Image via WikipediaPoliticians are very good at taking something simple and making it complicated. They are proving that now with the debate over tax cuts for the rich. The Republican argument calls allowing the Bush tax cuts to expire an increase that would slow economic recovery. In fact, it would raise taxes by about 3% on the wealthiest Americans.The problem with the Republican argument is that millionaires are not the ones suffering in the slow economy; the poor, the unemployed and the middle class are. For corporations and the super-rich who use loopholes to avoid paying taxes, 3% of nothing is still nothing. Now factor in the US debt, which is admittedly unsustainable at 14 trillion dollars and growing.
Does it make sense to subsidize millionaires with borrowed money?
The Republican solution to America’s debt is to squeeze the middle class by cutting away the safety nets of programs like Social Security, Medicare, and Food Stamps. These programs help maintain the middle class, provide health care to the elderly, and keep people from starving. Any desire to slash these programs raises the question; what kind of America are the Republicans trying to create?
Instead of moving America forward, the GOP seems determined to move her backward. Instead of introducing new legislation, they want to repeal health care reform and roll back entitlements for senior citizens and the poor, to fund tax breaks for millionaires. Something is wrong with this picture.
There is a simple, however politically impossible solution: Raise the tax rate on millionaires to 40%, and eliminate 90% of corporate tax loopholes; tax incomes between $500,000 and $1,000,000 at 38%. If you earn between $150,000 and $499,000, you pay 35%; Wage earners of $50,000 to 149,900 will pay 30%; and completely eliminate taxes for everyone who earns less than $50,000 a year.
The revenue generated by closing tax loopholes for corporations and millionaires alone would go a long way toward reducing the national debt. Giving people who earn less than $50,000 a year a tax-free ride would give them more disposable income, which they will spend. Spending creates demand and grows the economy.
Unfortunately, there isn’t a politician in Washington today who would dare make such a proposal. By simplifying the tax code and eliminating most corporate loopholes, lawmakers would lose too much of their leverage for enticing big-money campaign donations and manipulating economic markets.
America is for sale and the wealthy are buying themselves tax breaks. So even through the US has a new party leading Congress, nothing has really changed.
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