There is debate going on right now over an economic stimulus plan to revitalize our sputtering economy. It makes sense – but they really ought to consider putting some money in the hands of people who will spend it. That would be the WalMart workers, the UPS drivers, the guy who fixes your plumbing and the lady who watches your kids so your spouse can work. Most of these people are double-taxed, once for income, and again for the “payroll tax”, a weird non-name that really means “wage penalty”.
So Senator Charles Schumer, an on-again off-again DLC liberal, has taken a stand for a tax cut for ordinary working people.
If we did the rebate based on the payroll tax, it would hit a lot more people at a lower end of the spectrum. And so to just say income taxes are the only taxes we’re considering that people pay is unfair…”
It’s a good debate to have, and it would be good to raise awareness about who pays taxes and gets no credit – working stiffs. Too bad it has to be Democrats doing our bidding – it’s like trying to stand up atop a tub of Jello, but what are our choices?
Here’s my favorite comment, from Treasury Secretary Henry Paulson, who said Bush “is focused on broad-based tax relief for those who are paying taxes.” You have to decode a bit – you see, the payroll tax is not considered a tax. He’s saying that any tax rebate should go only to those who pay regular income taxes, and not for payroll taxpayers. That’s how they did it in 2001 and 2003. It means 22 million families on the low end won’t see tax relief.
I’m betting here that Paulson is born into money and doesn’t know that his housekeepers and gardeners probably pay tax at a higher rate than he does. Just presuming a bit here, but I’ll bet he thinks the current zero starting tax rate on capital gains and dividends is fair, and that a 39% tax on middle class wage earners is too.
Like Rodney Dangerfield, working folks just can’t get no respect in DC. But Schumer is speaking out. Let’s hope he stands his ground, and that a few more Democrats join with him.
Piece of Mindful 
EITC?
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EITC was originally conceived as a refund of the payroll tax masquerading as a welfare benefit. Now it exceeds payroll tax for many but you gotta have kids. If you don’t, you’re a taxpayer, just like everyone else. Assume you’re single and make $13,000 a year – what’s your EITC?
That covers low income people – now, take a working stiff making $40,000 a year, or more, paying two taxes that can add up to 39%, while the rich pay only one at 15% max, and tell me who is deserving of a tax cut? EITC? Get real.
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15%? Get real yourself. First, you are assuming that they have no other income than dividends. Second, you forget that the dividends that they get have already been taxed at a higher rate before they are distributed.
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The 15% maximum tax is applied against both dividends and capital gains. I do not assume they have no other income – only that these two categories are substantial.
Secondly, corporations carry a very low proportion of our national tax burden – around 7%. The idea of double-taxation in that area (they don’t seem to care about double taxation of workers – odd!) is a stretch. Corporate earnings are lightly taxed, and where the real burden falls is an open question.
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“Corporate earnings are lightly taxed, and where the real burden falls is an open question.”
Not really. It appears the corporate tax burden ultimately falls on the worker. Read: “A Review of the Evidence on the Incidence of the Corporate Income Tax” by William M. Gentry (Dept. of the Treasury, Office of Tax Analysis, Dec. 2007)
From the Abstract: “This paper reviews the evidence on the incidence of the corporate income tax, especially in light of recent empirical studies that focus on the relationship between the corporate income tax and wages. While further research is necessary to draw definitive conclusions, these studies suggest that labor may bear a substantial burden from the corporate income tax.”
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That’s absurd – there is an intellectual class that works in service of power whose job it is to justify policies that favor wealth and power. One of their jobs right now, as we speak, is to eliminate the corporate income tax, and taxes on revenue streams that originate there – namely, capital gains and dividends.
Thye question often arises – why aren’t there think tanks thinking away and books written that come to favor ordinary people over the wealthy. The answer is simple: Ordinary people aren’t rich.
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