Rather than lose this battle Republicans should pass a bill as follows and then go home leaving it up to Reid to vote it up or down.
1) turn the tables on Obama and lower the middle class tax rates (below $250,000) by 2 percentage points. This reduction will offset the impact on the middle class #2.
2) put a 30% tariff on all imports. Call it an incentive to bring jobs back to America. Tell the people we’ve been losing a trade war for the last 30 years and it is time to fight back. This tariff will raise $600 billion under the static economic formulas used by the government to assess the impact of taxes.
3). Keep the rates on the above $250k the same as today. Tell the people we are lowering rates on the middle class while not giving a break to the wealthy.
4). Implement a true “millionaire” tax by eliminating all deductions and credits for individuals with adjusted gross incomes over $1 million. Also tax dividend and capital gains at the marginal income tax rate for filers with adjusted gross incomes of $1 million or more. Eliminate “carried interest” for individuals with adjusted gross incomes of $1 million or more. Let the progressive Wall Street bankers and Mr. Buffett pay marginal income tax rates on their capital gains and dividends.
5). Protect small business by allowing small businesses to pay a flat 15% rate on all profits retained in the business. Profits extracted by the owners to be taxed at marginal individual rates.
6). Death tax exemption for all taxpayers of $5 million indexed for inflation ($10 million per couple). Death tax rate for individuals to be same as marginal tax rate the prior year. That way a middle class taxpayer who is normally taxed at a 20% rate doesn’t pay 50% on the value of the family business she inherits.
7). A new federal excise tax of 10 cents on every music and video download, every movie ticket sold, every entertainment DVD or CD sold. Plus a $1.00 excise tax on every ticket to a concert or professional sporting event. Republicans should justify the tax by saying the entertainment industry is making billions and it is time for them to pay their fair share.
8). Change “base” for federal budget assumption to prior year actual spending instead of prior year plus an inflation assumption.
9). Establish a spending ceiling of $X and require the president to show in his upcoming 2014 budget he will meet the spending target. Force Obama to be specific on the cuts.
10). Include a $1 trillion increase in the national debt ceiling with the requirement the president present a specific plan for achieving a balanced budget by the end of his current term. No plan, no increase in the debt ceiling.
The Republicans are losing the PR war. The only way to turn the tables on the class warfare game is to pass a tax bill with real middle class benefits, and perceived penalties for the wealthy. This plan does this without hurting small business.
To those who say the tariffs will damage the economy, I say not as much as caving to Obama’s demands. Actually a tariff will hit China in the teeth. To protect their market share Chinese factories will lower prices to offset some of the impact of the tariff which will in turn put huge pressure on the Chinese economy. From a national security perspective this will be good. To the extent prices for imported products do increase it will help domestic producers. In addition it allows Republicans to position themselves as the pro American and pro US worker party. This is a much better position than being the pro wealthy party. It puts huge political pressure on one of the Democrat constituent groups, the unions, whose members will love a tariff. Plus a tariff will raise significant revenue for the treasury. In addition, the 47% who pay no federal income taxes will pay tax indirectly, on every imported product they buy.
If the House Republicans pass this plan and go home the Dems will have the choice of voting against real middle class tax cuts and real tax increases on the wealthy. If they vote against the tariff they can be accused of voting against US jobs which will not sit well with the union rank and file. With respect to the “rich” this plan hits directly the Democrat wealthy. The Republicans can quietly tell their wealthy supporters they held the line on tax rates and got them a better deal tan they would have gotten under Obama. Plus the entertainment excise tax is a direct levy on a key Democrat constituent group.
The Democrats have Republicans on the defensive. It is time to go on the offense by turning the tables in the PR game and aggressively working to splinter the Democrat coalition. Obama and the Dems are playing hardball politics and winning the PR game. If Republicans don’t fight back hard with popular measures they will continue to lose.
Bump.