Nel's New Day

December 12, 2011

Republicans’ Payroll Tax Benefits Wealthy

Last week the conservatives in Congress who got elected to find jobs for millions of people in the country while not raising taxes voted against an extension of a payroll tax break for middle-class families. Their objection is that the top 0.1 percent of income earners would have a 1.9 percent tax increase. They defend their refusal to increase taxes for the wealthy by claiming that the Grover Norquist pledge prevents them from doing so. But last week they were comfortable raising taxes for half the people in the nation.

Tomorrow, in the last week before they leave on their holiday recess at the end of the year, the Republicans will vote on a proposal that won’t raise taxes, and they will proudly announce this while accusing the Democrats of wanting to penalize the poor and middle class. The good news about the Republican proposal is that it would maintain the payroll tax at 4.2 percent, partially continue the unemployment payments, and slightly raise the Medicare payments for doctors rather than drastically reducing them. As usual, however, with Republicans there’s lots of bad news.

The Republicans’ bill would add $25.3 billion to the federal deficit over the next 10 years, according to the Congressional Budget Office, increasing the deficit by $166.8 billion in just the coming year. They are willing to do this after swearing that any raise to the deficit is evil. Democrats have pointed out that the Republicans’ cut-go rules state that a bill must not add to the deficit in the 5-year and 10-year budget windows, but Republicans seem to ignore the rules whenever they choose.

The Republicans’ bill would allow states to require drug testing as a condition of receiving unemployment benefits. A judge has already declared that a Florida law requiring those who apply for welfare benefits to be unconstitutional. Judge Mary Scriven ruled that this law would violate the constitution’s Fourth Amendment ban on illegal search and seizure. “If invoking an interest in preventing public funds from potentially being used to fund drug use were the only requirement to establish a special need,” she wrote, “the state could impose drug testing as an eligibility requirement for every beneficiary of every government program. Such blanket intrusions cannot be countenanced under the Fourth Amendment.”

The Republicans’ bill would repeal $8 million in mandatory funding for the healthcare reform law and cut another $34.9 billion necessary in implementing that law. Language in the bill would also delay and potentially weaken Environmental Protection Agency air-pollution regulations for industrial boilers and incinerators. Republicans have been very strong in asserting that these regulations will hurt business, but EPA says revised boiler regulations aimed at reducing harmful air pollutants such as mercury and soot would only apply to about 1 percent of the country’s boilers and would offer major public health benefits.

The Republicans’ bill would extend a pay freeze for federal workers, prohibit millionaires from receiving unemployment benefits and food stamps, and gradually increase Medicare premiums for the upper-income retirees, those who make more than $80,000. The bill raises the number of Medicare recipients who pay higher premiums from 7 percent of them to 25 percent, affecting not only wealthy but also middle-class retirees.

The Republicans’ bill also changes the health co-payment structure for certain federal retirees, raises fees for Fannie Mae and Freddie Mac, and increases revenue through spectrum auctions, selling the rights (licences) to transmit signals over specific bands of the electromagnetic spectrum and to assign scarce spectrum resources. In addition, the bill allows businesses to deduct the full cost of their equipment investments in as little as one year.

The Republicans’ bill forces the administration to fast-track a permit decision on the Keystone XL oil sands pipeline which the Obama administration wishes to delay until after the 2012 election.

Missing in the Republicans’ bill is the 1.9 percent surtax on millionaires.  Republicans continue to protect the wealthy. Their reason for keeping the money flowing to the wealthy is the same one that they’ve used for the past decade: doing so will hurt the “job creators.” Sen. John Thune (R-SD) used his intuition to declare that a tax increase will keep businesses from job creation. NPR (always on the conservatives’ chopping block) set out to search for these “job creators” who will be affected by the 1.9 percent tax increase.

NPR reporters first went to Republican congressional offices, including House and Senate leadership, who couldn’t find any millionaire “job creator” to be interviewed. Then the reporters went to business groups lobbying against the 1.9 percent surtax. Once again no one. A reason for this failure might be that only 2 percent of people with any business income, large or small, would be affected by the 1.9 percent tax increase.

Instead, several business owners who would get the 1.9 percent increase insist that the tax wouldn’t hurt hiring at all. Business owners continue to tell Republicans that the marginal tax change makes “zero difference” in hiring. Anchor Brewing CEO Keith Greggord said that not a lot of “small-business owners I know are millionaires.”

White House spokesman Jay Carney derided the GOP package, saying, “Their plan seeks to put the burden on working families while giving a free pass to the wealthiest and big corporations by protecting their loopholes and subsidies.” As usual, the Republicans are also blackmailing the Democrats into passing this bill and penalizing the poor people through their additions to the bill such as requiring people getting welfare to take drug tests.

With a raise in the payroll tax, 160 million people would pay an additional 2 percent on the first $106,800 that they earn, an average of an extra $1,000 per year. A surtax on millionaires would charge 1.9 percent on their money over $1,000,000. Only 328,000 people have an adjusted gross income over $1,000,000; they are the top one percent. The bottom 160 million people are the real job creators because each one of them will spend their $1,000. That $120 billion will go into the economy.

The 328,000 millionaires, includes over 250 in Congress, are also developing spending “savvy,” according to a Newsweek article on 12/5/11. This means that the 2010 Bordeaux is too expensive; they’ll stick to the 2009 vintage. According to concierge services at Fischer Travel, the wealthy need a dermatologist in London or former White House doctors who treat them on yachts or private jets. So when they save money because the Republicans take money from the bottom 160 million people in the U.S., they can afford these luxuries–probably from out of the country.

 

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