Democratic Voters Will Be Hit Hardest by Tax Hike by Mike Franc

HumanEvents.com ^ | 05/11/2007 | Mike Franc

[K-oneTexas]

Democratic Voters Will Be Hit Hardest by Tax Hike by Mike Franc 05/11/2007

A certain irony surrounds the scheduled explosion of tax liability under the Alternative Minimum Tax. Namely, this is a “Blue State tax,” with the heaviest concentrations of affected taxpayers living in states that voted for John Kerry in the 2004 presidential election, including New York, California, Illinois, Connecticut, New Jersey and Maryland.

But they’ve got more than the AMT to worry about. A new Heritage Foundation study examines the economic effects of allowing the 2001 and 2003 rounds of tax relief to expire, and it turns out this other imminent increase in the nation’s tax burden also hits Blue State taxpayers the hardest.

Within weeks, lawmakers will likely approve a 2008 budget blueprint that stacks the deck in favor of a massive $900 billion-plus tax increase over the next decade. The new budget rule known as PAY-GO requires supermajorities of lawmakers to approve even simple extensions of current tax law, a near impossibility in the current environment.

If lawmakers seek to extend some of Bush’s most politically popular tax breaks, such as the children’s tax credit and marriage penalty relief, PAY-GO requires offsetting tax hikes on other taxpayers, dollar for dollar.

Either way, an unprecedented increase in the average taxpayer’s tax burden is coming.

Democratic political operatives may want to scrutinize the Heritage analysis closely given that this increase in the tax burden will impose the greatest pain on their own constituents. Twelve of the 15 states where taxpayers face the largest increase -- from $3,000 per taxpaying household per year in Delaware to more than $4,300 in Connecticut -- are Blue States. Voters in these states not only voted for Kerry, but also sent overwhelmingly Democratic delegations to Congress. In the Senate, the margin is 21 Democrats (plus Independent Joe Lieberman of Connecticut) to only eight Republicans; in the House, Democrats from these states outnumber Republicans, 124-87. Should these increases occur, lawmakers in these states and districts should expect to hear from some angry constituents.

By contrast, 14 of the 15 least affected states -- where the projected increase in the tax burden ranges between $2,261 per household in Mississippi to just under $2,700 in North Carolina -- are Red States. Taxpayers in these states, on average, are far less likely to report capital gains realizations or dividends on their tax returns. Because they earn less, they’re also far less likely to fall into the highest marginal tax brackets. It may surprise some to learn that these poor states tend to elect Republicans. In the Senate, 19 Republicans and only 11 Democrats represent these states; in the House, Republicans outnumber Democrats 35 to 28.

In the House, the taxpayers who face the most gruesome tax increases live, almost without exception, in the inner suburbs surrounding some of our largest metropolitan areas, including New York City, Chicago, Los Angeles, Washington, San Francisco, Denver, Atlanta, St. Louis and Philadelphia. They face increases ranging from $4,400 per household per year in Rep. Elton Gallegly’s (R-Calif.) Ventura County district to more than $5,000 per household per year in a dozen unfortunate districts. Leading the hit parade are the Nassau County constituents of Rep. Peter King (R-N.Y.). They will be asked to shoulder an increase in their tax burdens of an astounding $5,740 per year.

The study uncovered another dynamic -- an unexpected economic relationship between Red and Blue States. The investor class lives and works in the affluent, Blue State suburbs, where wages are higher and investment portfolios more common. The jobs their investments create, however, tend to be located in high-growth, Red State areas. A higher tax burden leaves the investor class with fewer after-tax dollars to invest -- hurting firms in high-growth regions and causing workers to lose jobs.

Consider how job losses would be distributed. Only four of the 25 districts hit hardest with the increased tax burden also rank among the 25 with the heaviest job losses. But 18 of the 25 with the greatest job losses are in Red States -- including communities that anchor rapidly growing regional economies in metropolitan areas, such as Las Vegas, Dallas-Fort Worth, Atlanta, Salt Lake City and Mesa, Ariz.

This prompts a question: If the Republican Party is the “party of the rich,” why do so many of the wealthiest Americans live in Democratic-controlled states and districts?

Mr. Franc, who has held a number of positions on Capitol Hill, is vice president of Government Relations at The Heritage Foundation. To send a question or comment to Mike Franc, email him at: MichaelFranc@heritage.org

[Red Badger]

HA HA!.........You lib guys asked for it!............now, you gonna pay and pay and pay and pay.........

[K-oneTexas]

Maybe a tax law could be crafted to “tax those that really, really, really want to be taxed” to ... help whomever or for ideological reasons. There would be a check block on the back of your National ID Card, with your signature of course, and a chip in your “???” to let the government know to “came and get it!”.

[Red Badger]

Those who say we don't pay enough taxes, our fair share, never volunteer to pay more than they are supposed to........

[DJ Frisat]

While it’s satisfying to think that the libs are going to ‘get theirs’, it’s also going to affect large numbers of conservatives.

The libs & the MSM will spin it and any impact that causes an outcry from libs whose taxes hit the ceiling will be successfully blamed on Bush for a variety of reasons.

And the gang-that-couldn’t-shoot-straight, with “GOP” on their propeller beanies, won’t have the slightest clue how to reflect the responsibility on whom it belongs.

[rabscuttle385]

The really rich liberals will hire people to manage their assets such that they successfully exploit loopholes in the tax code. The well-to-do liberals (but not really rich) in places like Arlington and Fairfax Counties here in Northern Virginia will suffer.

[MosesKnows]

If the Republican Party is the “party of the rich,”

Democrats often portray themselves as a beacon to the poor
Republicans "cater to the rich"

My father used to say:
The Republicans are the party of the rich.
The Democrats are the party of the poor.
The Republicans want as many people as possible to be rich.
The Democrats want as many people as possible to be poor.
Which would you rather be - rich or poor?

The logic would seem to be that in order for the party of the rich to collect more votes, that party would assist as many Americans as possible to be rich.

Then this logic must also be true.

In order for the party of the poor to collect more votes, that party would assist as many Americans as possible to be poor.

If the logic is reasonably accurate then my father’s observation was sound.

[Dark Wing]

ping

[ANGGAPO]

We told you so.

[conservatism_IS_compassion]

If the Republican Party is the “party of the rich,”

The Republican party is the party of the middle class.

The Democratic Party is the party of the poor and of the rich who can afford to buy off the poor with contributions to "their" party.