Dems Haven't Learned Lessons of Tax Cuts

October 30, 2007

 

Congressman Charlie Rangel (D-NY) is at it again. The powerful chairman of the House Ways and Means Committee is attempting to wrangle more of your tax dollars to pay for the ever-increasing size and scope of government. Rangel and his fellow robbin' hoods have developed a scheme designed to appeal to those most susceptible to class envy – those at the lower rung of the economic ladder. Rangel and company plan to redistribute wealth like no other tax plan in modern history. If enacted, it would be the largest tax increase ever in America.

 

The scheme is simple. It would impose a 4 percent “replacement tax,” whatever the heck that means, on Americans making over $150,000 per year and couples making over $200,000. The tax goes to 4.6 percent over $500,000. That would mean the top tax rate would rise from 35 percent to 44 percent.

 

The plan draws its appeal from class warfare. Most people don't make that kind of money and it's quite easy for them to get whipped up in the mindset that the rich don't deserve all that money and we should take it from them. Besides, they can afford it. It's not going to hurt them at all.

 

That's not the point.

 

The point is we haven't learned the lessons of tax history. The truth is, when JFK's tax reductions were passed posthumously, they created a windfall for the government. Back then, the Kennedy tax cuts reduced the top rate from 94 percent to 70 percent. Can you imagine? Anything you made over $300,000 back then you had to cough up 94 percent to the government. Charlie Rangel can imagine it. In fact, he longs for those days.

 

Fortunately, Ronald Reagan would lower those rates even more. The rates crept back up during the Father Bush and Clinton administrations then George W. pushed his across-the-board tax cuts through Congress in 2001 and 2003. Now, just as our economy is getting out of the woods and with uncertainty about inflation and oil prices, the Democrats in Congress want to wreck the economy with a tax increase. They would also further damage an already fragile housing market by phasing out mortgage deductions the more income you have.

 

Now, Charlie Rangel and friends see it a different way. They want to tax the rich more and, at the same time, expand the Earned Income Tax Credit. This is better labeled the Unearned Income Tax Credit since many people getting a so-called refund never pay any taxes. They actually get a tax refund from the government but never pay any taxes to warrant the refund. Nice work if you can get it. So Rangel wants to increase the number of people getting something for nothing while robbing the rich to do it.

 

There are some IRS statistics that stick in my head that really illustrate who's paying what. The top 5 percent of wage earners pay 56 percent of the income tax. Conversely, the bottom 50 percent of wage earners pay less than 4 percent of the income tax. You may want to read those stats again just to get their full impact. What this means is the rich are already paying far more than their so-called “fair share.”

 

It's the rich who actually create the jobs. Have you ever worked for somebody making $20,000 a year? Neither have I. Instead of begrudging the rich, we should all be striving to be in their number. But Rangel knows us too well. As the old saying goes, when you rob Peter to pay Paul, you'll never get an argument from Paul.