Shaila Dewan over at The Upshot reported, States Consider Increasing Taxes for the Poor and Cutting Them for the Affluent. This is not exactly shocking. I’ve been writing about this for a good long time. These states, of course, are Republican run states. They are states like Kansas where the Republicans decided that their economies would boom if they cut taxes on the rich and on businesses. They were wrong. Their economies did not boom, but their budget deficits sure did. So what is a Republican government to do? Well, first they cut funding for the schools. But that only gets you so far. Eventually, they have to turn to taxes.
But wasn’t that what got them in trouble in the first place? What is the point of cutting taxes if you are just going to raise them later? Well, it’s very simple. The idea was never to cut taxes. The idea was to shift the tax burden from the rich onto the poor. You may remember back at the start of 2013. The Republicans in Congress were crazy mad because the Obama administration wanted to end the temporary (decade long) tax cuts on incomes over a quarter million dollars per year. The Republicans were united in their belief that this was an outrage! But at the exact same time, the Republicans were absolutely fine with payroll taxes going back up. They claimed that was just because the payroll tax holiday was meant to be temporary. But so were the Bush tax cuts that the Republicans were so angry about.
Let’s think about that for a moment. The normal payroll tax rate is 12.4%. And the payroll tax holiday brought that amount down to 10.4%. The median American worker made $51,900 in 2013. There are no deductions for the payroll taxes, so normally, this worker would pay $6,435.60 per year, but during the holiday period, paid only $5,397.60. So that was an extra thousand bucks that the worker would take home each year. That’s a nice chunk of change — 2% of her gross pay for the year.
Because the payroll tax is extremely regressive, it worked very differently for a rich person. Consider Mitt Romney. Since 2013 was after the 2012 election, we can assume that Romney’s gross income was back up to its usual amount. We’ll go easy on him and just assume it was $20 million. I’m not sure if Mitt Romney’s income consists of any earned income at all. So he may pay none. But let’s just assume that he earned $113,700 that year — the maximum amount that payroll taxes apply. So he would have normally paid $14,098.80, but with the holiday, it would have only been $11,824.80. So he would have another two thousand bucks to spend. Maybe he’d buy an extra shirt or something. But the difference in his taxes wouldn’t be 2%. It would be just over 0.01%. So you can see that Mitt Romney and his class wouldn’t care about the payroll tax holiday, even though it was much better for the economy than the lower top marginal tax rate that the congressional Republicans were so worked up about.
So we’ve known for a very long time that the Republicans are not against taxes. They just don’t want their rich friends to be taxed. And the interesting thing is that Republicans are always the first to cry “class warfare” whenever inequality is brought up. But the entire basis of their ideology is class warfare. Now if you ask them, they will claim that they just want the tax system to be fair. And by that, they mean that everyone should have to pay the same percentage of their incomes in taxes. That is preposterous, of course. A young person living on $10,000 per year cannot afford a 10% tax rate the way that, for example, Mitt Romney can. But the situation is worse than that.
Conservatives are only in favor of an equal tax rate right now. Look at the way that they think the payroll tax is just fine. That’s a tax that I pay 12.4% of my income on — and always have. But Mitt Romney pays a rate of 0.07%. I pay almost 200 times as high a rate in payroll taxes as the Great and Mighty Trust-Fund Bully Romney. This is why you never hear Republicans complain about the payroll tax. If they ever managed to enact a single income tax rate, the Republicans would immediately start pushing for an equal tax: every person would pay the same amount in taxes. After all, regardless of how rich or poor a person is, she can only use one road at a time. Why should the rich person have to pay more for it?
Conservative thought nominally goes back to Edmund Burke. But he was just pushing a far older idea that the rich really are better than the rest of us. So it is not surprising that conservatives will always be pushing for more and more taxes to be borne by the poor. And the end result of that is for the rich to pay no taxes. Ultimately, for conservatives, the government should be replaced by the rich. They are our betters. They will take care of us out of their sense of noblesse oblige. (Modern definition of “noblesse oblige”: greed is good!) And rule by the people will ultimately lead to the Reign of Terror. This is why conservatives don’t believe in democracy. It is all part of the same package.
Paul Krugman responded to Shaila Dewan’s article, Naked Came the Class Warriors. He noted, “And that, ladies and gentlemen, is why I can’t take talk about ‘reform conservatism’ seriously.” Of course. I’m not sure why people ever took “reform conservatism” seriously. It is an oxymoron. But more important, the idea of conservatism is not to make society better and more just through conservative policy. It is quite simply to give more power to those who already have the most power. And this is simply because conservatives think that the powerful are better. But the rest of us must wake up to reality: conservatism in anti-American. And if it succeeds, it will destroy the nation. It’s already gone a long way in accomplishing that goal.