Hey, didn’t the GOP say it cared about deficits?
by Linda Beale
Hey, didn’t the GOP say it cared about deficits?
Just when you think those on the radical right had gone about as far as they could go without recognizing their own zaniness, those in Congress have revived their version of a tax “reform” for businesses. It was first proposed in 2009–as an alternative to real stimulus spending on infrastructure . And yes, it is yet another tax cut. An even zanier one than the rest that they’ve come up with while at the same time whining of deficits and suggesting that longstanding social programs like Social Security and Medicare must be cut back.
Eric Cantor, in a memo last month to fellow Republicans, announced that the House would be putting this proposal forward–let every business with 500 employees or fewer deduct off the top 20% of their income. And they want to pass this rot by the filing deadline–on the pretense that it will help ordinary folk.
See Richard Rubin, Hedge Fund Tax Break May Come in Republican Small Business Plan, San Francisco Chronicle (Bloomberg News, Mar. 8, 2012).
Now, folks, there are some mighty BIG businesses with fewer than 500 employees. Like just about every hedge fund and leveraged buyout fund. (The latter, of course, like to call themselves “private equity” these days–let’s people overlook the fact that they have destroyed many a stable, profitable business by loading them up with debt and sucking out all the cash while firing employees or making the business focus on paying back the debt and not on doing business). Why would the GOP want to reward those funds with even more tax breaks than they already grab for themselves–carried interest, pass-through taxation, and the ability to avoid the payroll taxes since they treat their compensation as though it were an investment gain? Because that is what they are all about–making sure the richest people in the country get all the breaks.
Then there are sports teams. Liquor stores. Golf courses. Gambling dens….. Hotels. Restaurants. Engineering firms. Accounting firms. Law firms. Architectural firms. Big Business that normally make Big Money.
Just goes to show that the corporatist GOP never saw a tax break for the monied class that it didn’t like.
crossposted with ataxingmatter
“they have destroyed many a stable, profitable business by loading them up with debt and sucking out all the cash while firing employees or making the business focus on paying back the debt and not on doing business”
Hey! Those are my qualifications for being President.
😉
I do think that the public is starting to catch onto their game—their purpose and the effect. Romney, btw, apparently said a day or two ago that his tax plan can’t be “scored” for its deficit impact because, well, Congress would amend any bill he proposes. As if the issue isn’t the impact of what Romney proposes, rather than the impact of what any final bill would be.
Hedge Funds are generally structured as LLCs or LLPs, and thus don’t have any profits as business entities.
Linda
first off, please understand that I agree with you.
second, as long as the middle class whines about “don’t tax us; tax the rich” and the democrats call ending the payroll tax cut a “huge tax increase on the poor”, you, “we”, are all suffering from the same brain damage that fuels the Republicans.
Coberly:
Your favorite Middle Class rant . . .
Lets understand why your critique of there stance and personally mine is off base. The entire Boy-George Bush administration skewed its priorities towards maintaining maintaining and increasing their level of income during one of the worst recessions ever experienced interms of income and employment which we have still not recovered. Historically, Bush was the only one who actions preserved the incomes of a minority of household taypayers.
The Middle Class, that starting from well above the Median Household Income, is not afraid to pay taxes. You would have those who are at Median Household Income begin to pay taxes again when they have lost much more in the last decade through no fault of their own. Obama’s plan to tax the $250,000+ incomes does indeed hit much of today’s middle class in income.
Coberly:
Your favorite Middle Class rant . . .
Lets understand why your critique of their stance and personally mine is off base. The entire Boy-George Bush administration skewed its priorities towards maintaining maintaining and increasing their level of income during one of the worst recessions ever experienced interms of income and employment which we have still not recovered. Historically, Bush was the only President who actions preserved the incomes of a minority of household taypayers during a severe recession. Even Hoover did not attempt such.
The Middle Class, that starting from well above the Median Household Income, is not afraid to pay taxes. You would have those who are at Median Household Income begin to pay taxes again when they have lost much more in the last decade through no fault of their own. Obama’s plan to tax the $250,000+ incomes does indeed hit much of today’s middle class in income.
Your favorite Middle Class rant . . .
Lets understand why your critique of their stance and personally mine is off base. The entire Boy-George Bush administration skewed its priorities towards maintaining maintaining and increasing the level of income for those taxpayers occupyiing 1% of the highest incomes during one of the worst recessions ever experienced interms of income and employment which we have still not recovered. Historically, Bush was the only President who actions preserved the incomes of a minority of household taypayers during a severe recession. Even Hoover did not attempt such.
The Middle Class, that starting from well above the Median Household Income, is not afraid to pay taxes. You would have those who are at Median Household Income begin to pay taxes again when they have lost much more in the last decade through no fault of their own. Obama’s plan to tax the $250,000+ incomes does indeed hit much of today’s middle class in income.
$250,000K+ incomes are the middle class?
run
yes. we don’t seem to be talking about even the same sort of thing. you seem to imagine that God has Ordained that you should never experience a loss of income. And that Therefore only people who are Really Rich should ever have their taxes raised.
The Really Rich of course imagine that God has Ordained that the Really Rich are the Jobs Creators and should never ever have their taxes raised lest they sulk and the people perish for want of jobs.
Me, I think tax cuts have been bad economic policy for the past thirty years or so. Therefore I think More Tax Cuts may be the wrong solution to the hole we have dug ourselves into. And since I Do Indeed thing the Rich should Pay More Taxes, I believe that So Should I, if for no better reason than to Set An Example.
I also think Tax The Other Guy is creepy, sick morality. I am willing to make taxes progressive According to the Ability to Pay. But I have no patience with people making 100k who say they are too poor to pay taxes. I don’t even have patience with people making 10k who think someone else should pay taxes for their retirement insurance.
Maybe someday we can have a nice talk about Losing Something Through No Fault of Your Own. But first you will have to have lost something important.
run
yes. we don’t seem to be talking about even the same sort of thing. you seem to imagine that God has Ordained that you should never experience a loss of income. And that Therefore only people who are Really Rich should ever have their taxes raised.
The Really Rich of course imagine that God has Ordained that the Really Rich are the Jobs Creators and should never ever have their taxes raised lest they sulk and the people perish for want of jobs.
Me, I think tax cuts have been bad economic policy for the past thirty years or so. Therefore I think More Tax Cuts may be the wrong solution to the hole we have dug ourselves into. And since I Do Indeed think the Rich should Pay More Taxes, I believe that So Should I, if for no better reason than to Set An Example.
I also think Tax The Other Guy is creepy, sick morality. I am willing to make taxes progressive According to the Ability to Pay. But I have no patience with people making 100k who say they are too poor to pay taxes. I don’t even have patience with people making 10k who think someone else should pay taxes for their retirement insurance.
Maybe someday we can have a nice talk about Losing Something Through No Fault of Your Own. But first you will have to have lost something important.
Batmensch:
Hmmmm and why not? If you follow why the AMT was established in the seventies, then I believe you would have your answer. Thae AMT was established then because some of the the rich (~200) or those making > $250,000 escaped all income tax. I believe Mike Kimel would tell you that same $250,000 in income now is >$1,000,000 today.
Now one could say the middle class are those with the greatest number of taxpayers and probably clustered around Median Household Income. I tend to believe the economy has gone beyond that beleief and much of the population has slipped backwards. Dr. Warren provides some good reasoning why this has taken place.
Middle calsss is no longer what it was decades agao as income has been stagnant or declined for many people. My $.02.
run income hasn’t been stagnant or declined for the past three decades for the top 2-3 percent of earners. These people have increased their share of income while everybody else did not or lost share.
$250,000 is about where the top 2 percent begins, so raising taxes starting at around this level is not unreasonable from that standpoint.
On the other hand, the argument that the middle class ought to chip-in has merit as we get out of the recession and need to address deficit levels. The only “Bush tax cut” that I hate to see expire is the 10 percent bracket on AGI up to $17,400 (joint/combined return), which would return to 15 percent. Low-income folks don’t need a large tax increase.
It’s probably safe to guess that the top 2-3 percent of earners from 3 decades ago are not the same individuals who comprise the top 2-3 percent of earners from 2011.
As for “Bush tax cut”, Obama signed a bill that maintained the then-current tax rates which were set to expire absent legislation in December of 2010, thus at this point, it’s just as accurate to call it “Obama’s tax policy”.
As for the 10% bracket – (1) by suggesting that if it were to expire, low-income folks were to suffer a large tax increase follows that the Bush tax cuts provided for a large tax cut for the low-income folks when originally implemented (despite cries of it being designed as only tax cuts for the rich), and (2) JCT agreed at the time, scoring the 10% bracket at about 1/4 of the overall costs of the Bush tax cuts.
Creation of the 10 percent bracket was indeed a nice tax cut for those making low (lower than middle class) incomes. AND most of the tax cuts, by far, were for people in the high brackets. Both are true. The JCT estimate implies, for example, that the bottom quintile of tax filers received less than 5 percent of the tax cuts–my point is that a little bit of money means a lot to folks who don’t have much, and I’d prefer not to take it back from them.
PJR:
Why are you the only one who understands this?
Jed:
Oh BS, give these people back the $1.5 trillion squirreled away for less than 1.1 million household taxpayers. The low income perhaps expierenced tax breaks in the aggregate far less than those in the upper 1%. 10% is not the same as the 1% and is a canard or red herring in trying to disprove where the tax breaks went. Jed, you are going to have to do better than this. CBPP says dfferently.
PJR:
No , it doesn’t have merit. This group of people spent far more to bail Wall Street out with lost jobs and income. Certainly, you realize this?
Coberly:
For as much as you know about SS, you know “squat” on how this played out. The $100,000 income people do pay taxes as well as many more above them. There salaries stagnated the same as many more below them. Why not learn the topic before you come and discuss it with me. You do not know what you are talking about and your prejudice is very apparent.
Run it does have merit if I assume you are referring to Coberly’s argument that the middle class also should chip-in. Beyond the bottom bracket,the Bush tax cuts applied to incomes approaching and exceeding six figures, well above the median (using married/joint brackets). These people can return to rates that get close to Clinton-era without much suffering and I think eventually we’ll need to do that rather than just increase taxes on the top 1-2 percent. In short, I think Clinton rates were not onerous for the middle class; they were too high on the lowest earners; and they were too low on the highest earners. But that’s just me maybe.
PJR:
These people financed Wall Street in the 2008 crisis. They lost their jobs, they l;ost their 200.5ks, they lost their homes of 6 to 7 rooms, and they deserve a break. They paid with income which stagnated and decreased. No, they deserve a break at the expense of Norquist, Ginrich, Romney and all of those who proffer thier own ilk. What you think is not the issue. What is reality is the issue. Speak of reality and not of illusions as Coberly imagines.
In order to benefit from reductions in marginal/effective income tax rates, the starting point has to be such that one is paying taxes before the reductions go into effect.
Yes run, I know some of these people. Coincidentally they’ve been die-hard conservative Republicans for over 30 years, although now they’re wondering if they’ve been wrong. But I do not weigh their politics and voting behavior in judging what “they deserve” after having their share of pie-growth diverted to the wealthy for the entire time. I also am not considering that these people got more tax breaks from Bush than most tax filers and suffered less in the recession than people who had nothing but their low-paying jobs. And I assume nobody is considering the notion of expropriating ill-gotten gains from the wealthy to redistribute them according to what people “deserve.” Instead, I am focusing on the future and improving the income tax system. People earning six-figures in future years can afford to see their marginal rate increase 3 percent, to Clinton-era levels, just as they once did. People at the top of the pyramid can afford to pay a heck of a lot more than that.
run
as i said, we are not even talking about the same sort of thing.
i would be very happy to learn the topic, if you think you present it in a way i could understand.
it seems to me you keep repeating “their salaries stagnated.”
i don’t dispute that. i do say that is not a reason for them not to have their taxes raised.
pjr
no, we don’t need a large tax increase, but a small tax increase would be bracing. in the case of the low end tax payer it’s more a matter of mental hygiene than the amount collected.
that is… you can’t tell some people it’s okay you get a free ride, while the wicked rich have to pay…
this is bad psychology and bad politics and that leads to bad policy and that is why the poor are so poor.
well, jed
but if reductions in marginal tax rates leads to a country that staggers and falls, who benefits?
run75441
seems to be imagining that i am going to pry his hard earned cash from his cold dead fingers in order to provide tax relief for the very rich. actually, i was thinking he wouldn’t miss another percent or so… i know i wouldn’t, and i am not anywhere near 100k… but paying that extra 1% would allow me to go with a straight face and ask the very rich to pay another, say, 5%. which, i think, together with pro-worker policies, would be enough to solve the deficit “problem.”
and i don’t think it would hurt the “stimulus,” because low taxes are not what we need to stimulate an economy that as been “stimulated” by low taxes for 30 years.
Just to be clear about small versus large tax increases, Coberly, what I would prefer not to see is the bottom bracket go up by 5 percentage points, i.e. a fifty percent hike for people earning very little money, as part of a simplistic “let’s get rid of all the Bush tax cuts.” I prefer that these people to pay their social security taxes again, not a lot more income taxes. If somebody were to propose a one percentage point increase to the bottom bracket and removal of all the other Bush tax cuts–nobody has–I could be there.
I think some people, perhaps including m.jed, are under the impression that you have to make a lot of money before you actually pay some income taxes. Wrong. This is one of several lies that people spread when they want to claim that low earners don’t pay their share.
After writing much of this, I’ll acknowledge that some of it is duplicative from different sources/years, so the volume shouldn’t necessarily be taken as discrete supportive data points.
According to the Tax Policy Center, one had to be in the middle quintile of household income before having a positive share of federal income tax liabilities as of 2007 – latest data available. http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?DocID=558&Topic2id=20&Topic3id=22
From their model, one had to be in the $30k-$40k cash income level before having a positive share of federal income taxes according to 2012 projections, or a positive effective tax rate according to 2011 projections.
http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?DocID=558&Topic2id=20&Topic3id=22
http://www.taxpolicycenter.org/numbers/displayatab.cfm?DocID=3276&topic2ID=40&topic3ID=41&DocTypeID=1
And according to the CBO, as of 2006, the bottowm 2 quintiles of household income had negative income taxes. The threshold to make it into the middle quintile of adjusted household income, for whom the effective tax rate was 3%, was $31,200.
http://cbo.gov/publication/42878
And since the data supporting the last point is dated, we also know that the bottom 50% of household income quintiles paid an effective federal income tax rate of 1.85% in 2009 vs. the 3% paid in 2006.
http://www.taxfoundation.org/news/show/250.html
I’ve seen these calcs, too, m.jed. And I believe they always report averages, which means “on average” or “statistical mean (variance unstated).” So here’s a dare: walk into a Marine barracks and say “Any of you low-lifes sucking on the teets of American taxpayers for your miserable paychecks who actually have paid income taxes can take a free shot at me.” It would be quite a pummeling. Trust me on this.
Aside from my not having sufficient imagination to consider addressing a veteran or enlisted person in such a disrespectful manner, E-1 Marines earn 37k per year putting them squarely in the income quintile/levels where the above data indicated they’re paying income taxes.
And of course the data is aggregated. And I do have sufficient imagination to consider that a few of the 44 million households in the bottom 2 income quintiles are paying federal income taxes. But on average, they don’t. And I’d guess if presented with percentiles within each quintile, the breakpoint would be significantly higher than the median.
I accept in advance your apology for your false accusation that I spread lies since the best you can come up with is refutation by anecdote.
A Marine E-1 makes $17,892 per year. And typically pays federal income taxes. An E-4 makes over $2K/month but only an E-7 makes over $3K/month as you claim. If you don’t like anecdotes, check the pay table here: http://www.navycs.com/2012-military-pay-chart.html Perhaps your figures include (non-taxable) reimbursement rates for food and housing for Marines who choose to live off base rather than in barracks.
If you want to say that low-earners on average don’t pay federal income tax, that’s fine, but nowhere do you ever say this. Instead you consistently say “one had to be” in a certain quintile or certain pay range to pay taxes, which is false. Plenty of low-paid people pay federal income tax and it is insulting to them to claim otherwise.
mjed:
As this old Sgt E-5 USMC used to make ~$425/month (3+ years) and was thrilled to get it as I could then fly to NYC, visit my financee and still have $ left over until I got paid again. I think you are quoting a Marine with a living allowance and other pay. I agree with PJR, the pay for a E-1 less than 2 years is ~$1400 per month as shown here: http://www.militaryfactory.com/military_pay_scale.asp I paid Fed Taxes after Vietnam which pissed me off and I am confident these young gyrenes are also. Someone could prove me wrong by looking it up though.
As far as who doen’t pay federal income taxes, this table may be helpful: http://www.taxpolicycenter.org/numbers/displayatab.cfm?DocID=3056 Rather than worry about these taxpayers who pay no federal income taxes but do pay state, local and sales taxes; I would rather concern myself with those taxpayers and corporations who pay no federal income tax.
mjed:
Payroll taxes have come to replace Corporate taxes as the federal revenue used to finance the gov programs. Anyone who works pays payroll taxes.
Run, thanks for the links. As I suspected, significantly more than 50% of each of the lower 2 quintiles are non-taxpayers. And I agree that state, local, and sales are more regressive – but Federal tax policy is separate and distinct from star, local, and sales, and doesn’t make sense to me to criticize Bush/Obama et al for amending Federal tax policy without them taking local policy into consideration, when they have no control over it.
As for other allowances, I’d love for my company to cut my salary by a third and provide me with a tax-free housing allowance instead. Clearly that’s a form of income, regardless of how the IRS views it.
Thanks Jack. Nice table of tax units broken down by “cash income” (which is quite different from AGI but still useful). It shows over 5.5 million paying positive federal income taxes with cash incomes below $20K. It’s a small percentage of people but we shouldn’t forget that they exist.
Thanks Run. Nice table of tax units broken down by “cash income” (which is quite different from AGI but still useful). It shows over 5.5 million paying positive federal income taxes with cash incomes below $20K. It’s a small percentage of people but we shouldn’t forget that they exist when discussing the tax code.
mjed:
“I’d love for my company to cut my salary by a third and provide me with a tax-free housing allowance instead”
If you are referring to the military; having fought the war from 50 feet away a few times and surviving, I will assure you the $125/month salary, combat pay, room and board I received as a Lance Corporal was not enough to compensate for getting shot and watching my friends disappear.