The Looming GOP Tax Hike
Following up on the last item, all six of the Republican members of the super-committee wrote a joint op-ed for the Washington Post today, trying to avoid blame for the panel’s failure. There’s a lot of nonsense in the piece, but the gist is about what you’d expect: Democrats wanted the GOP to accept some tax increases as part of a balanced compromise, and Republicans refused.
There was, however, one tidbit in the op-ed that stood out for me. From the piece:
The 2001 and 2003 changes to the tax code reduced marginal rates for all taxpayers as well as the rates for capital gains, dividends and the death tax. For technical reasons, all of these provisions expire at the end of next year — meaning that if Congress does not act, Americans will face the largest tax increase in our history.
This prospect has put a wet blanket over job creation and economic recovery. It would be the wrong medicine for our ailing economy. As President Obama has famously said, “You don’t raise taxes in a recession.”
The six Republican co-authors of the piece are playing fast and loose with several key details, hoping the public won’t know the difference. For example, the mere possibility of tax increases in 2013 is not holding back the economy in 2011. That’s ridiculous.
But let’s put that aside for now and look at the argument at face value: these six powerful and influential Republican lawmakers are saying they’re against a tax increase in the short term, and believe such an increase would hurt the economy.
And that leads to a different question: doesn’t this mean these same Republican lawmakers will have to agree with President Obama’s call for an extension of the payroll tax cut, which is set to expire next month?
The White House is eager, if not desperate, for the payroll break to go through 2012, with projections showing weaker economic growth next year without it. Republicans have balked and said they want taxes to go up on practically all American workers in January because, well, they haven’t exactly explained why they want this. (To see how much your taxes would go up if Republicans succeed, the White House has put together an online calculator.)
And that leaves GOP lawmakers in an interesting position. On the one hand, they’re killing a super-committee deal because they refuse to raise taxes on the wealthy in 2013. On the other hand — indeed, at the exact same time — the identical Republicans have no qualms about supporting a tax increase on practically every American who earns a paycheck, which would kick in on Jan. 1, which is just six weeks away.
You see the problem. Republicans are afraid a tax increase affecting a small sliver of the population over a year from now is awful for the economy, but they’re comfortable with a tax increase affecting practically everyone a month from now.
The GOP message machine is an impressive operation, able to convince millions of people to not only believe nonsense, but oppose their own interests. But I’ll look forward to this message machine spinning Republican support for a major tax increase on working families nationwide during a jobs crisis and a weak economy.