Democrats Undone by Tax Hike ‘Victory’

Member Group : Jerry Shenk

Political truth is seldom self-evident, because when truth doesn’t fit preferred narratives, many political practitioners willfully obscure it.
For example, since the enactment of the 2001 income-tax rate reductions, liberals, Democrats and the media savaged them as "Bush’s tax cuts for the wealthiest 1 percent."

Suddenly, during the recent fiscal cliff debate, the truth emerged. Without apology, embarrassment or a sense of irony, the same people, including congressional Democrats who voted against the 2001 cuts and their extension, announced that, if most of the cuts weren’t renewed, the middle class would take a big hit.

Really? Middle class Americans benefitted from President George W. Bush’s tax cuts? Who knew?

The final deal made permanent the Bush-era rates for 99 percent of American taxpayers, a win for Republicans who had sought rate permanence since 2001.
The truth also suffers in the fiction that raising taxes on the top 1 percent will close deficits or pay down America’s national debt.

If the government were to confiscate the entire net worth of America’s top 1 percent, it couldn’t begin to cover President Barack Obama’s deficits – and confiscation would leave nothing to tax the next year. Even if taxpayer behaviors aren’t affected and the IRS can collect it all – a doubtful proposition – increasing rates for individuals making more than $400,000 ($450,000 for couples) is estimated to produce new revenues of $620 billion through 10 years – about $62 billion a year, or an amount roughly equal to two weeks of federal borrowing.

Washington Democrats merely punished successful higher earners to mollify their low-information base who, for years, have been fed class-warfare slogans like "tax cuts for the wealthiest 1 percent" and "paying their fair share."
In the industrialized world’s most progressive tax system, the top 10 percent of American earners pay more than 70 percent of federal income taxes. Nearly half of Americans pay no income taxes at all, while many collect "tax credits" from those who do. Fair?

Don’t confuse wealth and income. America’s income tax system doesn’t tax wealth, but, if it did, the left’s favorite capitalist, multi-billionaire Warren Buffett, would be outraged. Buffett receives special tax treatment because his personal income comes from investments rather than paychecks. He intends to leave his wealth, tax-free, to "charity."

The fiscal-cliff agreement solved nothing. Mark Steyn observed: "The Congressional Budget Office estimates that the latest triumphant deal includes $2 billion of cuts for fiscal year 2013. … That’s what the government … borrows every ten hours and 38 minutes. Spending two months negotiating ten hours of savings is like driving to a supermarket three states away to save a nickel on your grocery bill."

More truth: The fiscal-cliff deal actually added enough new spending annually to significantly exceed new revenue projections. The agreement will help increase the national debt from $16.4 trillion presently to $23.9 trillion in 2022.

However, irony is inseparable from politics. After achieving their goal of raising taxes on top earners in the fiscal-cliff deal, Washington Democrats have exhausted the class-warfare rhetorical devices they’ve relied on for years. Income-tax rates are settled – and Democrats allowed the Social Security tax holiday to expire.

Since most workers see their tax burden in terms of what remains in their pay after all tax agencies take their cuts, most have already noticed that Obama’s tax hike on the "1 percent" made their own paychecks shrink. The nonpartisan Tax Policy Center has estimated that 77 percent of taxpayers will pay higher taxes in 2013.

Liberals insist that raising taxes on the top 1 percent is a substitute for the real solution of spending restraint, but, mathematically, spending can’t be maintained even at current levels without significant tax hikes on the other 99 percent. That’s where the real money is. But, since Democrats have already raised taxes on nearly everyone, a case for additional increases is a political nonstarter.

After winning the tax increases on the top 1 percent of earners, jubilant Washington Democrats are just now beginning to realize that they’ve depleted their own and awarded leverage to Republicans in the upcoming debt-ceiling negotiations. If Washington elected officials are serious about solving America’s financial problems, there’s little left to discuss but genuine spending cuts.

"Ev’n victors are by victories undone." – John Dryden, 1631-1700.
http://www.ldnews.com/columns/ci_22498358/democrats-undone-by-their-washington-tax-hike-victory