Obama calls for tax fairness

On Monday, July 9, President Obama urged Congress to extend the Bush tax cuts for those who make under $250,000 for one year and let tax cuts expire for the top 2%.

We don’t need more top-down economics. We tried that theory . . . we can’t afford to go back to it,” Obama said. “That’s why I believe it’s time for the tax cuts for the wealthiest Americans, including myself, to expire.

Republicans who control the House are unlikely to accommodate his request, but, with this announcement, Obama injected the issue of tax fairness into the campaign—an issue that may be a difficult one for Republicans. To be clear, President Obama is urging a two-step process. He is asking lawmakers to act now to extend most of the tax cuts (which expire at the end of 2012) and to have a second debate, after the November election, on tax cuts for the wealthiest.

Romney’s campaign spokeswoman Andrea Saul called Obama’s request a massive tax increase on “families, job creators, and small businesses.” But something tells me the American public isn’t buying the Republican myth that the wealthy are “job creators.” After a decade of Bush tax cuts, it’s dawning on the electorate that a healthy middle class, rather than a wealthy, tax dodging elite, creates a healthy economy.

When the GOP exaggerates and lies, claiming that Obama’s tax plan is a massive tax increase on families and small businesses, they fail to mention that only the top 2% of families and small businesses make $250,000 after deductions. Under Obama’s plan, 98% of taxpayers will keep their current tax cut. The Obama administration needs to challenge Republican misinformation and hammer this home.

The administration needs to add a further clarification: It’s not that the 98% who make “up to $250,000” get to keep their tax cut, while “the top 2%” lose all of their tax cut. Under Obama’s proposal, the bush tax cuts will continue to apply to the first $250,000 earned by anyone—even millionaires and billionaires.

The American public has been brainwashed for decades by Grover Norquist and his Republican anti-tax zealots to believe that taxes are a drag on the economy. Democrats, cowed by that argument, have tried to get elected by moving to the right. But, if the Obama campaign is smart, it will use this moment in history to make a two-pronged argument that: a) taxes are good because they pay for lots of things you want and rely on, like education, health care, Social Security, Medicare, the FDA, the VA, etc.; and b) the tax system needs reform because it favors both the very wealthy who make their income from investments, and corporations that pay little or no taxes, and unfairly burdens the working and middle classes. While the Obama administration is at it, it should advocate for raising the cap on Social Security payroll taxes, which is ridiculously low, and end once and for all the lie that Social Security is unsustainable. It isn’t, if the wealthy pay their fair share.

Democratic leaders differ with Obama

When it comes to taxes, Democratic leaders in the House and Senate have a different figure in mind. They are calling for preserving tax rates for all households earning less than $1 million per year, a higher figure than Obama’s $250,000. This makes it easy on the campaign trail to charge Republicans with supporting tax breaks for millionaires. Also, the higher figure may make it easier for some well off Republican leaning Independents to vote Democratic.

It turns out, Mitt Romney, whose robotic, out-of-touch self is having a hard time relating to ordinary Americans, shelters large amounts of his income abroad to avoid paying taxes. In addition to calling for lower taxes for corporations and the wealthy, he has Cayman Island, Bermuda, and Swiss bank accounts that bring into high relief the unfair tax loopholes available to him as a member of the privileges elite. The Onion couldn’t have invented a better GOP candidate than Mitt Romney. Somehow, I just can’t imagine him appealing to millions of unemployed voters, and millions more trying to scrape by on dwindling salaries.

The Obama administration has had its own problems in communicating a coherent message to the electorate on a variety of issues.  For example, it failed miserably in informing the public about The Affordable Care Act. Obama’s bold call for tax relief for the middle class and a tax increase for the wealthy is a welcome change.