by Jeremy Leaming
Forget the fact that the nation’s middle class is shrinking and more and more people are being shoved into poverty every year. Texas Gov. Rick Perry, who is seeking his party’s presidential nomination, has an answer – give more tax breaks to the nation’s wealthiest.
This morning Perry announced tax policy in South Carolina, which “would dramatically reduce taxes, particularly on wealthy Americans and corporations,” The Washington Post reports.
The newspaper says Perry’s plan would “reduce the corporate tax rate from 35 to 20 percent, eliminate taxes on dividends and many capital gains and essentially cap individual tax rates at 20 percent.”
Perry, who not long after entering the presidential race railed against “the injustice that nearly half of all Americans don’t even pay any income tax,” is pushing a flat tax rate that would not only provide the nation’s wealthiest with even more tax breaks, but continue to sap the middle class. (As Post columnist Ruth Marcus noted in August, the nonpartisan Tax Policy Center reported that about 46 percent of Americans would not pay an income tax in 2011 because they are not earning enough “to owe income taxes, based on the progressive structure of the tax code and provisions designed to help the working poor and lower-income seniors.”)
In a column for Politico, Robert L. Borosage says “every major candidate” seeking the Republican presidential nomination has “suggested that too many working poor aren’t paying income taxes, a position The Wall Street Journal describes as ‘GOP doctrine.’”
Borosage says the Republican candidates’ mantra that too many Americans aren’t paying taxes is “disingenuous.” He continues, “Working poor people do pay taxes. They pay a larger portion of their income in payroll taxes and sales taxes than the wealthy. And they pay property taxes indirectly in their rental costs. Poor workers pay about one-eighth of their incomes in taxes on average.”
Perry said lower-income Americans could opt of his flat tax rate and stay with the current tax code, though as TPM notes, the plan’s “political benefit” is obvious – “Allowing wealthier individuals to take a huge tax cut, while in theory not necessarily raising taxes on lower-income people who would not do as well under a flat tax, by at least giving them the legal option of paying a lower rate with more paperwork.”
Perry’s tax proposal, aimed at firing up a group of voters who crave a vastly limited government and even lower taxes, is hardly a serious one, especially for the few lawmakers serious about tackling debt and income inequality.
As a report issued earlier this year by the Economic Policy Institute noted, reducing the nation’s deficit will only be done by raising taxes on the nation’s highest-income earners, “particularly now, when income distribution is extraordinarily skewed to the top and federal revenue is at the lowest level relative to the economy since 1950.” The full EPI report by Andrew Fieldhouse and Isaac Shapiro is here.
Moreover, as numerous economists have noted, it is only the nation’s wealthiest who have seen their incomes rise in recent decades. As Columbia Business School Professor Joseph Stiglitz reported in May, middle income earners have “actually seen their incomes fall.”