The GOP's Hidden Tax Agenda

Boy do Republicans love taxes. They love taxes so much they're willing to push our country into default unless Democrats agree to a massive tax increase on the middle class. I know what you're thinking -- the GOP is the anti-tax party, and it's the Democrats who are the "tax and spend" party.

Let me explain.

For decades, conservatives have insisted that the only way to balance the budget, reduce the deficit, and pay our national debt, is by cutting government spending. The GOP has become a virtual echo chamber: cut, cut, cut. But it's not just spending they're after. They also want to cut taxes, especially for rich people, dead people, and corporations: cut, cut, cut.

And to their credit, Republican leaders in the House recently put their money where their mouth is by passing a budget that effectively eliminated Medicare. Cut, cut, cut.

What the GOP won't tell you is that their policies are effectively tax increases on the middle class. Think about it: the Republicans want to slash student loans, gut Social Security, and turn Medicare into a hollowed-out voucher program. Let's get real: a dollar more paid in taxes or a dollar more paid in student loans is still a dollar that a student no longer has. The same goes for seniors: a dollar more paid in taxes is worth the same as a dollar more paid in healthcare costs as a result of Medicare cuts.

But it's not like students or seniors are getting a free ride. The average college senior graduated this spring with $22,900 of debt -- the most ever, 8% higher than last year, and 50% higher than a decade ago. Under the GOP's plan, these students would have fewer Pell Grants and low-interest loans, and much higher debt.

Of course, the Republicans wouldn't call these policies "tax increases," they'd call them "spending cuts." But for students and seniors, the math is the same: they're out a dollar because the GOP decided that the best way to balance the budget is by having students and seniors pay more. Republicans might not call it a tax increase, but it sure feels like a tax increase.

The inverse, of course, is also true: Republicans' previous so-called "tax cuts" -- which are more properly called "tax expenditures" -- were the economic equivalent of massive spending bills. These are revenues that the government could be collecting to reduce the deficit, but isn't. Loopholes that allow billionaire hedge fund managers to pay a lower tax rate than waitresses at Denny's are the financial equivalent of a massive spending bill. Again, Republicans might not characterize these tax expenditures as government spending, but the budgetary effects are the exact same. If the Bush tax cuts were allowed to expire, future deficits would be cut in half.

The irony is that the Democrats have let Republicans get away with calling their tax increases "spending cuts," and their spending increases "tax cuts."

So now we're stuck with what will probably be a multi-trillion dollar "deficit reduction" package chock-full of so-called "spending cuts." But in reality, it will represent the largest tax increase in American history -- and what's worse, it'll be a tax increase focused entirely on making the poor, the young, and the very old pay more money.

The government's budget is a moral document. It identifies our priorities and our values, and states how much we are willing to sacrifice for them. And while we should acknowledge that we cannot tax our way out of this mess, or continue past levels of spending, we also ought to acknowledge that not a single child, not a single student, and not a single senior drove the government into the financial ditch that it finds itself in.

The bottom line is that cutting student loans is like raising taxes on students. Cutting Social Security is like raising taxes on the elderly. Cutting Medicare is like raising taxes on the poor. And yes, closing loopholes is like raising taxes on hedge fund managers.

So the real question we should be asking is whether we'd rather raise taxes on students and seniors, or on hedge fund managers?

You might call it the $4 trillion elephant in the room.

David Perez is an attorney and the Assistant Director of the Korematsu Center at the Seattle University School of Law.