Jan 7, 2013
On New Year’s, after almost two months of political soap opera, the Democrats and Republicans announced that they had reached an agreement to reduce the budget deficit. To almost everyone’s relief, the politicians announced that the taxes for the vast majority of people would not go up. They also promised that only the very wealthiest would pay more taxes – which was long overdue.
On both counts, the promises are false, completely false.
Working people will pay higher taxes this year. Every person who works for a living will pay 2% more in Social Security payroll taxes on all their wages under $113,700. Because this payroll tax is taken from the first dollar earned, this tax increase is really a two per cent pay cut. That’s $1,000 a year for a family earning $50,000.
As far as the much hyped tax increase for the wealthy, not only is it really tiny, it only has to be paid after the first half a million dollars. This tax increase is especially meaningless considering that many of the very wealthy pay no taxes at all. According to the most recent figures from the IRS, in 2009 six families who reported over 200 million dollars in income paid no taxes. And it is all perfectly legal, given all the tax loop holes for the wealthy. So, all the propaganda about how the wealthy are going to pay more taxes is completely laughable.
Even more laughable is the fact that the Democrats and Republicans used the same new tax deal to slip in hundreds of billions of dollars worth of tax breaks for all the biggest companies, including banks, industrial companies, movie studios – even NASCAR. Job growth, as the politicians claim? Forget it. Companies just pocket the higher profits, then recycle them back to the wealthy through higher dividends, stock buybacks and interest payments.
Whatever small increase in taxes that the government may take from the wealthy in the new tax bill, the government gives right back – with even more money tacked on – through all the extra tax breaks to the same big businesses that the wealthy own and control.
The tax code was already extremely regressive. Over the last three decades, payroll taxes paid by the working population have been raised so much, they now make up almost half of all the taxes taken in by the government. Meanwhile, the politicians have slashed the proportion of taxes paid by corporations by two-thirds, while they have slashed in half the top tax rate paid by the wealthy.
The new tax law will make the tax code even more regressive. It will make permanent a whole series of tax cuts for the wealthy that up until now had been temporary, including tax cuts on big inheritances, dividends, and the profits from buying and selling property, stock and businesses.
Bad enough. But this is just the beginning of the attacks that we will face in the next year – and we better know it. For the politicians have made it clear that the next big attack will be against Social Security, Medicare and Medicaid. The Democrats and Republicans have scheduled a new “fiscal cliff” deadline in two months. Once again, they will threaten that if they don’t get what they want, the government will begin to run out of money – triggering new cuts in government programs. Of course, the entire crisis is fake, just like the one on January 1 was false – dreamed up to justify reductions in Social Security and Medicare benefits we already paid for.
The elections are over – and Republicans and Democrats are working together to attack the working population. The Republicans are the stalking horse, telling outrageous lies, while the Democrats pretend to be our friends so they can slip in the knife.
We’re in the middle of a fight. But up until now, only one side, the wealthy and the politicians, are fighting, while the working population is not. So, we better goddamned get going.