Tuesday, December 14, 2010

House Opposition to Obama Tax Cut Plan Is Insufficient

Here's my latest letter to my Congressional representatives, in the House and the Senate:

I am encouraged to hear that you reject the Republican proposal to reduce the estate tax and increase its threshold to $5 million. That's great, do it, but it will only save, if I recall correctly, about $68 billion over two years.

Still, it is a grave error to pass a bill that will include tax cuts for those "earning" more than $250K. That is where the greater cost is, $700 billion over ten years, and the greater injustice. The estate tax reduction is morally corrupt, but so are income, capital gains, and dividend-earnings tax cuts for rich people.

Please stand firm against a bill that includes cuts for those over $250K. They won’t help the economy now, and they will do a lot of damage in the future. While you are at it, why not bump capital gain tax back up to 20%, or so? And treat dividend payments as ordinary income again. That will do a bit to reduce income inequality. And do not accept a cut to the payroll tax. It won’t do much to grow the economy, but it will undermine Social Security.

BTW, Robert Reich was quoted the other day as saying: “If we put a 2% surcharge on millionaires and 5% on billionaires, instead of cutting their taxes, the long-term deficit would disappear.” How about it?

Courage! Unemployment benefits, and all of the positive provisions of the President’s agreement are worthwhile, important, and urgent. But, Republicans need to be shamed into doing the right thing. Nothing else will get them there. And fixing one provision of the President’s tax plan, the estate tax, seems to be an act of political triangulation. You are doing something, so you can tell progressives you did something, but it is not enough. You need to lead, and take the risks that come with leadership. Or, get out of the way, and let someone else lead.

Here's my sources:

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