Tuesday, September 20, 2011

9/20 Silver Spring Town Hall with Rep. Donna Edwards // Backdrop: Obama Proposes MD-Style Millionaires Tax

UPDATE: Maryland Reporter has this coverage of the town hall meeting. The article notes there was "applause for tax increases." Meanwhile, the DC City Council just passed a tax increase on upper income brackets. Is sanity on a comeback?

Tonight, Rep. Donna Edwards is speaking at a town hall meeting in downtown Silver Spring, along with Maryland Senators Roger Manno and Jamie Raskin.

A Town Hall: Taking Back the Budget Debate
Tuesday, September 20th at 7:30 pm
More info at OurFunds.org

Silver Spring Civic Center
Ellsworth & Veterans Plaza, Silver Spring, MD
3 blocks from the Silver Spring Metro
Free parking after 6 p.m. at the Wayne Ave garage

The timing of this event is fortuitous, given that President Obama this week released details of his new jobs and deficit-reduction proposals. Among the plans are $1.5 trillion in savings achieved by undoing the worst of George W. Bush's class warfare schemes, along with a new plan for a minimum tax rate to ensure millionaires and billionaires pay the same rate as ordinary Americans (note: they are currently paying less).

 The White House describes their $1.5 trillion savings plan as follows:
  • Allowing the 2001 and 2003 tax cuts for upper income earners to expire ($866 billion)
  • Limiting deductions and exclusions for those making more than $250,000 a year ($410 billion)
  • Closing loopholes and eliminating special interest tax breaks (approximately $300 billion)

Over the weekend, the New York Times also described the President's plan for a new millionaires tax, which appears to be similar to one Governor O'Malley passed in Maryland:
President Obama on Monday will call for a new minimum tax rate for individuals making more than $1 million a year to ensure that they pay at least the same percentage of their earnings as middle-income taxpayers, according to administration officials.

With a special joint Congressional committee starting work to reach a bipartisan budget deal by late November, the proposal adds a new and populist feature to Mr. Obama’s effort to raise the political pressure on Republicans to agree to higher revenues from the wealthy in return for Democrats’ support of future cuts from Medicare and Medicaid.

The NYT further noted that Maryland's Rep.Van Hollen sits on the special joint Congressional committee that will be weighing the President's proposals, and he wants the millionaires tax to be a requirement in negotiations:
Representative Chris Van Hollen of Maryland, one of six Democrats on the 12-member joint committee, said Mr. Obama must make it clear that those reductions from entitlement programs “are tied to his proposals to raise revenues by cutting special-interest tax breaks and asking the folks at the top to pay more.”

“Otherwise,” Mr. Van Hollen added, “there’s a risk the Republicans will cherry-pick the pieces they like and leave behind the ones they don’t.”

It shouldn't be too surprising to see Mr. Obama borrowing policy ideas from Maryland, as he has a history of looking to the states for models. "Socialist ObamaCare," after all, is a version of Mitt Romney's Massachusetts health plan. In an ironic twist, however, national Democratic leaders are poised to advance a Maryland-style millionaires tax -- at the same time that Maryland allowed it to expire and force more difficult cuts.

The GOP would never let one of their precious billionaires tax cuts sunset without a massive fight. But for some in Maryland, I suspect the decision to allow our millionaires tax to sunset was based on bogus claims that millionaires were fleeing for Virginia. First, that has been proven to be untrue -- but even if it were true, the argument would boil down to this:
Millionaire residents are a valuable commodity for a community to retain because they spend money locally and the tax base needs them. If their income tax rate is too high, they'll spend less money or just move somewhere else. Ergo, we should keep our millionaire tax rates low.

This sounds eerily like the logic for the worst kind of corporate welfare -- ie: when a sports team or company threatens to leave a city, and the locality responds by giving away millions of dollars to keep them. In almost every version of this story (and there are many), the community ends up with no added benefit from the taxpayer giveway. That makes using imaginary millionaire flight to push for lower taxes, just another version of trickle-down economics -- but with the added element of extortion. And by the way, if President Obama succeeds in passing a millionaires tax, our Virginia boosters should be aware that neighboring El Salvador has a lower effective tax rate than the U.S. -- I've heard real estate is cheap there!

All of this misinformation tells Maryland Juice that we are fighting the myths of trickle-down economics all over again. Lord knows how many thousands of think tank dollars over the decades went into proving that millionaires do not send their money back into the local economy, and that governments should not make policy planning for that outcome. Republican President H.W. Bush was even famous for calling this voodoo economics -- but today we are still fighting this ridiculous argument in mutated and disguised forms.

Either way, you can discuss these issues (and more) at tonight's town hall meeting. The event seeks to highlight problems with Congress' August 1 budget deal. Dozens of Maryland-based groups are co-sponsoring the event, which states the following goals:
  • Put Americans back to work
  • Institute a fair and progressive tax system
  • Protect Americans’ health and save the environment
  • Preserve Social Security
  • Reduce the Pentagon budget
  • Bring all troops and contractors home from wars and occupations abroad

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