Tax as a Weapon, Redux

Right after the election, a lot of liberal blogs were exploring the idea of federalism, having (collectively) realized that the Republican strategy for the election (and for rule, generally) was just an extension of the Southern Strategy, except instead of coded words for black folks, you had flat-out demonization of liberals and the places where liberals live.  Faced with rule by a political movement which whips up hatred for liberals as a strategy, despite liberal states and liberal urbanites being the primary engine of economic growth, and the main source of tax revenue for the federal government, liberals naturally felt like they should withdraw, and let the haters get on with their lives without liberal dollars, since our money is so clearly soiled by our Godless, homosexual-loving, abortion-wanting, gun-hating, tax-and-spend politics.

One of the suggestions was for the Blue States to shift all of their taxation directly into income taxes, which would be then deductible from federal income taxes.  And I thought to myself, "Self, you know that won't work, because while the New Republican Tribe controls the federal government, they can just change the rules."  See, that's a fundamental difference between the contemporary Democrats (and a lot of individual liberals) and the movement conservatives who comprise the New Republican Tribe.  For all of the claptrap movement conservatives spout about God-given rights and laws, they understand that the rules under which we live are entirely mutable.  Those rules are only as permanent as the country has the political will to make them.  That can be used for good (see, e.g., the Civil Rights Act), or for evil (see the last four years of legislation and administrative rulings). 

I regularly hear people talk about "basic human rights" as if they were something more than the rights secured by political agreement, and thinking how wrong they were.  That view, of course, makes me a heretic, no matter what party I support. 

Even today, I hear a lot of otherwise very bright people say "Roe will never be overturned", or "Bush wouldn't do that" (where that is something more than the thing they thought he wouldn't do in his last term.   It will, and he would, because even if Bush himself doesn't understand that the rules are exactly what we say they are, there are a lot of destructive people in the New Republican Tribe, with only their own parochial interests at heart, who do.

With that in mind, let's quickly review a few elements of the current tax structure:

1. Blue State federal income taxes (as a general matter) subsidize Red States; the New Republican Tribe has every incentive to defend and extend that subsidy.
2. The Alternative Minimum Tax is coming up fast on those of us in the states and cities with high wage income, high local and state taxes, and high property values.  It has much less effect in the less urban Red States.  The New Republican Tribe has no incentive to fix this disparity, because that would both increase the record deficits the party of fiscal responsibility is running, and help us Blue-Staters.
3. Under George Bush and the New Republican Tribe, the federal income tax has become substantially less progressive, as the NRT eliminated the estate tax, radically reduced the tax on dividends and capital gains, and reduced the rates on the top two tax brackets.
4. This year, the Republicans legislated a deduction from federal income tax allowing taxpayers to elect to deduct either sales taxes or income taxes (but not both), a gift to Red States.  Most people missed this.

And now, from the Washington Post today, we see what's in the works:

1. Further gifts to the wealthy in the form of eliminating taxation on investment income.
2. "Broadening" the tax base, which is code for "reducing progressivity in the the tax system", supporting a general anti-government sensibility on which the Republicans thrive.
3. Eliminating deductions for state and local income taxes, which will technically eliminate the AMT, while preserving the effect of the AMT on those of us who live in states or cities which have determined to provide decent public services.   It will also serve to further incite working Americans against income taxes, allowing the Republicans to continue to campaign on the false "friend of the little guy against the tax man" theme.  Further, it will provide political ballast to the still-more-regressive "consumption tax" proposed by people like Jim DeMint.  Last, it will preserve the subsidy that Blue-State workers pay to freeloading Red States.
4. Eliminate the business tax deduction for health insurance costs, apparently on the general theory that the government should not subsidize health care for anyone on any level, even through tax deductions, unless they're rich enough to self-insure.  This will of course force a lot of employers to eliminate any health insurance except the private health care savings accounts that the Bush people have been pushing, but which so far have been a bust.
5. Add new special purpose tax-deferred savings vehicles or increase the size of the current crop, providing tax shelters for people who have money to save while increasing the relative percentage paid by those who don't.  Again, a gift to the wealthy.

Of course, Bush won't introduce these proposals in 2005, where they could get a decent airing free from the pressure cooker of an imminent election.  Instead, he's going to appoint a panel to "study" the problem (because there's simply not enough literature on the subject already) and make his proposals some time in 2006, so that he can spin them as further "tax relief" and "tax fairness" and beat the Democrats over the head with them in the 2006 mid-terms, just as he did in 2004.

So, Democratic leadership, the New Republican Tribe is again telegraphing its attack on you (and of course, the rest of us, but that's incidental for your personal ambitions).   You've got a year to figure out what is likely to happen and your response.  Let's see if, yet again, you are rocked back on your heels when the promised attack happens, or if you can plan and act ahead.

Comments

[Mark Greene]

Well, if there is one thing we've learned out of the presidental election, it's that Democrats seem to have no memory of how they were flogged last time around. Take Kerry and the Swift Boat guys. He gets it from them every six years that he runs for the Senate, and for that matter, back when he first spoke out against Viet Nam in 1972 and yet he runs for president and, "Yikes, there's an attack ad on TV from some crazy group called the Swift Boat Vets for Truth! What a shocker!"

No response for three weeks while they walk all over his six point lead.

I tell you, I'm ready to hang it up with the Democrats and just start working issues like how to get money to stop flowing to the right wing from the left wing. It's a take-off on the oft repeated suggestion in the black community that black folks should do business with black owned businesses.

Well, liberals need to stop spending money with right wing corporations, or at least, use less of what they sell.

We could start with entertainment. Cable TV. Fox. See where I'm headed with this? Come see me at http://www.starvetheright.com

[paperwight]

Mark, it's worse than that. It would have been a weeks work to figure out the Rove M.O. -- just send somebody to Texas and Alabama to interview the people who ran against Rove's candidates. And then you could have prepared a strategy. Hell, the DNC coulda done it in 2003, because it doesn't matter who was running for the Dems, they knew for damn sure who they were running against.

And yet, they seemed to be totally shocked when they got hit with the smear campaign.

[John J. McKay]

So, Democratic leadership, the New Republican Tribe is again telegraphing its attack on you (and of course, the rest of us, but that's incidental for your personal ambitions). You've got a year to figure out what is likely to happen and your response.

If we wait a year for the Republicans to attack first, we will once again lose and, what's more, deserve to lose. For once we need to strike first. We need to demonize and mock them mercilessly 'til they won't dare introduce such a plan.

By the way, they have been telegraphing elements of this plan for years. Look at point three in the WaPo list. Raise taxes on the "lucky duckies" so that they will demand further tax cuts that can only be met be met by cutting programs until the government is "small enough to drown in a bathtub." The excrable Grover Norquist and the Wall Street Journal editorial page have been openly threatening this for decades.

This is an obvious place where we bloggers can start acting as the counter-wurlitzer information network. We need to make noise. Get people to write letters. Nag our Democratic representatives to say something.