April Fools: GOP Budget a New Windfall for the Wealthy
It may be April Fool's Day 2009, but the Republican Party is playing the same joke on the American people. After brushing off last week's calamitous Republican "road to recovery" blueprint as a "marketing document," Rep. Paul Ryan unveiled the GOP's alternative budget in a Wall Street Journal op-ed. In it, Ryan offers the same snake oil his party has been selling since the days of Reagan and Bush. The cure for what ails the U.S. economy, it turns out, is a massive tax windfall for the wealthiest Americans who need it least.
The new Republican budget doubles down on the wildly regressive Bush/McCain tax cutting binge American voters rejected at the polls in November. Making the budget-busting Bush tax cuts of 2001 and 2003 permanent, the GOP also proposes an alternative "highly simplified system that fits on a post card, with few deductions and two rates." Taxpayers making over $100,000 would see their rate drop to 25% from its current high of 35%. (Below that level, the rate drops to 10%.) Corporate taxes would also drop to 25%. While the capital gains tax rate would be frozen at its post-2003 level of 15%, the estate tax would be eliminated altogether.
The predictable result is yet another massive redistribution of the tax burden away from the richest Americans even as it produced a torrent of red ink. While the Center for American Progress concluded the Boehner-Ryan giveaway would hand an annual tax bonanza of $1.5 million to the average CEO, a preliminary analysis from the Center for Tax Justice last week concluded that by 2011, the GOP scheme would drain the Treasury to the tune of $300 billion more than the Obama plan. And as is par for the course for the Republicans, the usual upper-income suspects benefit the most:
Over a fourth of taxpayers, mostly low-income families, would pay more in taxes under the House GOP plan than they would under the President's plan.
The richest one percent of taxpayers would pay $100,000 less, on average, under the House GOP plan than they would under the President's plan.
(It should be noted the CTJ model was preliminary and does not necessarily reflect the final details in today's GOP budget document. For example, CTJ assumed a capital gains tax rate of 10% and not 15%.)
To be sure, the GOP's so-called alternative budget is merely a reprise of the unprecedented windfall George W. Bush and his Republican Party delivered to the rich over the past 8 years.
And a massive windfall it surely was. As the Center for American Progress noted, the Bush tax cuts delivered a third of their total benefits to the wealthiest 1% of Americans. And to be sure, their payday was staggering. As the Center for Budget and Policy Priorities detailed in 2008, in 2007 millionaires on average pocketed $120,000 from the Bush tax cuts of 2001 and 2003. Those in the top 1% stashed an extra $45,000 a year. As a result, millionaires saw their after-tax incomes rise by 7.6%, while the gains for the middle quintile and bottom 20% of Americans were a paltry 2.3% and 0.4%, respectively. (Another CBPP study demonstrated that the Bush tax cuts accounted for half of the mushrooming deficits during his tenure in the White House.)
And as the New York Times detailed in 2006, the 2003 Bush dividend and capital gains tax cuts offered almost nothing to taxpayers earning below $100,000 a year. Instead, those windfalls reduced taxes "on incomes of more than $10 million by an average of about $500,000." As the Times revealed in a jaw-dropping chart, "the top 2 percent of taxpayers, those making more than $200,000, received more than 70% of the increased tax savings from those cuts in investment income." So it should come as no surprise that the income share of the 400 richest Americans doubled over the past decade.
And so it goes. As surely as the sun rises in the east and sets in the west, Republicans will offer tax giveaways to the wealthy as the cure-all for surpluses, deficits, boom times and recessions, perhaps even for enlarged prostate and erectile dysfunction. But while Steven Benen deemed today's GOP budgetary sleight of hand "completely insane," OMB communications director Kenneth Baer said, "I have two words for you: April Fool's."
As usual, the Republicans' joke is on us.
UPDATE: For more details, see Ryan's GOP budget proposal here. Meanwhile, rumors continue to swirl that deficit-challenged Senator John McCain will buck Minority Leader Mitch McConnell and offer a Republican budget alternative in the Senate.