What taxes do Republicans like?

I’ll save you from having to read until the end: whatever you can say about them, Republicans like regressive taxes and dislike progressive taxes. Or perhaps I should say: all the taxes that Republicans are in favor of draw their revenue disproportionately from the poor (regressive taxes) while all the taxes that they want to abolish draw their revenue disproportionately from the rich (progressive taxes). Either way, if you make something north of $200,000 every year, Republicans (who represent most conservatives now) want to lower your taxes. If you make less than that, then Republicans want your taxes to stay the same or increase. Explained below.

The Taxes Republicans Like

Contrary to their rhetoric, there are some taxes that Republicans do like to use. After all, conservatives don’t want to abolish government, and government needs some revenues. In general, they are in favor of using payroll, sales, property and excise taxes to fund their limited government. We know conservatives like these taxes because conservatives push to raise payroll taxes while fighting to abolish income taxes and to implement sales and excise taxes on the state level. That’s right, for all their wailing and moaning about income taxes, national conservatives are currently pushing to raise the national payroll tax. So, who pays conservatives’ taxes?

Overwhelmingly, the poor pay Republicans’ favored taxes. For example, Texas is a state with no income tax. For revenue, it relies on higher than average sales, property and excise taxes. The result?

Texas tax laws actually redistribute income away from ordinary families and towards the richest Texans. A November 2009 report by the Institute on Taxation and Economic Policy found that the poorest twenty percent of Texans paid, on average, 12.2 percent of their income in taxes, while the wealthiest one percent of taxpayers paid an average of only 3 percent of their income in state and local taxes. (emphasis mine)

Talk about redistribution of wealth! If  Texas is the definition of conservative governance, then this is the despicable truth that underlies all those conservatives’ pledges to “lower taxes” (*wink, wink*). When states get rid of all the taxes that “punish success,” all you have left are the taxes that punish you for being poor or middle class. “No new taxes” usually just translates into “no new income taxes, but I’ll raise regressive excise taxes all I want!”

Let’s look at another example. Payroll tax is essentially the same thing as income tax in principle because both are levied as a percentage of income earned. As we all know, Republican HATE income taxes. However, Republicans oppose similar cuts in payroll taxes. This would seem logically inconsistent with their anti-income taxes stance until you consider this chart (reposted from my last article):

Payroll taxes as a percentage of income at different income levels.

Republicans only want to lower those income-based taxes that affect the rich. Ahh, that clears up the logical inconsistency. Conservatives must believe that taxes are only bad for the economy when they are levied on the rich. Taxes on the poor and middle class, on the other hand, must be good for the economy.

The Taxes Republicans Dislike

Republicans and conservatives dislike some taxes, and it is instructive to compare the taxes they like to the taxes they dislike. We can clearly see that Republicans actually like to implement and defend regressive taxes on the poor. The taxes that draw conservatives’ ire most are income, inheritance, and capital gains tax. That’s a varied  group of taxes, but the thing they all have in common is that they affect the rich much more than the poor.

I will never know how, but decades ago someone convinced Congress that income from capital gains on stocks and bonds should be taxed less than the income you get from working. Today, as Warren Buffett explains, this tax loophole is mostly responsible for rich people paying much less in taxes than you or me. And of course, there are some good reasons capital gains should be taxed at higher rates, like all other income. But there is no shortage of Republicans arguing that we should abolish taxes on capital gains! Well, which Americans have the most capital gains income?

Source: Citizens for Tax Justice

Getting rid of capital gains  taxes, like many Republicans want to do, would overwhelmingly help the richest 1 percent of Americans, who earn over two-third of the capital gains income in America. It would make it so that Warren Buffett and people like him would pay almost nothing in tax. Whatever else  it would do, getting rid of the capital gains tax would be a HUGE giveaway to the rich and would do almost nothing for most Americans.

Inheritance (estate) taxes are levied against the tip top of American society. The richest 0.6 percent of estates in America were the only ones that paid into inheritance taxes  in 2009. Unless your parents were multi-millionaires when they died, then you didn’t have to pay taxes on their estate in 2009. One of Republicans’ greatest triumphs is convincing Americans that they could be affected by this tax, when in fact almost no one is! The costs of this tax are only born by dead  millionaires, while the living are set to reap $784 billion over the next ten years. I don’t know of any credible studies that show that this tax hurts America economically (if someone does, tell me). True to form, Republicans are out to protect the richest Americans by repealing the estate tax.

Whatever else their policies are meant to do, Republicans’ tax policies will do one thing: shift the burden of taxes from the rich onto the poor and middle class. Republicans are pledged to eliminate the taxes on the richest one percent of Americans. That’s what they mean when they say they will lower taxes. If  you are not so rich, Republicans are either ambivalent about your taxes, or they want them to increase.

(This is of course not imply that all conservatives/Republicans believe that our tax policy should be distorted in this way. However, these are the predominant views of elected and prominent Republicans in this country)

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    • Kay
    • October 5th, 2011

    That was the best article. Thanks so much for writing it.

    • Matches
    • January 24th, 2012

    I think this article was right on the money all you conservatives who are not rich better wake up. Just think if republicanst get the presidency and the senate and keep the house. They would end Medicare, privitise social security, cut the top income tax on the rich to 25% then end capital gains that also benefits the rich, drill for oil all over the country, impede voting rights of young poor and old also minorities and kill unions and yes lower the minimum wage. Add to that theyalso will raise taxes on the poor rolland back regulatiions that protect our air and water if you are a consertive this is what you are voting for

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