June 30, 2012

City Democrats and the 1% . . . Together Again

Is George Bush Their Secret Hero?

By Stan Shapiro

On June 28, City Council repealed the wage tax rebate for the working poor. This landmark legislation, one of the signature achievements of the late Councilman David Cohen, was repealed by a 10-6 vote, with 8 of those repealing votes coming from Democrats. Voting in favor of repeal were the following:

Darrell Clarke D-5th District
Bill Green D-At Large
Bill Greenlee D-At Large
Bobby Henon D-6th District
Curtis Jones D-4th District
Jim Kenney D-At Large
Brian O’Neill R-10th District
David Oh R-At Large
Blondell Reynolds-Brown D-At-Large
Marian Tasco D-9th District

Voting against repeal were the following:

Cindy Bass D-8th District
Jannie Blackwell D-3rd District
Wilson Goode D-At Large
Kenyatta Johnson D-2nd District
Dennis O’Brien R-At Large
Mark Squilla D-1st District

...Continued from home page

Democrats Trying to Be Like Republicans . . . And Succeeding

Generally Neighborhood Networks tries not to engage in single-issue rating of politicians. But this is going to be a hard pill to swallow when it’s time to vote for the repealers again. The wage tax credit is the kind of tax provision that generally marks the divide between Democrats and Republicans. It’s targeted toward the working poor so only those that need it, get it. Recipients recycle the money locally by spending it right in their neighborhoods, rather than on overseas vacations, or by depositing it in offshore accounts. Furthermore, strains on the City budget are eased since the extra cash enables economically marginal families to pay their rent and utilities, thus keeping them intact and lessening the need for expensive social services.

So Democrats, the alleged Party of working people, should like this kind of tax break. It follows the same policy guidelines that the President articulates when he argues against continuation of the Bush tax cuts for the rich. It provides some slight progressivity to the local wage tax that is otherwise structured about as regressively as one can imagine. That wage tax, what a piece of work.

The wage tax looks like a flat tax but is really heavily skewed to benefit the rich, even more so than the federal tax code after the Bush tax cuts. Even after those cuts, the U.S. income tax is still progressive in that higher income people pay at a higher rate. The wage tax, on the other hand, is levied at higher rates on poor people because it only applies to wages; capital gains and dividend income is excluded entirely. In addition, higher income people deduct their wage tax against their federal income tax, enabling them to write off as much as 35% of it. In sum, it is the kind of tax that Democrats should be rushing to fix. But not most Democrats on this City Council.

The Mayor's New Plan to Transfer Wealth Upward

This is going to get even harder to take next year when the supposedly Democratic Mayor of our town will be proposing, and this same Council will probably be enacting, an across the board cut in the wage tax. It will be paid for with the money saved by repealing the tax credit for the working poor.

The Mayor’s replacement wage tax cut proposal exactly mirrors the approach of George Bush in cutting taxes in 2001. On the surface you can say it’s fair, because it’s cutting everyone’s taxes by the same percentage. But in reality across-the-board cuts always grossly favor the rich. Comcast execs taking down half a million will get 20 times the tax break as a janitor in the Comcast building earning $25,000. Even Warren Buffett knows that's not fair. But it seems that a majority of Council like it.

Of course millionaires can give campaign contributions to Democrats and Republicans alike. The only price to pay is one’s soul. 8 Democrats seem to be working hard to complete that deal.

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