Robert Reich to Dems: Hold the Middle Class Hostage

In a recent blog post Robert Reich takes the Obama administration to task for—gasp—trying to forestall “Taxmageddon”—the potentially devastating combination of expired tax rate cuts and new taxes slated to go into effect automatically on January 1. Mr Reich suggests Mr. Obama ought instead let it occur as scheduled:

his strongest bargaining position would be to allow the Bush tax cuts to expire on schedule come January – causing taxes to rise automatically, especially on the wealthy.

Of course, Mr. Reich is well aware that the tax changes slated for January 1 go far beyond “the wealthy”: income tax rates rise for all taxpayers, payroll taxes increase, and a large chunk of the middle class becomes subject to the Alternative Minimum Tax (AMT*).

But in Mr. Reich’s Machiavellian mind, if Mr. Obama just sits back and lets Taxmageddon unroll, once poor working sods and the middle class feel the pain of higher income, payroll, and AMT taxes and start squealing, the Democrats can come to the rescue: the White Knight, with a tax plan that saves the day (except, of course, for “the rich”*: see definition, below)—which plan the Republicans will thereby be forced to agree to or look anti-middle class.

Putting the squeeze on working people and the middle class for political ends = Progressive.

But presumably it’s OK, because the ends justify the means.

Speaking of ends and means: this doesn’t even begin to address the impact of the Affordable Care Act taxes that also begin in January. Prepare for lots more pain that’s good for you.

*AMT: Tax passed to make sure “the rich” pay their fair share. Surprise! It isn’t indexed for inflation, so now “rich” = middle class! Remember this lesson, kids, when politicians start talking about taxing only “the rich”.

Mary L. G. Theroux is Senior Vice President of the Independent Institute. Having received her A.B. in economics from Stanford University, she is Managing Director of Lightning Ventures, L.P., a San Francisco Bay Area investment firm, former Chairman of the Board of Advisors for the Salvation Army of both San Francisco and Alameda County, and Vice President of the C.S. Lewis Society of California.
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