How the Republicans are Trying to Make the Rich Even Richer
The GOP isn't even trying to conceal its efforts to help the rich pay less taxes while the poor pay more
If Tax Day fills you with dread and anger, that's not irrational — at least not if you're poor or middle class. The United States tax code is so warped, so skewed in favor of the wealthy, that it is in effect hastening the arrival of the new Gilded Age.
Since the middle of the last century, millionaires' tax burden has been cut in half. During the same time period, the share of government revenue coming from corporate taxes has plummeted while the portion coming from payroll taxes has jumped. As a freelancer, I have to give 30% of my income to the Internal Revenue Service. Hedge fund managers, meanwhile, pay 20% because they're allowed to pretend that their regular income is actually investment income. This particular rich-person tax perk is one of the main reasons income inequality in this country is out of control.
Here's the really bad news: If the Republicans who control Congress have their way, the tax code is only going to get more unfair.
Over the last 12 months, they've pushed on multiple occasions to raise taxes on the poor even as they cut taxes for the wealthy.
In April 2014, for instance, Rep. Paul D. Ryan (R-Wis.) — then the chairman of the House Budget Committee — released a budget proposal that would give millionaires an average tax cut of $200,000. Ryan was vague about how those cuts would be offset, but Citizens for Tax Justice argued that the proposal would require increasing taxes on low- and middle-income people.
Then, in July, the Republican-controlled House passed a bill largely along party lines that would expand the child tax credit for higher-income families — without renewing an expiring child tax credit for poor families.
The fight over the child tax credit resurfaced around Thanksgiving. Each year, Congress renews a package of so-called tax extenders: temporary tax breaks for business that amount to corporate giveaways. Beginning in 2009, an expansion of the child tax credit and the earned income tax credit were added to the mix to help working-class families during the recession.
But in November, when Republicans pushed Senate Democrats to make several corporate tax breaks permanent, they let languish the two expiring low-income tax breaks. The latter help tens of millions of low- and middle-income families get by.
Republicans pointed out that the EITC and the child tax credit provisions don't expire until 2017, and argued that there's plenty of time to renew them. But Democrats countered that once you disaggregate tax extenders for the rich from the ones that help the poor, there's no political will to do what's right.
President Obama vowed to veto the legislation, with Treasury Secretary Jacob J. Lew warning that any tax extender deal "must ensure that the economic benefits are broadly shared."
GOP efforts to further skew the tax code to benefit the wealthiest come as economic inequality in America reaches levels not seen since the early 20th century. From World War II through the early 1970s, incomes across the spectrum grew at nearly the same pace. Between 1979 and 2011, however, the average after-tax income of the top 1% quadrupled, while the incomes of the lower 20% increased by only about half.
Today, the top 20% of U.S. households own more than 84% of the wealth in this country, while the bottom 40% holds a mere 0.3%. Of all Western nations, the United States is now the most unequal.
Yet the GOP continues to help the rich get richer. And the party isn't even trying that hard to conceal its efforts. This week, while millions of Americans scrape the bottoms of their savings accounts and the tops of their credit card limits to pay their share of taxes, the House will vote on a bill to fully repeal the estate tax.
If it passes, the measure would redistribute an average of about $3 million a year to the wealthiest 0.2% of households in America — or about 5,000 rich families. With that in mind, enjoy Tax Day.
© 2015 The Los Angeles Times