"... a cut in the rate of any tax --
payroll, income, sales, excise, property, or otherwise -- is always a
good thing for liberty and limited government. It may be a bad thing for
government revenue, but why should a fiscally conservative,
limited-government, budget-cutting Republican have a problem with
that?"
Why Do Republicans Want to
Raise Taxes?
by Laurence M. Vance, September 6, 2011
True or false: Barack Obama wants to raise taxes and Republicans in
Congress want to cut them. The surprising answer is, False. Although it
can usually be said that the president never met a tax hike or spending
increase he didn’t like, such is not the case right now.
One does not have to be a fan of Obama or his motives to recognize a good
deal for the American people and applaud him for proposing it. It seems
that the president wants to extend the payroll-tax cut that is set to
expire at the end of this year.
It hasn’t even been a year since Republicans fought for, and obtained, an
extension of the Bush tax cuts for two years. Yet now they are opposing
the proposed extension of the payroll-tax cut that was part of the deal
to extend the Bush tax cuts.
There are two types of payroll taxes: Social Security taxes and Medicare
taxes.
Social Security taxes were instituted in 1937 as part of Franklin
Roosevelt’s New Deal. The original rate was 2 percent. Then, as now, half
the tax is paid by the employer and half the tax is paid by the employee.
By 1960, the rate had tripled. Since 1990, it has been 12.4 percent.
Social Security taxes were originally levied only on the first $3,000 of
yearly income. That threshold is now up to $106,800. That means that the
maximum amount one could conceivably pay in Social Security taxes for one
year is $6,621.60, with one’s employer paying the same amount.
Payroll-tax deductions for Medicare were instituted in 1966. The original
rate was .7 percent, again, divided between employer and employee. Since
1986, the rate has been 2.9 percent. After 1993, the taxable threshold
was eliminated. Thus, unlike Social Security taxes, Medicare taxes are
levied on every dollar of earnings.
The Bush tax-cut extension that was enacted last year included a
reduction in the employee’s share of Social Security tax rate from 6.2
percent to 4.2 percent. The employer’s share remains the same. A cut in
the Medicare tax rate was not included.
A reduction in the Social Security tax rate greatly benefits those who
need it most the poor and middle class. But unlike a refundable tax
credit, the extra 2 percent of their income that Americans are now
allowed to keep in their pocket and out of the hands of the government is
not a subsidy or income transfer payment it is their money.
In one of his recent weekend radio addresses, Obama proposed extending
the temporary payroll-tax cut: “There are things we can do right now that
will mean more customers for businesses and more jobs across the country.
We can cut payroll taxes again, so families have an extra $1,000 to
spend.”
Yet Republicans in Congress generally oppose extending the cut in Social
Security taxes.
A spokesman for House Majority Leader
Eric Cantor (R-Va.) said that “all tax relief is not created equal.”
He maintains that Cantor believes “there are better ways to grow the
economy and create jobs than temporary payroll-tax relief.” House budget
guru
Paul Ryan (R-Wisc.) termed the tax-cut extension “sugar-high
economics.” The office of the chairman of the House Ways and Means
Committee (the committee that writes the tax laws),
David Camp (R-Mich.), who is also a member of the new congressional
“supercommittee,” issued a statement saying that tax reductions, “no
matter how well-intended,” will increase the deficit.
Over in the Senate,
Lamar Alexander (R-Tenn.) objected as well: “We don’t need short-term
gestures. We need long-term fundamental changes in our tax structure and
our regulatory structure that people who create jobs can rely
on.”
Republican presidential candidate
Michele Bachmann (R-Minn.) also opposes extending the temporary
payroll-tax cut. Candidate
Mitt Romney said that he “would prefer to see the payroll-tax cut on
the employer side.”
Why do Republicans want to raise taxes?
Can it be that their reputation as tax cutters is not so deserved? The
only Republican in Congress that I am aware of who has called for the
complete elimination of the income tax and not replacing it with
anything is Ron Paul. And the same goes for the Republican
presidential candidates. After all, it was under Republican idol Ronald
Reagan that Social Security tax rates increased from 10.16 to 12.12
percent and Medicare tax rates increased from 2.1 to 2.9
percent.
For Republicans to claim that the payroll tax cut extension should be
rejected because it is shortsighted or will increase the deficit is
ludicrous, considering that only last year they fought for an equally
shortsighted and deficit-increasing measure -- the extension of the Bush
tax cuts.
But letting the Social Security tax-rate cut expire is not the only way
that Republicans are willing to effectively raise taxes. Out of one side
of their mouths they are saying that they will not vote to raise taxes,
but out of the other side they are talking about closing tax loopholes,
ending tax shelters, and reforming tax deductions and credits. Those
measures raise taxes as surely as a rate increase, but they allow the
Republicans to pose as being for tax and budget cuts.
Regardless of the president’s ulterior motives, his other horrible
policies, his plans to increase income taxes on the “rich,” his
nanny-state philosophy of government, his poor understanding of
economics, and his belief in the redistribution of wealth, a cut in the
rate of any tax -- payroll, income, sales, excise, property, or otherwise
-- is always a good thing for liberty and limited government. It may be a
bad thing for government revenue, but why should a fiscally conservative,
limited-government, budget-cutting Republican have a problem with
that?
http://www.fff.org/comment/com1109e.asp
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