Is the GOP Set to Self-Destruct Over Payroll Tax?

As a number of commentators have noted, the GOP's no tax increase mantra apparently doesn't apply to working class folks - only the wealthy seem worthy of the GOP's anti-tax vigilance. Frankly, it's part and parcel with the GOP's increasingly anti-middle class agenda which wants all burdens shifted from those most able to pay to those who are struggling to keep a roof over their families and food on the table. Oh, and let's not struggling to keep health care coverage. Despite the GOP's anti-middle class agenda, cretins in the Christianist/Tea Party base of the party remain too stupid to figure out that the party is in reality their economic enemy. All they see is gratuitous statements about "family values" and a consistent anti-minority platform. A piece in The Daily Beast looks at what could hopefully cause the GOP to self-destruct if its idiot supporters, a/k/a Fox News viewers, finally wake up. Here are some highlights:

Every blessed once in a great while, all artifice is stripped away, rhetoric collapses under the weight of its own absurdity, and we get to see things as they really are. Such will be the case later this week when the Senate tries to vote on extending the payroll-tax holiday. The Republicans will oppose it—that is to say, the Republicans will support a tax increase on working Americans. And why? Because the Democrats want to pay for it with a small surtax on the very top earners. So the choice couldn’t be more direct: which is more important, giving the middle class a tax cut or protecting those who make more than $1 million a year? Republicans are making it clear.

The facts: The Social Security payroll tax comes to 12.4 percent of an employee’s salary—employers and employees each pay 6.2 percent. The money goes into the Social Security Trust Fund and finances benefits. At the end of last year, the Obama administration, in exchange for temporarily extending the Bush tax rates on all income levels, got Congress to agree to a one-year 2 percent payroll-tax holiday for employees, down to 4.2 percent. For a $50,000 earner, that meant paying $1,000 a year less in payroll taxes. It was agreed in that law that the holiday would cost the Social Security Trust Fund nothing—the depleted revenue would be replaced out of the general treasury. So the holiday adds to the general deficit but does not affect the trust fund.

The cut proved popular, or is presumed to be popular, so now, as many people predicted last year, Congress wants to extend it. Republicans of course say (as they say of everything) that it hasn’t done any good. But economists attest to its stimulative value.

What the Senate Democrats want to do now is this. They want to increase the employee’s reduction from 2 percent to 3.1 percent (that is, to cut it in half from the normal 6.2 percent rate). And they now want, for the first time, to extend the holiday to employers as well. This is important, and it probably won’t be well explained in very many places. But the Democrats would have employers pay 3.1 percent (rather than the 6.2 percent they now pay) on the first $5 million of their payroll. Also, if employers add to their payrolls, they would pay no payroll tax on new hires. So the new bill is specifically aimed at helping the job creators. The total cost is $255 billion.

The Democrats want to pay for it with a 3.5 percent surtax on dollars earned over $1 million per year. In other words, if someone earns $1.3 million a year, she will pay the extra 3.5 percent only on the last $300,000 in earnings; that is, an extra $10,500 a year (bear in mind that this person takes home, after taxes, around $30,000 every two weeks). So it certainly raises the taxes of the very wealthiest. But it gives more money back to middle-class people, and it stimulates the economy, perhaps to the tune of 50,000 jobs a month, maybe even more.

[E]xtending the holiday will help the economy at a moment when Republicans are now very clearly trying to hurt the economy. This is not even a controversial thing to say anymore, it’s so obvious. And . . . now there’s a price tag on it; it has to be paid for in some way, and that way is a surtax on super-high incomes. And this above all is what the GOP cannot accept.

So the bill will cut taxes on middle-income people and on small employers. And it won’t get a single Republican vote. Maybe one—Scott Brown might have to back it. But they will block this.

It just never ends with these people. . . . . How a party can so nakedly represent only the top 1 percent while at the same time try to stop anything that will help the economy, and survive while doing it, is just beyond me. Obama should give an Oval Office speech Wednesday night and say: “If you are an employee and make less than $1 million, or if you are an employer of any size, I am trying to give you a tax cut.

I totally concur with the writer's sentiments. And this travesty is yet another reason I have fled the GOP brand. I hope many more will do likewise.