Republican Tax Plan Falls Flat

By Yuval Rosenberg

Another tense day with all eyes on the conflict
in Ukraine. Here’s what you need to know about some key issues
closer to home.

Rick Scott’s Tax Plan Falls Flat

We told you
yesterday about the "Rescue America" plan released
by Sen. Rick Scott that laid out his blueprint for what the GOP
should do if it takes back power in Washington in the 2022 and 2024
elections. The Florida Republican made it clear that he understands
that some might reject his plan for being too radical – "I’ll warn
you; this plan is not for the faint of heart," he cautioned in the
introductory letter – and on Wednesday critics on both the left and
right quickly proved him right.

Ed Kilgore of New York Magazine, for example,
noted that the 50% cut in funding and workforce at
the IRS Scott calls for might make it very difficult to enforce tax
code, while the forced sunsetting of all federal legislation every
five years – "If a law is worth keeping, Congress can pass it
again," Scott said – would likely produce an unprecedented level of
legislative chaos.

But of the many parts of the plan that came under fire, one
detail in particular proved particularly unpopular among both
Democrats and Republicans: Reviving the Romney-esque conservative
complaint that "over half of Americans pay no income tax," Scott
called for all Americans to pay some kind of income tax so they
"have skin in the game."

Some critics noted that Scott’s complaint is incorrect as
stated, since many of the low-income Americans who currently pay no
federal income taxes do pay all kinds of other taxes, including
state income taxes, payroll taxes and sales taxes. More broadly,
critics wondered if it was such a good idea for a Republican
senator to call for a tax increase on millions of people.

Dave Carney, a Republican strategist,
told Politico that the proposal would not be
popular among Republicans. "Tax increases — our voters don’t dig
tax increases," he said. "To be fair to [Scott], I don’t know what
the hell the context is. Generally, taxes are not very popular with
Republicans."

White House Press Secretary Jen Psaki echoed the point, charging
that Scott’s plan would raise taxes on millions of Americans,
"including on seniors and working families."

Scott, who chairs the National Republican Senatorial Committee,
responded to the barrage of criticism, saying that his proposed tax
increase wouldn’t apply to the elderly or to those who are not
"able bodied." But the damage appears to have been done, likely
reducing the chances that Scott’s proposal will have its intended
effect of rallying Republicans around his plan, at least as far as
tax increases go.

"It’s dramatically off-message for where Republicans are going
on taxes — they shouldn’t be talking about raising taxes on
anybody," Brian Riedl of the conservative Manhattan Institute

told The Washington Post. "The GOP has moved away
from the 2010 ‘makers and takers’ framework — so it’s a little
outdated."

Michael Strain, an economist at the conservative American
Enterprise Institute, agreed, saying the Republican view on
contributing to society has become more nuanced. "Raising kids is a
contribution; working is a contribution; being a member of your
community is a contribution," he said. "Yes, let’s have a stronger
norm that everyone is a contributing member of our society — but I
don’t know why that means everyone needs to contribute through a
nominal income tax."

Is It Time to Raise the Social Security Wage
Cap?

Americans earning $1 million hit a milestone today: After
February 23, anyone with an annual income at or above that level
has hit the payroll tax cap and paid all of their Social Security
taxes for the year.

In an op-ed at The Hill, Max Richtman of the nonprofit National
Committee to Preserve Social Security and Medicare argues that in
light of the program’s precarious finances, which could result in
benefit cuts as soon as 2034, it’s time for Congress to raise the
wage cap on Social Security taxes, currently set at $147,000.

"In years past, 90 percent of wages earned in this country fell
below the cap," Richtman writes. "Today only 83 percent of those
earnings are subject to the Social Security payroll tax. Most
Americans pay 6.2 percent of their wages into Social Security. But
the effective tax rate for the wealthy is significantly lower, in
some cases as little as .08 percent."

Richtman calls on Congress to pass the Social Security 2100 Act
from Rep. John Larson (D-CT), which would raise the income cap to
$400,000 per year. The bill has nearly 200 co-sponsors.

"The right path for lawmakers is not to cut benefits, but to
expand them to meet the needs of seniors, workers with disabilities
and their families," Richtman says. "The fairest way to fund such
an expansion is by finally asking high earners to pay their fair
share. If this wasn’t an obvious course before the pandemic, it
certainly is now."

Read
Richtman’s op-ed here.

Chart of the Day: Fatter Bank Accounts

"Despite soaring inflation and multiple waves of covid-19,
crisis-era stimulus that added an estimated $1.7 trillion to U.S.
incomes left many families on strong financial footing at the end
of 2021," The
Washington Post’s Andrew Van Dam writes
Wednesday.

While savings peaked last March with the arrival of the final
stimulus checks, most households are still at least $500 ahead of
where they were before the pandemic. The savings aren’t shared
evenly, though, with high-income households hanging onto a higher
proportion of their accumulated savings than low-income ones.

90% of Covid Test Orders Shipped, White House
Says

The White House’s senior adviser on coronavirus testing said
Wednesday that 90% of the orders placed for free Covid-19 tests
have been shipped.

"It’s a lot of firsts. It’s the biggest test acquisition in
history. It’s the fastest delivery of anything to this number of
households,"
said Dr. Thomas Inglesby.

The White House announced last month that about 60 million
orders for tests had been placed in the first 10 days of the
program, and last week officials said that 50 million households
have received their shipments. However, while some tests were
shipped quickly, many households had to wait weeks to receive their
orders, which in many cases arrived after the surge of the omicron
variant of Covid-19 had already begun to fade, reducing the need
for the tests.

Inglesby said that the Biden administration worked directly with
the United States Post Office and manufacturers – which include
Abbott, iHealth Lab, Roche Diagnostics, Revival Health, Atlantic
Trading, Siemens Healthineers – to increase the speed of producing
and shipping the tests. The White House hired a senior executive
from FedEx to help develop the plan.

"For many companies, this was something that they had never done
before on this scale, or at this speed," Inglesby said. "And so it
was all in, from the companies and from the government side and the
logistics providers, whether they were trucks or planes moving
things around."

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