Saturday :: Dec 10, 2005

It's Time For Democrats To Enter The Tax Relief Debate Themselves

by Steve

This past week, we saw the latest installment of how the GOP treats the American treasury as an ATM machine for the top one percent of taxpayers when the House GOP passed an extension of the capital gains and dividend tax cuts, without a care at all for the deficits that same House GOP decried just weeks ago. There is nothing new in this behavior by the GOP, just as there is nothing new in their claims that any move to let these tax giveaways expire would be a tax increase and would harm the economy and job growth. These claims are not true, as there is little or no evidence that cutting the capital gains taxes or dividend taxes, or any of Bush’s tax cuts for that matter have done anything to create private sector jobs in the last four years. Yet this is the only way the GOP can mask their naked giveaway to the rich, and the eventual transfer of a greater and greater burden away from them to the middle class and the poor.

The GOP talks about tax cuts as tax relief, while Democrats have found themselves for the last half-decade being the party of fiscal discipline and “eat your spinach.” The Democrats have been unable to seize upon an idea or ideas that would stop the GOP’s continuous drumbeat for more and more tax “relief” for the wealthy, by forcing them to argue for the wealthy instead of everyone else. I have two suggestions. First, as long as we are talking about tax relief, and in light of the MBNA Democrats’ willingness to appease the banking lobby by passing the bankruptcy bill earlier this year, why not bring back for the remainder of this decade a tax deduction that reflects how the middle class has been getting by for the last five years in a period of rising inflation that outstrips wages?

That’s right; instead of letting the GOP have the whole debate about how dividend and capital gains tax cuts somehow help us all, why not bring back the consumer interest tax deduction, something that will actually provide tax relief to a vast majority of the population that is living paycheck to paycheck? Let the GOP argue why it is more important to keep giving the capital gains tax cut and dividend tax cut to the wealthiest one percent on the false promise of job growth, something that can be immediately refuted, instead of letting everyone else who has loads of accumulated consumer and credit card debt get something for it.

Sure, you’ll hear some say that this will encourage more borrowing, but most consumers are at their limit now, and the bankruptcy bill will serve as a brake here as well. Besides, wouldn’t the auto industry right about now like to see the return of a write-off that will lead to more auto loans? You’ll also hear critiques about why it is poor public policy to provide incentives for consumer debt, which then forces the question as to why providing incentives for the wealthy to escape taxation on their wealth is better, especially given what little we as a society have to show for these policies.

Second, while the GOP is forced to defend why it is more important to continue tax cuts for the rich that have generated little new jobs these last four years, why not force the GOP to have a debate about what tax breaks actually benefit all of us? The Democrats should advocate that instead of continuing these tax giveaways for the top one percent, they should be replaced by the introduction of a tax break for college tuition. Why shouldn’t the Democrats argue for which is more important to our society: more giveaways to the top one percent or a tax break to soften the blow from rising tuition while rewarding those families that make such a commitment?

Let the GOP argue for the continuation of these giveaways against this backdrop, and we’ll see how the vulnerable GOP incumbents scurry around between now and next November. There will be plenty of time for the Democrats to advocate a real reform of our tax system that will benefit all of us, but any such changes like those advocated this week by the New America Foundation, will not gain traction until the Democrats are back in power. In the meantime, Democrats need to have ideas that they can use to stop the GOP in its tracks and push back against them, showing voters a real choice of values for next year. The Democrats have been pushed into arguing against a frame of “tax relief” without being able to offer an alternative tax relief model that provides benefits for the majority. It’s time to dust off the consumer interest deduction and introduce a college tuition tax break as the alternate tax relief vehicles that will make the choice next year a stark one: between a party that only cares about the wealthy, and a party that cares about the rest of us.

Steve :: 1:22 PM :: Comments (5) :: TrackBack (0) :: Digg It!