There’s been a great deal of talk about tax reform recently. However, much of it has been, as Representative Sander Levin, D-Mich., put it on Friday, “discussed only in glittering generalities” that distort reality.
At a time when the middle class is saddled with an economic recession and a recovery that is slow to reach them, Republicans like Wisconsin Rep. Paul Ryan are backing budget proposals that in the name of deficit reduction award tax breaks to the wealthy while cutting services vital to the middle class. Americans need a progressive discussion of tax reform that defends the middle class and responsibly reduces the federal deficit.
That discussion happened at the Center for American Progress Action Fund, where Rep. Sander Levin gave a talk Friday on “The Implications and Opportunities of the Current Tax Reform Debate.”
Levin declared the need for a real tax reform discussion with specific and realistic goals. In light of Congress’s inability to talk about taxes, he proposed three guiding principles for the tax reform debate: “Tax reform should protect working families; it should encourage economic growth and job creation in the United States; and it should be fiscally responsible.”
There is an obvious need to address redundancies and complexity in the tax system to make our tax policy more effective. However, the House Republican approach of lowering the top tax rate to 25 percent for individuals and corporations, with no thought to who would make the sacrifices as a result, is astoundingly blind. It is, as Levin put it, “the equivalent of putting a blindfold on, spinning around three times, and picking a number. It’s time to take the blindfold off. It’s time to understand clearly what that would mean for working families.”
Working families and middle-class America should be the focus of the tax reform debate and Levin’s talk championed this ideal. It is disheartening to hear some members of Congress call for the elimination of all tax credits and deductions, as the White House bipartisan fiscal commission recommended, when the overwhelming majority of the beneficiaries of those tax benefits are lower- to middle-income families. For example, in 2009, all of the people receiving the Earned Income Tax Credit, 90 percent of the people receiving the child tax credit and 81 percent of education credit beneficiaries are in households that make less than $100,000 a year.
Finally, we need to discuss raising revenues as we talk about deficit reduction. Republicans refuse to even broach that topic, even though during the only period of time since World War II that we have balanced our nation’s budget, the federal government’s revenues averaged 20 percent of gross domestic product. Compare this to 2010, when federal revenues were at 14.9 percent of GDP, close to historic lows.
Asked how Democrats would convince Republicans to discuss federal revenues, Levin said, “We face an unavoidable debate that may be an unavoidable collision and our challenge is to face that collision productively.”
Members of Congress should rise to Levin’s call to a real tax reform debate, face the inevitable collision with congressional conservatives and champion the economic rights of middle-class and working families.