Wednesday, March 26, 2008

How the Democrats Can Win the Tax Issue

The Republicans own the tax issue. It is the source of their power and their popularity with voters, especially the independents and "Reagan Democrats" who usually give them their margin of victory on the national level. Ask any American which party is most likely to cut their taxes, and there will be no hesitation: the Republican Party.

Ask any American what the Democratic Party has done for them lately, and it may take some time for them to answer. It's been decades since Social Security and Medicare were created. Decades since the Civil Rights Bill.

In the absence of a compelling economic program from Democrats that would make a difference in the average American's checking account, many will simply vote their pocketbooks and vote for the party that will cut their taxes.

But it's not too late. The Democrats can take this issue back from the Republicans and win on taxes, by promoting an aggressive policy of Rise Up Economics.

It won't be easy to take the tax issue back from the Republicans. They have burnished their image as tax-cutters into the collective American psyche. President Reagan's banner domestic achievement was his series of tax cuts and he will forever be associated with them.

Democrats like Tip O'Neill and Dan Rostenkowski's complicity in passing the Reagan tax cuts did nothing to give the Democrats any political gain. Their me-tooism on tax cuts didn't get them very far, while giving Republicans the issue of a lifetime.

President George W. Bush added his own wrinkle to cutting taxes: while most of his tax cuts went to the wealthiest Americans, he made sure that his plan provided some tax relief for everyone, and he even sent tax refund checks in the mail to every taxpayer for $300-$600. How's that for putting money in your pocket?

Both Hillary Clinton and Barack Obama rightly plan to let the Bush Tax Cuts for the wealthiest Americans expire, for which they will be branded as tax-raisers. They both promise vague "middle class tax relief," but with very few specifics. This middle class tax cut gets lost on their websites among a host of other promises.

It will take more than vague promises of cutting taxes on the middle class to differentiate the Democrats from the Republicans on this issue. McCain will run on a platform of making the tax cuts permanent and take every opportunity to paint his opponent as a tax and spender.

To win on taxes in this presidential campaign, the Democratic nominee will need a brash, aggressive new policy of tax cuts and tax credits that makes it crystal clear to the average American that it's in their economic self-interest to vote Democratic.

I propose a policy of Rise Up Economics: create a $10,000 Economic Security Tax credit for working people.

The $10,000 tax credit would help eliminate poverty by ensuring that all Americans have at least a poverty-level income. It would serve as a major tax cut for the middle class and upper middle class. It could replace welfare, and instead of driving a wedge between the poor and middle class as welfare did, it could bring them together as a policy that helps all Americans regardless of income, the same way that Social Security and Medicare does.

The Democrats should argue that we shouldn't be relying so much on taxing the income of working people to fund our government. We instead should be taxing wealth, pollution, carbon emissions, investment managers' profits, oil company profits, etc.

Some new, fairer taxes could include:

  • CEO Tax: a 10% surtax on all income over $2 million
  • Advertising tax: a 10% tax on every commercial and ad you watch, hear, or read
  • Carbon tax on corporations that contribute to global warming

The Democrats have one big issue that they claim will change the lives of every American: health care reform. It will be a major battle in Congress, and based on where both Obama and Hillary have started with their plans, it's likely that we will end up with a new system that still has way too much profit in it for insurance companies and HMOs. Many Americans may not see clearly how it will help them.

And the Republicans will still own the tax issue. Unless the Democrats take bold action on taxes.

No comments: