You’d think that with the economy growing, and indeed accelerating in its growth, the GOP would be setting itself up to claim all the credit come November — rather than reluctantly embracing President Obama’s call for a payroll tax cut, while talking down its efficacy as a tonic for the job market.
Instead they’re obstinately digging in. And with all of the party’s presidential hopefuls lukewarm on the payroll tax cut and leapfrogging each other with plans to cut taxes for wealthy Americans alone, Republicans are inadvertently clarifying for voters what they know to be unpopular economic policies.
“Let’s be honest, this is an economic relief package, not a bill that’s going to grow the economy and create jobs,” said House Speaker John Boehner last week in a statement ahead of the passage of the payroll tax cut deal.
The package itself won a modest majority of Republican votes in the House and a significant minority of Republican votes in the Senate. But both stand in complete agreement with the GOP presidential field on the need to enact large, permanent tax cuts for the highest earners in the country. This is what Mitt Romney refers to as pro-growth tax policy. So to give you a clearer sense of what the GOP would have rather done than renew the payroll tax cut, here’s a graphical breakdown.
A couple quick notes on this. First, this chart was compiled before Romney introduced a new tax framework that lacks key details and hasn’t been subjected to the Tax Policy Center’s rigorous analysis. We’ve included his original plan, which includes many features in common with the plan his campaign introduced Wednesday.
You’ll also notice that topmost line in this graph plots average tax rates under current law — i.e. if all the Bush cuts and other tax provisions expire at the end of the year. That baseline makes it appear as if the leading candidates want to give everybody a significant tax cut. The more appropriate baseline is current policy — the dark blue line. All the GOP candidates want to lock in the Bush tax rates, and then cut from there. Using that standard, you see that none of the candidates, but particularly Romney, want to do very much at all to reduce the tax burden for the middle class. Those lines only really start to diverge at incomes around $200,000 annually. It’s textbook supply-siderism, but that’s the segment of earners whose taxes the GOP really wants to cut.
