Extending Tax Cuts for the Rich Is Only the Beginning for the Tea Party

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While attending the second annual 9/12 Tea Party rally in Washington, one could not escape the focus by speakers and participants on tax policy. If there was one overarching theme of the rally, it was that the Obama Administration has sought to dramatically increase the size of the federal government by proposing and enacting dramatic increases in taxes and government spending. (For a reality check, remember that President Obama cut taxes for 98 percent of working Americans last year, proposes to leave the Bush tax cuts in place for 98 percent of taxpayers this year, and enacted a health care reform that reduces the deficit.)

What Tea Party rally attendees support is awfully murky, but what they oppose is clearer. They are against the healthcare reform, the bailouts, the recovery act that created so many jobs, cap and trade, and allowing any of the Bush tax cuts to expire. This opposition was taken to an extreme by some of the individual Tea Party attendees whose signs argued that allowing the tax cuts to expire is equivalent to sexually abusing children or that Obama’s expansion of government made him comparable to Hitler, the Soviet Union, or just a plain old socialist.

Deftly mirroring the anger of the crowd, Rep. Mike Pence (R - IN) elicited enormous cheers saying that “No American should face a tax increase in January, not one. We will not compromise our economy to accommodate the class warfare rhetoric of the American left or of this Administration.” In reality, it's the possibility of a Republican filibuster of President Obama's tax plan that might lead to all Americans having more income taxes withheld from their paychecks starting in January.

The disconnect from reality doesn't end there. The anti-tax rhetoric was not followed by substantive and fundamental calls for equally large decreases in government spending. There were no signs or speakers calling for the enormous cuts to Medicare, Social Security, or Medicaid that would be required to make lower taxes possible. There was certainly no articulation of what cuts would be needed to make up for the $700 billion in lost revenue if the Bush tax cuts for the wealthiest Americans were extended.

The sponsors and speakers of the rally also promoted extremely regressive and radical changes to the tax system. Freedom Works, the chief sponsor of the event, advocates replacing the current system with a single flat rate income tax, which was promoted by its representatives who spoke at the rally. In addition, several speakers also alluded to the need for a single national sales tax, which is also known as the "Fair Tax," to "fix" our tax system. Echoing both sentiments without specifying one over the other, the Tea Party-backed “Contract From America” states that the current tax system should be replaced with a single rate tax set forth in a law that is not longer than the Constitution.

As Citizens for Tax Justice demonstrated over and over and over again in the 1990’s, the single rate flat income tax proposed by Dick Armey (the leader of Freedom Works) would dramatically raise taxes on all but the richest Americans while also massively increasing deficits unless the single rate was much higher than proposed.

Similarly, the Institute on Taxation and Economic Policy showed in its 2004 analysis of the "Fair Tax" that it would actually increase taxes by an average of $3,200, or roughly 50%, for the average individual in the bottom 80% of income earners. In addition, in order to raise the amount of revenue currently being spent, the rate would have to be between 45% and 53%, rather than the 23% that flat tax supporters advocate.

While calls for the flat or "fair" tax incited some excitement, the crowd seemed more enthusiastic about basic calls for lower taxes or a simpler tax system rather than the radical tax changes advocated by the rally’s sponsors.

In both opposing President Obama’s policies and advocating for a regressive tax overhaul, the Tea Party leaders are attempting to get away with promising lower taxes and better government without facing the real consequences of specific policies.

Thank you for visiting Tax Justice Blog. CTJ and ITEP staff will soon retire this domain. But ITEP staff are still blogging! You can find the same level of insight and analysis and select Tax Justice Blog archives at our new blog, http://www.justtaxesblog.org/

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