In a last-ditch effort to influence the stimulus package, Republicans have proposed an alternate bill focused predominately on tax cuts.
“If government spending was going to get us out of this mess, we’d have been out a long time ago, because that’s all we’ve been doing,” said Rep. Jim Jordan, R-Ohio. “This is not going to work. That’s why we’ve got a bill we think will work.”
Their bill, called the Economic Recovery and Middle-Class Tax Relief Act of 2009, promises a host of tax-cutting measures. It includes a 5 percent “across the board” income tax cut; an increase in the child tax credit from $1,000 to $5,000; a freeze on capital gains and dividends tax rates at 15 percent; and a number of other measures targeted toward businesses.
While the Democratic version of the bill is expected to pass the House today, the Republican initiatives are worth considering. I donâ€™t think tax cuts alone are going to be any more effective than spending alone would be, but such measures as increasing the child tax credit and freezing capital gains taxes at 15% are solid ideas. The child credit will help families weather the recession while keeping capital gains taxes low will ensure businesses can reinvest their money and move us more quickly toward recovery.
The problem for Republicans is that itâ€™s really easy for any broad tax cutting to be labeled a tax cut for the rich. If you pay more taxes, youâ€™ll get more immediate benefit. Republicans have yet to create innovative tax solutions to Americaâ€™s problems and are stuck recycling the same worn ideas. Even when those ideas are on-target, itâ€™s easy to dismiss them as out-of-date.
Perhaps Democrats will listen to Republican ideas as the stimulus moves towards passage. The bill could use a more even balance between spending and tax relief. But if Republican ideas fail to find a place in the stimulus plan, Republicans can blame themselves for having, from the beginning, an unfocused response to the economic crisis. Their ideas failed them in the election and it will not be surprising if they fail them here in the early moments of the Obama presidency.