Folks who have been awake during the last six months recall that the Republicans opposed raising marginal tax rates on the wealthy as the highest principle of politics and economics. That is why it should have been a huge news story when they proposed a plan that would do exactly this, but only for the less wealthy who fall in that esteemed group they call “job creators.” Remarkably the Post article that reported on this change totally ignored this break with Republican theology.
The break comes in the form of what the Post describes as a “bubble tax” which it claims that Republicans are proposing. The bubble tax would phase out the lower tax brackets (e.g. the 10 percent tax bracket for income under $17,900 and the 15 percent bracket for income between $17,900 and $72,500). This phase out implies an increase in the marginal tax rate over the period of the phase out. For example, if the phase out for couples occurs between the income range of $250,000 and $750,000 it would be roughly equivalent to an increase of 5 percentage points in the marginal tax rate over this income interval. That would actually be a larger increase in the marginal tax rate for people in this income range than just letting the Bush tax cuts expire. (Of course the phase out could be more gradual, but then it would raise less money.)
The income levels that would be most affected by this sort of restructuring of the tax code include the overwhelming majority of small business owners who the Republicans have blessed as “the job creators.” Given this change in positions by the Republicans, it might have been appropriate to headline this piece something like:
Republicans throw ‘job creators’ under the bus to limit taxes for the very rich.
The article also refers to a proposal by Senator Susan Collins that would raise taxes on people earning more than $1 million, except for those who own a small business. It would have been worth pointing out to readers that this small business exemption would essentially make the tax increase optional for the very rich. It is unlikely that there are many people in this income category who either could not figure out how to make themselves a small business owner or hire an accountant to pull off this trick.
In keeping with the Post’s longstanding editorial policy of pushing for cuts in Social Security the third paragraph of the piece referred to the:
skyrocketing cost of federal retirement programs such as Social Security and Medicare.
Of course Social Security costs are not skyrocketing by most definitions of the term, with spending as a share of GDP projected to increase from 5 percent to 6 percent over the next two decades. Medicare costs are rising more rapidly, but this is due to projections that show U.S. health care costs in general rising rapidly.
The piece also used the term “fiscal cliff” in both the headline and first paragraph. This term, which is not an accurate description of the impact of the expiration of the tax cuts and the spending sequester that takes place in January, helps to imply an atmosphere of crisis over not reaching a budget deal by January 1. This also fits the Post’s agenda of pushing for a deal this year that is likely to be on more favorable terms to the Republicans than a deal that is made after the tax cuts expire.
Dean Baker is co-director of the Center for Economy and Policy Research. He also writes a regular blog,Beat the Press, where this post originally appeared.
Photo by 401k 2012 under a Creative Commons Share-Alike license.