| When Republicans cut taxes for the rich without any hints of remorse, the typical explanation is that cutting taxes at the top grows the economy for everyone. Despite the fact that decades of economic policy have shown this theory to be grounded in fantasy, sometimes it's really hard to imagine how their tax policies would ever actually grow anything.
In their latest inexcusable tax proposal, Republicans are attempting to lower the estate tax for the wealthiest heirs, while letting tax breaks expire for lower- and middle-income families. From the Center on Budget and Policy Priorities:
"In recent proposals to extend expiring tax cuts beyond the end of the year, Republican leaders in the House and Senate have called for extending an estate-tax cut enacted in 2010 that provides a large tax break to the estates of the wealthiest 0.3 percent of Americans who die each year - about 7,000 people - while ending a provision of the same 2010 tax legislation that makes improvements in the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) that benefit 13 million moderate-income working families"
It's especially sad when you think about what these different tax breaks and tax expenditures represent. The EITC is one of the most successful tax expenditures in history, and the largest poverty reduction program in the U.S. It appropriately aligns incentives to encourage low-income people to work. The Census Bureau found that it lifted 5.4 million people out of poverty in 2010 alone. It was expanded by Ronald Reagan - the great tax reducer himself. And the CTC provides breaks for families making less than $130,000 per year - basically every lower- and middle-class family with children. It was expanded under George W. Bush. And failure to extend these tax breaks will result in a greater tax burden for 13 million low-income working families - in some cases thousands more for a family already at the poverty line.
On the other hand, extending the estate tax provision means America loses out on $119 billion that will instead go to the people who are already inheriting the largest 0.3 percent of estates. They're not being rewarded for going to work, for growing a company, or producing something we value as a public good like energy efficiency R&D or low-income housing. They're just inheriting millions of dollars.
In Texas, this amounts to major tax breaks for roughly 540 multi-million-dollar estates in Texas while letting the improvements to the EITC and CTC expire for 1.5 million moderate-income Texas working families and their nearly 3 million children.
Even if you don't believe it's morally wrong to provide more breaks for the people who don't need them (or even feel them), there's new evidence that income inequality has stalled our economic recovery - and really doesn't trickle down. In the first full year of the recovery, the top 1 percent of earners got 93 percent of the income gains. The International Monetary Fund even cautioned the U.S.: "Some dismiss inequality and focus instead on overall growth - arguing, in effect, that a rising tide lifts all boats. When a handful of yachts become ocean liners while the rest remain lowly canoes, something is seriously amiss."
So not only do these kinds of regressive tax policies fail to generate the promised economic growth - they might actually prevent it. Yet we see time and time again that Republicans in Congress are determined to take us down that road. And if Mitt Romney ever actually releases details on his tax plan, we'll probably be seeing the same from him.