When I read this morning that Rep. Eric Cantor was looking favorably on the "tax reform" being proposed by Pres. Obama I got a sick feeling in my stomach. Nobody is being specific on what loopholes to close and what the reform will look like. We won't know until they emerge from the smoke filled rooms with a done deal, and then it will be too late.
But we know what Republicans want:
- Revenue neutrality - Any increases in tax revenue must be offset by reducing someone else's tax burden.
- Eliminate the EITC - Republicans hate the Earned Income Tax Credit because it reduces the tax burden on the working poor and, hence, is unfair to the rich.
- Cut Capital Gains Taxes - Unearned income from capital gains and dividends is taxes at a much lower rate than earned income from working. It's a gift to the idle rich from the working class. Republicans want to abolish capital gains and dividend taxes altogether.
- Cut Corporate Taxes - This will certainly be in the mix because it is the only thing Tim Geithner cares about.
On the individual level it will be a double boon for the rich. Corporate tax cuts will increase dividend payouts and stock prices, ergo capital gains, on which the rich will be paying nothing in taxes. For the working poor it will be a cruel stab in the back. Increasing taxes on people barely getting by means starvation, homelessness, and infant mortality.
Republicans Propose More Tax Cuts for the Rich
Orrin Hatch, The Poor Need to Do More
Over 100,000 Rich Folk Pay Zero Taxes