Friday, 9 December 2005

Tax Policy & Partisanship

First, hats off to the lone three Republicans in the House, Sherwood Boehlert (NY-23), Fred Upton (MI-6), and Jim Leach (IA-1) for bucking their party and voting against yesterday's Republican tax package HR 4297 which unfortunately passed by a 234-197 margin. The Senate version has yet to be voted on, but may face some problems with some Republican moderates already expressing doubt or opposition. This bill basically extends the Republican practice of giving marginally higher tax cuts to the wealthiest Americans in the name of stimulating investment. In fact it keeps the tax code more complicated for those who have modest capital gains for little if any advantage, and irresponsibly starves our treasury in a time which should call for national sacrifice, especially on the part of those who can best afford it.

Treasury Secretary John Snow gives the usual talking points in favor of stimulating the economy (by giving tax breaks to the wealthy) and is quoted in the Washington Post story:
"Lower tax rates on savings and investment have benefited millions of Americans of all income levels either directly -- through lower taxes on investment returns -- or indirectly through new and better jobs and greater economic security for families," Snow said.
which concludes:
The Tax Policy Center, run jointly by the Brookings Institution and the Urban Institute, has concluded that the bottom 80 percent of households would receive 15.8 percent of the House tax cuts' benefit. The top 20 percent would receive 84.2 percent of the benefit. Households earning more than $1 million a year would get 40 percent of the tax cuts, or an average reduction of nearly $51,000.

Numbers such as these have given moderate Republicans pause in the Senate. Sen. Olympia J. Snowe (R-Maine) last month single-handedly blocked the Senate Finance Committee from even considering an extension of the dividend and capital gains cuts. Instead, the committee drafted and the Senate approved a five-year, $60 billion tax cut largely aimed at restoring the hurricane-ravaged Gulf Coast and slowing the expansion of the alternative minimum tax.
It is striking to me how unified the Republicans in the House typically are when it comes to tax policy, hence I think it's worth calling out the three exceptions here. Leach is a representative whose integrity and independence I've noted before. Certainly as a percentage, though, the 54 member Republican caucus of the Senate shows considerably more independence from orthodoxy than the 231 member Republican caucus of the House. This is yet another reason that I feel the switch to a Democratically controlled House is more important than a switch in the Senate. The switch in the Senate is going to happen anyway in 2008 if not next year, the switch in the House really needs to happen in 2006.

1 comment:

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