So long as the US taxes income rather than wealth, Grover Norquist might as well be winning

Allowing Bush's tax cuts for the super-rich to expire would only address the effects of the Great Recession, not its cause

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One man is dominating U.S. news. His name is Grover Norquist. He's not a politician. He's not a bureaucrat. He's not even an intellectual. But he may be the most feared man in Washington - at least he was until President Barack Obama won reelection.

About 20 years ago, Norquist embarked on a quest to get every Republicans to pledge to never - never ever - raise taxes. Conservatives already believed government wasn't the solution to America's problems. It was the problem. But Norquist's organization, Americans for Tax Reform, took that idea to new heights. If small government is good, then starving the government of tax receipts for more than two decades is even better.

“I don't want to abolish government,” he said in 2001. “I simply want to reduce it to the size where I can ... drown it in the bathtub.”

That was then. Now we have a president who won on a promise to raise taxes on the very, very rich, and on a promise that government can help Americans who face economic destruction. This has put Republicans in a jam. Work with Obama or face the Wrath of Grover. “We’ve got some people,” Norquist told CNN on Monday, “discussing impure thoughts on national television.

Inequality

Mind you, Obama isn't asking for much. He wants to allow the George W. Bush tax cuts to expire on those who enjoy incomes above $250,000 a year. He wants to extend the cuts for everyone else. And he wants a return to the top rates of the Clinton years. Obama is acting the part of fiscal conservative while the so-called fiscal conservatives are dithering over questions of anti-tax purity.

Indeed, if lawmakers allowed the Bush tax cuts on the super-rich to expire, and then directed half of that revenue to job creation, the US could avoid the austerity crisis that has plagued Europe and even spur growth, according to the Economic Policy Institute. That tells you just how big those Bush tax cuts are.

But such a move, if it were to happen, would address only the effects of the Great Recession, not the cause: wealth inequality. That's why economists like Daniel Altman say quibbling over income taxes is a moot point. Wealth inequality is so extreme it “distorts economic opportunities,” he wrote in The New York Times.

Tax wealth not work

Replacing the income tax with a wealth tax - 1 per cent on wealth between $500,000 and $1 million; 2 percent over $1 million - would bring in more revenue than all the income tax the federal government currently collects. It would be fairer, too. The very, very rich don't rely on their incomes. They own things, like companies and securities, that yield dividends taxed at half the rate of incomes that most working Americans depend on.

Formerly implacable Republicans appears ready to strike a deal with the president, suggesting to some that Grover Norquist's reign of anti-tax terror is over. Maybe so. But as long as we are fighting over taxes and not wealth inequality, he may as well be winning. 

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