Which Party Is Really the Tax-and-Spend Party?

Democrats have allowed Republicans to convince the public that the Democrats are the Tax-and-Spend Party, while Republicans are the Tax-Cutting Party. The truth of the matter is just the opposite.

Most Democrats are actually trying to cut tax subsidies for the very wealthy - individuals and corporations - while Republicans seek to increase those subsidies based on the theory that their enhanced wealth will trickle down to the middle class, a theory that has been wholly debunked by decades of empirical evidence. In the meantime, it is the middle class whose taxes are paying for the Republican's subsidies to the wealthy.

Although Republicans claim to favor the free market, they are actually subsidizing only those parts of the market that can afford expensive, well connected lobbyists. The result is that the government is actually picking the winners and losers, not the free market. Unfortunately, the public is not aware of this because the subsidies are deeply hidden in the tax code and the Democrats keep talking about increasing taxes on the wealthy, rather than eliminating tax subsidies for the wealthy.

In fact, carried interest, low capital gains tax rates and a host of other very expensive subsidies for the wealthy have no economic justification. If they were eliminated, the free market could actually begin to pick the winners and losers while the government could focus instead on funding the infrastructure needed to support future growth. Indeed, our roads, internet and power grid are beginning to resemble what one would expect to find in the third world rather than in an economically healthy country. Borrowing money at interest rates below inflation to repair our infrastructure is something that any government would do, if it were run as a business, since it would effectively cost nothing. Yet Republicans will not allow it.

Indeed, while Republicans recognize that by cutting tax subsidies, we could cut the tax rates for most businesses and simplify the tax code, they are pushing a proposal, territorial taxation, that would exempt from taxation profits multinational corporations claim they earned offshore. The effect would be to put domestic companies at a competitive disadvantage and increase the incentives to move jobs and profits offshore. Speak about a job killing tax!

In short, any genuine reform is unlikely until we have another economic crisis or unless the public understands the hoax perpetrated by Republicans and gets mad enough to act. Only when the middle class comes to understand that they have been squeezed for the last 30 years by Republican subsidies for the rich will we stand a chance, remote though it may be, that politicians will finally be forced to enact a simplified tax code that will allow the free market to strengthen our economy and ease the squeeze on the middle class.