Modernize and Moderate

The GOP Should Stop Worrying About Income Taxes (For Now)

02.22.13 1:10 PM ET

It's still not 1980 anymore, and if the GOP wishes to rebuild a formidable coalition on the level of Reagan's Revolution, we'll need more just a cosmetic makeover.

Here's one thought: with income tax rates now permanent, the GOP should shift its efforts to an across-the-board cut to the payroll tax.

I like you, Marco. Why don't you lead this one? (JEWEL SAMAD/AFP/GettyImages)

This quote from the Wall Street Journal illustrates why this is both a smart political move and a much needed kick in the pants for our shaky economic recovery:

The expiration of the payroll tax cuts that knocked 2% off consumers' take-home pay is having an impact, these companies say. It will ding a household with $65,000 in annual income $1,300 this year, and shift $110 billion overall out of consumers' hands, estimates Citigroup. ...

These companies say the changes could be long-lasting and are revamping operations to better cater to consumers pinched by higher taxes, stagnant wage growth and rising gasoline prices, which jumped nearly 50 cents a gallon in the past month alone.

Less take-home pay is causing 45.7% of consumers to curtail spending, according to a survey released on Thursday by the National Retail Federation, a trade group. A quarter of consumers are delaying big-ticket purchases, a third are reducing restaurant visits, and about a fifth of shoppers are spending less on groceries, it said.

In the below clip from Bloggingheads, Jamelle Bouie and I discuss the future of the GOP. I argue the GOP should center its strategy on the working class' major concerns in the 21st century: health care costs (and access!), the payroll tax, student debt, and wage stagnation. 

The remarkable irony of Mitt Romney's "47%" remarks was the reason half of Americans no longer pay income taxes is that the Reagan Revolution successfully pushed lower income Americans off the income rolls. That was a feature, not a bug!

It's time for the next step: let's lower the payroll tax for everyone, but the first step is cutting the payroll tax for America's working class. The politics are great, the policy is even better.

Who's with me?