What amounts to the greatest sham in tax history, is being hatched by Toomey, an arch conservative, government hating fascist. That's right, fascist. Read the book, The "Anatomy of Fascism" before you call me a "namecaller".
At first, some progressive reporters even fawned over Toomey, because it appeared he was trying to break the Norquist pledge to never, and I mean never, raise taxes. Cutting taxes insanely forever is alright, but never raise a tax, no tax, ever....ever...ever...
So here comes Toomey's plan. What it appears to do is close lots of loopholes, resulting in an increase in taxes for the poor and middle class, and cuts the tax rates for the richest of the rich by about 10%!
That is right, he cuts the rich tax rate below the Bush tax cut rate. I will say that again, he gives a tax cut to the super rich, raises taxes on the middle class and poor to make up the difference.
What gall! With the 99% movement almost reaching the revolutionary stage, this aristocratic fascist has the temerity to actually slyly develop a plan that takes deductions for mortgages away, messes with the standard deduction, and slashes taxes for the richest of the rich.
By the way, the mortgage interest deduction does need to be reduced or eliminated, but another source of revenue must take its place! Toomey, as usual, has a tax cut for the rich take its place. There is no way the revenue can be replaced.
If you read about his Tax "idea"?, you will think for a moment that he has developed a plan to close loopholes, eliminating the need to stop the Bush tax cuts, and actually reduces the deficit.
Not so. Even if you entertain this madness, and I can't believe I am even doing so while writing this blog, the horrible fact is that the middle class has been dramatically reduced in size and wealth. Toomey's plan for example imagines a large revenue increase from the mortgage deduction elimination. What he misses is the middle class has lost homes at a record rate and now are renting. Young people, who have never entered the housing market, may never own a home, since renting foreclosed houses is now endemic all over the United States.
So, no mortgage interest deduction windfall if the tax deduction is removed. And, the amount of money in mortgages is about 1/2 of what is was, since millions of homeowners new have homes that are worth way less than they once were. When a family buys a home, that once was worth $400,000, it is now worth $200,000; you do the math on the mortgage interest loss.
Of course, Toomey and his fascist collaberators (sounds pretty harsh huh?), are so out of touch with mainstream America they haven't even considered this. Conservatives frequent only the rich and super rich (who are of course actually the sponsors and owners of the teaparty), and don't have a clue about the rest of us.
I am reminded of George P. Bush's famous grocery store incident, when he got in line to buy something, to mingle with the "common folk", and didn't know how to get by the cash register. It had been so long since he had to do a "commoner" task like buying a stick of gum, that he did not know how! Things like this cost the aristocrat the election.
Same thing with Toomey and his con fascists. They are so out of touch they don't or won't relate to ordinary Americans; even upper middle class Americans.
Ok, here is a primer about why the marginal tax rates where "high" in the post war world and why a cut could be done around 1980 by President Reagan.
World War II was the most destructive and expensive war EVER. In 1945 the federal deficit was almost 100% of GDP. That's right, we owed to ourselves almost as much as we totally produced.
This is even more impressive, considering America's industrial capacity was at full throttle in 1945.
I know, I know, the war bonds; they paid for the war. No they did not, they couldn't. In 2011 dollars the deficit was almost twice what it is today or more.
So, at the end of the war we had to start paying ourselves back.
Why ourselves? Well, in 1945 the rest of the world was destroyed. The United States did not, in fact could not, borrow from anyone to pay for the war. Europe was destroyed, most of Asia likewise. We basically put the war on the future generation (the baby boomers) to pay for over decades.
So, to start doing that effectively, taxes were raised, especially on the super rich. Democrats had long before, during the Great Depression, realized that the American economy has a propensity to concentrate wealth, much more than other economies. The middle class was growing fast to be sure, but to insure a core of payment for the war, marginal tax rates on the rich went up to almost 90%.
Dwight Eisenhower, no raging liberal to be sure, continued these tax rates, in fact increased them.
Meanwhile the middle class was booming, having a boatload of children, and paying more and more in taxes.
Around 1960, America was in a small recession, and the bill was being paid faster than anyone could have imagined. The economy was growing at a rate no one could have predicted, because the imbalance in income was flattening out, and the masses had way more to spend.
It did not hurt that Europe, Russia, and Asia were still recovering from the war. The United States quite simply was not only militarily the strongest nation on the planet; economically, even with the recession of 1959, America was supreme.
And, the middle class, the upper middle class, and the rich were prospering.
And then Europe and Asia (and the USSR) began to catch up.
Kennedy knew all this, and made his famous tax cut of 1960, modest by Bush standards, BECAUSE THE BILL FOR WWII WAS BEING PAID AT A FASTER RATE THAN PREDICTED.
Okey, now for the clincher. Most American did not realize that is what was going on, because almost all Americans wanted desperately to forget WWII.
If a politician had argued that we were paying for WWII with the relative high tax rates, they would have lost. Nobody talked about it. Nobody wanted to. Veterans, especially combat veterans even hid their citations (my wife's father did) from their families. They just wanted to live a nice middle class life, with a nice home, a white picket fence and no more war.
Vietnam changed all that. But that is another story.
Reagan and the Prop 13 tax cutting crusade were born out of the realization that the present tax rates (state and federal) were beginning to develop surpluses. Johnson's "War on Poverty" came about because revenues were sufficient to actually address the damage 250 years of slavery had done to African-Americans. This greatly overdue effort lasted exactly four years, and began to end with the election of Nixon in 1968.
So, next came the Reagan revolution, blaming liberals and the New Deal for the relative high tax rates, especially on his rich Hollywood friends, and establishing the cut tax religion.
Big government was the enemy, tax and spend liberals were holding back economic growth.
Of course the truth was Europe and Asia were finally able to globally compete for a share of manufacturing, cheap Japanese and European goods began to out compete more expensive American made ones. The manufacturing hegemony of America began a slow, steady decline, as foreign made goods flooded the hungry American consumer market.
And American went nuts. Rather than develop sensible trade policies, and a national economic policy to compete in what was fast becoming a global economy, we descended into an endless economic debate over lower taxes, free enterprise, state competition; et al. Meanwhile we also totally ignored the energy crisis, assuming the con by petroleum aristocrats that oil was going to last forever with no climate change results. Again, this is another story.
The result was, as we are seeing today, the lack of a competitive advantage in the global economy.
So, WWII and paying for it was the culprit for high taxes, not the New Deal. We paid down the debt faster than predicted, and then cut taxes way more than we needed to, which has created (ironically) a competitive disadvantage in the global economy.
Now, in over-reacting to the recession, the foolish tax cut caused Great Recession, we stand to make things much worse.
It is the revenue. We need to pay for the Bush tax cuts and the Bush terrorist wars with more revenue. Luckily, even though the middle class has been decimated, the rich are awash in revenue, and higher marginal tax rates, plus reducing tax cuts to what is left of the middle class (they were not enough to make much difference anyway to individual families) will reduce the deficit and put us in a more competitive position in the global economy.
And what are Toomey and the cons doing? Why, they are cutting taxes even more, creating a even greater inequality between the rich and rest of us, and dooming our competitiveness in the world economy. Without a middle class to consume world economy goods and services, middle classes are growing rapidly in the "third world". In a sense, or tax cut mania is producing a third world country here, and the middle class consumer engine, that drove our prosperity, is moving overseas. The market is moving away from the United States. For example, when was the last time you though about the consumers in Brazil and how many American products they buy? You haven't of course, because we are all trained that we are the ONES, the only global market that counts. Talk to a current global economy CEO, and they will tell you the American market is no longer the only one, it is fast fading.
Leaving the 99 percent of us holding the bag.
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