Democrats Propose Tax Cuts and Republicans Oppose Them. Has Your Party Changed and will it affect your business?

If you were having a hard time figuring out which political party stands for what, following the recent battle over the expiring payroll tax cut will not help.

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In the recent debate, Republicans shot down Democratic tax cut proposals and Democrats have blamed Republicans for a potential increase in taxes.

Have we entered the political Twilight Zone?

Now that a deadline is looming for a holiday payroll tax increase, both parties are vying for a quick answer that will not add to the embarrassment of the recently failed “supercommittee.”  Both want a payroll tax cut or an extension, which leads most Americans to see little difference between the party’s schemes.

Why the fight over what many see as the same solution?  A colleague of mine recently gave his candid take on the politics of it saying that “Ultimately, both parties are playing base games. . .”  With elections coming up, politicians will, however unfortunately, do what gets votes, which is far too often showing what your opponent will not do, not what you can do.

But for those of us who still have faith that our legislators have a more rational, economically-based explanation for their actions (there are still a few of us naïve souls out there), good luck finding it in this talking-points dominated political world we live in.

“House Republicans have been opposed to extending the payroll tax cut for middle income Americans,” according to Democratic leaders.  However, the Senate recently denied the same Democratically-proposed legislation, with fewer affirmative votes than there are Democrats.

Republicans also blame their counterparts, claiming that Democrats are the reason their legislation has not gained headway.  If the Democratic proposal was slapped down, the Republican version was shot out of the sky with a hypersonic missile, garnering approval from only 22 Senators.

Although both proposals seem contrary to previously-established party ideology, let me make you feel better:  nothing has changed.

Republicans want to pay for a payroll tax cut by shrinking the number of federal employees and freezing their pay.  Democrats want to pay for a payroll tax cut with the tax hikes on the “wealthy” they have been aiming for since the oldest member of Congress, Ralph Hall (R-TX), was being fed mashed peas and carrots with a spoon (which is kind of confusing, since he is old enough to be doing the same now).

Both parties agree that increasing the payroll tax will cost jobs. Even the Democratic Congressional Campaign Committee has said, “Independent economists have found that increasing the payroll tax could cost nearly 1 million American jobs and trigger another recession.”

When a prominent Democratic organization makes the same argument against raising taxes that they have repudiated for decades, you have to question their genuineness.

But since they both “agree” on some form of payroll tax cut, what remains is whether the adjoining legislation’s benefit will outweigh the sacrifices we will have to make in order to “pay for” the cuts.

And that brings us back around to the same ideological divide we have always had.

Democrats want to counter the payroll tax cut with an increase in taxes on wealthy Americans, bringing in extra revenue that the government needs to support future spending.  Economist Walter Williams refutes the intended effects, “When individuals face higher income taxes, they report less income, buy tax shelters and hide their money.”  In addition, wealthy individuals, who are also far more likely to own and invest in small businesses that employ the rest of the population, will generally make cuts in their business investments, stocks, bonds, and savings – all of which is used by corporations, businesses, and even governments to raise money in order to invest in expansion and hiring – before they will sacrifice the lifestyle of their own families or the investments in their grandchildren’s future.

Republicans want to suspend pay raises for federal employees – who already earn far more in pay and benefits than the average American – as well as reduce the number of new hires that replace retirees.  Otherwise the rest of the country is forced to continue to subsidize the near full-employment and professor-like tenures of the government and its employees, while they continue suffering from record unemployment and may be fired at the mere mention of increased business costs or tax increases.

In this “post-racial” political world, Democrats have responded with the fact that African Americans are employed at a higher rate in the federal government than within the private sector and, therefore, if Republicans want to reduce government, they must be as racist as Bush when he “refused” to help African Americans in New Orleans.

An equally preposterous response could be that, since Hispanics are employed at a lower rate in the federal government than in the private sector and also have a higher level of entrepreneurship than most Americans, Democrats who want to reduce the capital available to small businesses and reduce the opportunities for Hispanic-hiring in the private sector in order to subsidize Whites and Blacks in the federal government, must also be racist.

Although surface pundits and political strategists may want you to believe that your party of choice has somehow betrayed its core values and become the hypocrites they have always told you they are, Republicans are still for shrinking government and cutting expenses and Democrats are still propositioning an increase in the size of government and raising revenues through new taxes.

We have to decide, not as Whites, Blacks, or Latinos, but as Americans, which course is going to be the best, not for short-term political punditry, but for long-term American prosperity.  Your ability to see through political motives and recognize true intentions will affect generations to come.

Justin Vélez-Hagan is the National Executive Director of The National Puerto Rican Chamber of Commerce, and an international developer of senior living facilities.  Justin is also a contributing writer for Politic365 and a member of the U.S. Air Force Reserve.  He can be reached at Justin@Politic365.com or @JVelezHagan.