The GOP Position on Taxes Gets Worse

Please focus on the boundless cynicism here.

Through the artificial debt-ceiling "crisis," through the Moonie-like spectacle in Iowa of candidates (including Mr. Sanity, Jon Huntsman) raising hands to promise never to accept any tax increase, the Republican field has been absolutist and inflexible about not letting any revenue increase, in any form, be part of dealing with debts and deficits.


Except, it now turns out, when the taxes are those that (a) weigh most heavily on the people who are already struggling, and (b) would have the most obvious "job-killing" effect if they went up.

When it comes to those taxes -- hell, we're easy! According to the AP and Business Insider, Rep. Jeb Hensarling of Texas (at right), the Republican co-chair of the all-powerful budget Super Committee, is dead set against letting the Bush-era tax cuts expire for anyone, including millionaires. But he sees no problem in letting the current cut in payroll-tax rates -- you know, the main tax burden for most Americans -- run out.  As the AP story puts it:

>>Many of the same Republicans who fought hammer-and-tong to keep the George W. Bush-era income tax cuts from expiring on schedule are now saying a different "temporary" tax cut should end as planned. By their own definition, that amounts to a tax increase.

The tax break extension they oppose is sought by President Barack Obama. Unlike proposed changes in the income tax, this policy helps the 46 percent of all Americans who owe no federal income taxes but who pay a "payroll tax" on practically every dime they earn...

"It's always a net positive to let taxpayers keep more of what they earn," says Rep. Jeb Hensarling, "but not all tax relief is created equal for the purposes of helping to get the economy moving again."<<

"Not created equal" is exactly right. In fact, payroll-tax cuts are the sort of tax break most likely to "get the economy moving again" during a recession. (Because they put money in the hands of people most likely to spend it and therefore boost other businesses. And on balance they lower the cost of adding new workers.) Income-tax breaks at the top end are least likely to create new demand or jobs. (Because they go to people who have a lower "marginal propensity to spend" and are more likely to park the money in the bank.)

I had thought that Republican absolutism about taxes, while harmful to the country and out of sync with even the party's own Reaganesque past, at least had the zealot's virtue of consistency. Now we see that it can be set aside when it applies to poorer people, and when setting it aside would put maximum drag on the economy as a whole. So this means that its real guiding principle is... ??? You tell me.

The fine print. Yes, I know that there is a critique of these tax cuts from the left: That by reducing the self-funding nature of Social Security, they could in the long run undermine its legitimacy and support. I am confident that this is not the reason for Rep. Hensarling's position.

And, yes, there is a further level to the critique from the right. The problem with this tax cut, according to Republican majority leader Eric Cantor, is precisely that it's temporary, so businesses can't base plans on it. Eg, according the AP quote from Cantor's spokesman, he "has never believed that this type of temporary tax relief is the best way to grow the economy."

But as an anti-recession measure, the temporary nature of the cut is its advantage. It gets money into people's hands when they need it, without building in another permanent revenue hole -- like the tax cuts Cantor fights so hard to preserve.