Taxes: A Republican Alternative?

Taxes: when all is said and done, it boils down to who pays and who benefits.

Look at the Bush tax cuts; they cut taxes primarily for the top income earners, and caused the largest budget deficits ever recorded--until the Great Recession, as it's now called.

What did we get for those tax cuts? Unbridled speculation, or increasing debt? Both, actually.

Because of Rubin-Clinton-Greenspan, the banks were unleashed. Because of the tax cuts to the wealthy, there were piles of loose capital available for speculation. Because of the previous 30 years of deregulation, union-busting, tax flattening and shredding safety nets, those without loose capital were so hard-pressed to maintain the "American Lifestyle" that they went into debt. And then some of the speculators had a bright idea: speculate with all that extra debt: bundle it, slice it and resell it (the "derivatives" that nearly brought down the western world--they may still).

Obama's budget-tax policy trims around the edges: allowing the Bush tax cuts to lapse for those with high incomes, cutting middle class taxes just a bit and adding some modest progressive credits.

What does a "conservative" Republican have to offer? Congressman Ryan of Wisconsin has offered a Republican alternative tax plan. It has been called radical, and it is; it's definitely not conservative. It would start with making the Bush tax cuts permanent, but would go much further. It would abolish the estate tax and the corporate income tax, privatize Medicare and Medicaid (replacing them with vouchers), reduce and partially privatize Social Security, eliminate taxes on capital gains and dividends, and eliminate the income exclusion of employer-provided health insurance--to force health insurance into the "free" market.

To make up (some) of the difference, Congressman Ryan would add an 8.5% "Business Consumption" tax: a value-added, or sales tax.

The effects would be radical. "It’s difficult to design a tax plan that will lose $2 trillion over a decade even while requiring 90% of taxpayers to pay more," said the analysts of Citizens for Tax Justice about this plan. It does this by shifting much taxation to the sales tax, while eliminating the Earned Income Tax Credit and other poverty reduction credits. Since poor people spend more than their income on consumption, they will be taxed more than 8.5% of their income. In fact, only those earning more than $127,384 would pay less in taxes. Those earning more than $480,700 (the top 1%) would save 15% on their taxes, or $211,314. Those earning $20,053-33,117 would pay $2,032 more (7.7%) and the lowest income group would pay $1,605 more (12.3%).

Just what we need! It's the selfish class raising its head again, and the effects could be even more disastrous than they were between 2000 and 2008: debt, excess capital, declining consumption, rising inequality and speculation.

Give the Republicans power and they'll make the Senators of the Late Roman Empire look like pikers!