 30 years now, the Republicans prefer to take money from a struggling Peter’s pocket to pay a struggling Paul. If there is an after-life, my bet is on an elephant passing through an eye of a needle before any of these elephant party standard-bearers get into heaven.
The President is right that we need to keep pumping money into the economy. Both the recipients of the payroll tax break and those from whom the Republicans want to steal money to pay for it will put most of this money into the economy. But virtually all of the 3.25% that the President will get from income in excess of $1.0 million will go into savings or investments. The Republicans say that the rich folk will use this money to create new jobs, but history has shown that not to be true. It’s more likely that this money will go into stocks or bonds bought on the secondary market, which does not create jobs because the proceeds of the sale do not go to a company but to whomever owned the stock or bond. A lot of that 3.25% might end up in the hands of other rich people as paintings and other art objects exchange hands.
It’s time for President Obama and the Democrats to show a little backbone. They have backed down so many times in the recent past when it comes to economic and taxation issues.
They backed down and extended the Bush II tax breaks for the wealthy, paying for it with decreases in job-creation and social service programs.
Obama backed down and agreed to link raising the debt ceiling to making spending cuts.
Obama backed down on implementing stronger air quality regulations.
But Obama should not back down on insisting that a tax increase on the wealthy pay for this tax break for middle class and poor Americans. Here’s why:
- All recent surveys have shown that the overwhelming majority of Americans are on his side, with about two-thirds wanting to tax the wealthy.
- The Republican plan will take money out of the economy, so it won’t help the country.
- The Republicans and everyone else know that not extending the tax break will take enough money out of the economy to sink the economy even further.
It’s time for all of us to write President Obama and the Democratic leadership and tell them not to flinch, but to insist that we pay for extending the payroll tax break by taxing the wealthy. Everyone should also write their congressional representatives and senators and tell them to support the Obama plan. You can get all the addresses and emails you need at the website of the Friends Committee on National Legislation (FCNL), the Quaker’s lobbying group. The FCNL legislative directory is at http://capwiz.com/fconl/directory/congdir.tt