Lets do a little

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July 27, 2001 7:58 pm
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Let’s do a little due diligence on our friend Mitch Daniels, shall we?

Here’s a quote from Daniels’ appearance on NPR’s Talk of the Nation last Wednesday (7/25/01):

It’s very fascinating to me that people who argue against, for instance, this tax cut, have little or nothing to say about the payroll tax, which is a flat tax on the first dollar of income that the poorest American makes, essentially. It’s very regressive, weighs much more heavily on people at the bottom than on the wealthy. And yet it seems to be fiercely defended by the same people who argue for higher taxes on the income side.

Really? Nothing to say about the payroll tax?

This is the sort of blithe dishonesty that seems to role off Daniels’ tongue with distressing ease. I don’t want to call Mitch a liar or anything (it’s such an ugly word); but let’s agree to call this a tour de force of disingenuousness.

Here’s why.

During last Spring’s tax cut debate the centerpiece of the Democrats’ alternative tax cut plan was tax relief for Americans who pay most or all of their taxes in payroll taxes rather than income taxes — roughly three-quarters of Americans.

The proposed mechanism for accomplishing this was a refundable income tax credit against a portion of payroll tax liability. This would have limited the bite of payroll taxation without harming the funding base of Social Security. Republicans vigorously resisted this approach by arguing that payroll taxes are somehow not real taxes in the way that income taxes are. As top economic advisor Larry Lindsey dismissively put it, “the tax cut proposal is designed to cut taxes for people who pay taxes … if you don’t pay taxes, it’s very hard to get a tax cut.” Or in Daniels’ boss’s slightly more candid phrase, the administration supported “tax relief for everyone who pays income taxes.”

Which Democrats supported tax relief aimed at those who pay payroll taxes? Oh … Joe Lieberman, the New Dem Democratic Leadership Council, the liberal Economic Policy Institute, basically all of them.

Or take another example. Ted Kennedy, who, in case you hadn’t heard, opposed the Bush tax cut, has for several years been trying to reduce payroll taxes from 6.2% to 5.3%. He would fund the cut by eliminating the cap on payroll taxation which allows high-income earners to avoid payroll taxes on much of their income.

(It’s fair to note that liberal Social Security wonks have in the past been leery about fiddling with payroll taxes for fear of either harming the fiscal integrity of Social Security or eroding popular support for the program — something I’ve criticized in the past. But the trend among Democrats in the last few years has been very much in the opposite direction.)

I could cite numerous other examples. But suffice it to say that for anyone who’s followed tax policy debates over recent years Daniels’ comment is utter crap — which suggests a pattern.

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