Boehner’s ‘plan B’ would redistribute wealth UPWARDS

As Greg noted this morning, John Boehner is scrambling to secure Republican votes for “Plan B,” his alternative to the fiscal cliff compromise which would only raise taxes on income over $1 million. Boehner wants to be able to present himself as willing to compromise, but unwilling to go as far as President Obama wanted, which probably won’t work, because most Americans see GOP policies as too extreme, and have far more faith in Obama’s ability to handle economic problems than they do the GOP’s.

What’s missing from the discussion here is that the ideas that undergird “plan B” were already rejected by voters in the 2012 elections. While Republicans are selling this plan as proof they are willing to target the rich, the reality is that Plan B simply repackages a range of conservative ideas that would redistribute wealth upwards.

In particular, Plan B would retain the massive estate tax cuts pushed by Republicans in 2010 — and passed in exchange for a larger earned income tax credit — and it would block limits on itemized deductions for high income earners, which are scheduled to go into effect on January 1st. A recent analysis from the Tax Policy Center found that the latter would provide people with incomes over $1 million an average tax cut of $118,000 each. The former is even more egregious; under Plan B, the estate tax would only apply to estates worth more than $5 million, at a cost of $119 billion in revenue over the next ten years. And this money wouldn’t go towards struggling farms or small businesses (loosely defined) — it would go to the richest .3 percent of Americans who die each year, in effect, transferring huge amounts of national income to the nation’s wealthiest families.

On top of all of this, as the Center on Budget and Policy Priorities shows, is the fact that Boehner’s Plan B allows key improvements in tax credits for low income workers to lapse at the same time that it preserves benefits for the richest Americans. The Earned Income Tax Credit and the Child Tax Credit — which were boosted in 2009 and 2010 — would lose substantial value: “Under Plan B,” notes the CBPP, “a mother with two children who works full time at the minimum wage of $7.25 and earns $14,500 a year would lose $1,560 of her Child Tax Credit, which would plummet from $1,725 to $165.”
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