To Surtax With Love

Senator Chuck Schumer (D-NY) is once again leading the charge of bold new ideas on how to solve the nation’s fiscal woes. Previously we had been worried that Chuck would stick to his guns and propose a whole raft of new taxes, particularly on the most wealthy. Fear not! Schumer has a new plan, and it’s not a tax.

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It’s a surtax. (See what he did there?)

U.S. Senate Democrats are planning to force a vote as early as this week on pairing a 3.25 percent surtax on income over $1 million with an extension and expansion of an expiring payroll tax cut.

The first vote on the $265 billion proposal will test Democrats’ resolve to implement the largest part of President Barack Obama’s jobs plan and Republicans’ willingness to block that effort…

“The Republicans are giving themselves whiplash on the issue of taxes,” Charles Schumer of New York, the Senate’s third-ranking Democrat, told reporters on a conference call. “The public is starting to figure out that Republicans have one position on taxes when it comes to the wealthy and another when it comes to everybody else.”

If Congress doesn’t act, a 2 percentage point cut in the payroll tax for workers will expire Dec. 31. The Democrats’ proposal would cut the 6.2 percent Social Security portion of the payroll tax in half for workers, cut the employer portion in half for companies on their first $5 million in wages and eliminate the employer tax on certain wage growth.

Republicans, including Mitch McConnell, are already firing back, labeling this move as another episode of class warfare which pits the middle class against the wealthy. But the Democrats are countering, essentially noting that Republicans are the ones who want any federal expenditures to be paid for, and insisting that this is precisely what they are doing. In order to continue the payroll tax holiday for the working class while not continuing to drain money from the Social Security system, they propose to pluck the difference from the pockets of those earning more than $1M.

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As I noted yesterday, this presents a serious messaging challenge for the GOP. They have the votes to block this from every seeing the light of day on the Senate floor. (And both sides are apparently admitting that’s what is likely to happen.) But Schumer and his colleagues probably never had any expectation of actually getting this through. They’re continuing to make calls straight from the White House playbook and will use any such vote as ammunition to take their case to the public, claiming that the GOP wants to jack up taxes on the middle class while protecting the interests of the 1%.

It’s a fairly classic, populist theme. The problem is, once again… they call it “populist” for a reason.

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