Democrats Should Embrace a 'Flat' Tax Cut
Richard Long email@example.com
Now that Alan Greenspan has given his benediction to the Republican tax plan, it appears the pressure on the Democrats to concede to a tax cut may be overwhelming. It is particularly galling to hand the Republicans this important political victory for several reasons:
First, because the Republicans don't deserve an ideological victory. They have been calling for a tax cut for years, even when the economy was deep in debt, even when the economy was superheated and the Fed was raising interest rates to slow it down, even when it would mean reductions in important government programs for the needy. The Republicans don't want a tax cut to adjust the present economic situation; they want it because it is one of the boneheaded, knee-jerk things that Republicans do when they're not distracted by blood sports like impeaching a hated president. Giving them a tax cut now may give them cause to claim disingenuously that they were right all along.
Second, because it helps close their divided ranks. Republicans have taken in millions in soft money by promising their wealthy corporate supporters they would get it back in the form of a tax cut. When Republicans failed to deliver again and again, they blamed it on President Clinton even though they were in the majority for several terms and never handed Clinton a tax cut bill to sign or reject; they were too busy trying to drive him out of office. During the impeachment, a number of wealthy Republican supporters were openly critical. "You may throw red meat to the religious right to get their votes, but remember that you work for us, not them," they were publicly reminded. For the Republicans to finally deliver on the long-coveted tax cut would heal the rifts within the party and provide positive reinforcement for eight years of bad behavior, which now includes both the impeachment and a stolen presidency.
Third, because it hands UnPresident Bush a triumph in a split Congress without forcing him to compromise on any of his policies (which more than half the people voted against in the recent election).
But if the Democrats, pressured by the weight of Greenspan's advice and for the good of the economy, feel they must concede to a tax cut, there is one simple compromise solution that will put the bitter taste back in Republican mouths, where it belongs.
The Democrats should insist that the tax cut be a "flat" tax cut - that the amount of money to be "refunded" to the American people be divided equally - a few hundred dollars among all the taxpayers - rather than given in the form of a percentage of taxes paid.
This will mean that the wealthy do not gain the vast majority of the revenues, but it will have the same effect of invigorating the economy and taking the money out of the hands of Washington politicians.
So why would the Republicans object to such a plan? Because they never wanted to simply give the money "to the people," and everyone knows that. They want to give the tax cut to their wealthy supporters, and this plan would eliminate that result. And the only way the Republicans can argue against this plan is to dredge up the naked trickle-down theory that underlies their supply-side rhetoric.
In the 1920s, Republican Secretary of the Treasury Andrew Mellon never minced words - tax cuts were supposed to go to the rich, he said, so that the benefits would "trickle down" to everyone else. The American public didn't like that theory in the 1920s, and they won't like it in 2002 either.