Tax Cuts

The story of the day seems to be this New York Times report that as much as 40% of the economic stimulus bill may be devoted to tax cuts. I’m not going to try to address the substance of the proposal, mostly because the report is pretty thin and doesn’t give you much to go on, other than to note that our tax system needs pretty drastic overhaul in a more progressive direction, and if the Obama team is going to use the stimulus package to that end I’m not going to complain.

But as far as the politics goes, I think this is probably much more small bones than some others seem to. For better or worse, Barack Obama campaigned on cutting a lot of taxes for a lot of people, and this was one of te major areas of contention throughout the campaign, as the McCain campaign frequently lied and claimed Obama and Congressional Democrats were going to raise taxes. I wasn’t all that happy with Obama conceding the “tax cuts are always awesome” line at the time, but what’s done is done, and it seems downright impossible for Obama not to follow through on his campaign promise now. If he doesn’t, look for the RNC sponsored adds featuring video of Obama promising to cut taxes interspersed with deep, worrying voiceovers about how “Obama lied to the American people” and “will say anything to get elected” in 2010. Will that make much hay for the Republican Party? I don’t know, but it’d be a hell of a lot better than anything they’ve got going for them right now.

But on a more serious note, it seems like the important thing for progressives to engage now is not whether to cut taxes, but how to cut them. General distaste for right-wing myths aside, there are plenty of places where a progressive tax cutting policy is needed and could do real good over the long run. The EITC can be expanded, which will put more money into the hands of lower income families. New tax credits aimed at the working class can be enacted. Loopholes can be closed to shore up revenue streams. And, in general, we can enact a tax scheme that doesn’t ridiculously favor the wealthy. I don’t know if that’s what’s being proposed, but it should be and progressives ought to fight forcefully for it, as it’s something that’s been needed for quite a while, and there’s no reason not to do it now.