President Obama, and the Democrats in Congress, have failed to adequately explain that the tax cut extensions they are attempting to pass are for all Americans. Rather than calling these extensions a middle class tax cut, they should have called them an American tax cut. Additionally, the Democrats should have used the cap on Social Security payroll taxes to justify the income limitations of the tax cuts. This failure on the part of the Democrats to properly explain that the tax cuts are for all Americans has allowed the Republicans to turn this into class warfare. On Saturday the Republicans in the Senate voted against extending the tax cuts for all Americans, not just singles earning less than $200,000, or couples earning less than $250,000.
The Democrats should have explained that every American is getting a tax cut up to a certain income level. If you are fortunate enough to make more than $200,000 as a single or $250,000 as a couple then, you, like every other American, will receive a tax cut on your first $200,000 or $250,000. Any income beyond these amounts will be taxed at slightly higher rates. These slightly higher rates are the same rates that were paid prior to the temporary tax cuts the Republicans passed with expiration dates. When the Republicans first passed these tax cuts in 2001 and 2003, using reconciliation both times and the tie-breaking vote of Dick Cheney in 2003, this expiration date was in the bill. This was not a Democratic bill. This Republican written bill was passed by Republicans with a Republican expiration date at which time the Republicans decided the tax rates would return to the previous tax rate. Now it's the Democrats who are trying to make the tax cuts permanent for every America. The Republicans that decided in 2001 and 2003 that on December 31, 2010 that every American would pay higher taxes. The Democrats want to deny the Republicans this tax increase on every American. The Democrats want every American to pay a lower tax rate on the first $200,000 or $250,000 earned.
When the Democrats introduced the bill to extend tax cuts for all Americans, they should have used the cap on Social Security taxes as an example of similar taxes with income limits. Currently, the Social Security payroll tax is applied to incomes up to $106,800. Any money earned above that level is exempt from Social Security payroll taxes. This payroll tax exemption benefits those Americans who earn more than $106,800 and requires Americans who earn less than $106,800 to pay Social Security payroll taxes on 100% of their income. While recently it has been suggested that this cap be raised, no one ever called the Social Security payroll tax a rich person's tax because it exempted incomes above the cap. Yet, now that the Democrats want to limit the permanent tax cuts to the first $200,000 or $250,000 earned it is being called a middle class tax cut. Using the cap on Social Security payroll taxes as an example the Democrats could have demonstrated that it's not unusual for taxes to have income limitations. This would prevent the Republicans from characterizing a tax cut that benefits every American as a middle class tax cut.
When the Republicans passed these tax cut bills in 2001 and 2003 there was very little Democratic support for the bills. It required the use of reconciliation and a tie-breaking vote of Dick Cheney in 2003. Additionally, the Senate Majority Leader, Trent Lott, fired the Senate Parliamentarian in 2001 because the Parliamentarian had issued a ruling on the tax cut bill that went against what the Republicans wanted. Included in the Republican bill was an expiration date of December 31, 2010. In their desire to provide tax cuts, that mostly favored the rich, the Republicans were willing to use reconciliation knowing this would mean a tax increase for all Americans in 10 years. Rather than allowing these tax cut extensions to be characterized as middle class tax cuts, the Democrats should stress that the Republicans are willing to raise the taxes on all Americans, and that it's the Democrats who want to make the tax cuts permanent for all Americans.