Friday, August 26, 2011

The Next Tax Fight

Maybe I'm ahead of the curve on the news for a change: There's a fight brewing over a pending increase to the Social Security payroll tax. As part of the December 2010 tax deal, Congress passed a temporary 2% reduction in this payroll tax. It is now set to expire, and the Republicans are ready to wave goodbye to it. Democrats are ready to attack Republicans for tax cut favoritism. The talking points are being prepared, with number of households that don't pay income tax sure to be part of barrage.

Bonus analysis/historic perspective

Update 9/9/11: The House Republicans were sounding more conciliatory on this even before the jobs speech on 9/8. With a matching cut to SS taxes for small employers, I'm not sure how the Republicans can turn it down. Well, maybe they can--it all depends what else is in the package.

1 comment:

Anonymous said...

This is an interesting fight and one that would definitely favor the Dems. When the GOP talks about "broadening the base", that's their euphamism for taxing the poor and making them pay what most wealthy people consider the poor's "fair share". It's the same argument generally deployed against the rich, but rendered more elegantly. After all, the rich think they pay all the taxes (and they do pay a large proportion) and the poor get all the goodies.

That's not true, of course, since most taxes are just a reflection of government laws that favor private interests and their ability to make profits from, essentially, public square resources. They just don't see it that way. For all their clamoring about "regulations", they like most of them because it raises the cost of entry to competitors, either explicitly or implicitly.

The Dems should actually double-down on the strategy. They should keep the 2% reduction while INCREASING the social security wage limit, at least for employers (for maximum political gain) and for employees (for maximum strength of the program) in the name of fairness. It's a winning populist argument and one the GOP's elegant language cannot overcome.