On Understanding the Context of Tax Policy: Race, Tax and 2012

"If you have a big government progressive, or a big government progressive in Obama... ask yourself this, Tea Party: is it about Obama's race? Because that's what it appears to be to me. If you're against him but you're for this guy, it must be about race. I mean, what else is it? It's the policies that matter," -Glenn Beck

Is Glenn Beck justified in what he is saying?

Well, before we go into the details, we have to understand one thing. Beck compares Obama to Gingrich. Both love the idea of big government. He is justified when he says this, no doubt. But we cannot sit here and try to castigate these men, whether we are talking about Barack Obama, Newt Gingrich or even Glenn Beck. That’s not the point of Glenn Beck’s analysis. Obama and Gingrich are but the pawns in his logic. We must understand that the main question we must ask to assess Beck’s words is: Would/Is the battle between Obama and Gingrich one of race? That is our purpose in regarding Beck’s words, but, nonetheless, it involves understanding both men’s policies – that is unavoidable.

I argue that that race would not solely be about race simply because Gingrich and Obama differ in beliefs, beyond just “big government.” Their tax policies differ. But, mind you, I am not saying one man’s policies are better. That is left for you to decide. So let us understand that both men are supporters of “big government,” that is a belief in allowing governmental institutions to spend the public dollar to serve the public’s problems. But it is the way each man goes about doing it, spending the public dollar.

Obama is a prolific spender of the public dollar for more “liberal” policies and Gingrich is one for more “conservative policies.” But there is no better field to compare the two upon than tax reform. It is here that they differ drastically. Obama is totally pro-middle class. In the recent speech Obama gave in Osawatomie, Kansas he talked about the mid-20th century America, “an America where hard work paid off, and responsibility was rewarded, and anyone could make it if they tried.” He suggested that – whether by causation or by simple correlation or maybe even by infinite regression – “ Every American shared in that pride and in that success—from those in the executive suites to those in middle management to those on the factory floor.” But now, “Those at the very top grew wealthier from their incomes and their investments -- wealthier than ever before.  But everybody else struggled with costs that were growing and paychecks that weren't” 

So what does he suggest? Well, he’s already made an attempt to solve this problem. In a White House summary of the The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, the 2010 Act “Extends middle class tax cuts to prevent a typical working family from facing a tax increase of over $2,000 on January 1.” But his suggestion is both explicit and implicit. According to Jackie Calme’s NY Times article from last September, “Obama Tax Plan would Ask More from Millionaires,” the President was going to mandate “a new minimum tax rate for individuals making more than $1 million a year to ensure that they pay at least the same percentage of their earnings as middle-income taxpayers, according to administration officials.” It is implicit in how it contradicts Gingrich’s plan.

Newt Gingrich is the current GOP front-runner, who, according to Gallup, leads the polls with a 33% ballot support, in front of Romney’s not-too-shabby 22%. You should remember: Gingrich brought back the Republican House majority in the 1994 elections, dubbed the second Revolution. Working alongside the Clinton administration, he helped build and pass the Welfare Reform Act (1996), which sought, according to Amy Goldstein’s 2008 San Francisco Chronicle article “Jobless Crisis Strains Shrunken Welfare System,” to “transform the old system of welfare, once considered an open-ended right, into a finite program built to provide short-term cash assistance and steer people quickly into jobs.”

Indeed this surprisingly unbiased interpretation of the Welfare Reform Act very well still defines Gingrich’s tax plan. Gingrich’s plan, as per “[t]he analysis” done “by the” independent “Tax Policy Center,” will see to it that the taxes placed on “households making more than $1 million a year would…drop by an average of 62 percent.” And what does he say about the middle class? In this very same Washington Post article (“Study: Gingrich tax plan would provide big breaks for rich, blow huge hole in budget deficit”), Gingrich’s plan apparently has an “optional 15 percent flat tax on income,” which “would apply to income at all levels, but there would be a variety of tax deductions and credits.” But how does this compare with Obama’s plan?

Well, first we must understand that both men agree on big government. And this agreement can be seen in the area of tax policy. Any sort of tax cut is based on the idea of a pro-deficit ideology. Deficit spending is nothing more than spending the public dollar, which brings us to big government. But it is beyond this agreement that the two differ. And, again, this can be seen in the area of tax policy. Obama, according to his rhetoric, believes in reviving the middle class by taxing the rich thru government spending; whereas, Gingrich, as per his plan, strives to revive the economy by cutting the taxes for the wealthy, thereby encouraging business and improving the job economy. (Note: Gingrich’s plan would have been a Reaganisque small government policy had it not included the various tax deductions and credits for accepting the 15 percent flat tax.) Certainly, then, Glenn Beck was wrong. It is NOT about race, the competition between Obama and Gingrich. It is about the same ideological difference that has resided in tax policy since a very long time ago: government activism versus trickle down. That is what the race would be about, not race.