GOP goes to bat for richest two percent

For practical and political reasons, the Obama administration has decided to allow Bush-era tax cuts for the middle class to stay in place. Politically, the president campaigned on a promise of not increasing taxes for the middle class. Practically, middle-class and working-class Americans will spend more of that money rather than saving it, which will help a weak economy.
However, to address the deficit, Obama wants to allow the tax cuts on the richest Americans to expire. Last week, Treasury Secretary Tim Geithner confirmed the Obama administration’s intention to allow steep tax cuts for the rich to expire on Jan. 1, 2011, as the law requires. “We believe it is appropriate to let those tax cuts that go to the most fortunate expire,” Geithner told a gathering of journalists last week.

Oddly, Republicans, joined by a small group of Democrats, are arguing against allowing the tax cuts to lapse. Even though the GOP has made the size of the deficit one of their premier issues for the mid-term elections, they don’t want to increase revenue by hiking taxes on the richest Americans. It’s more rank Republican hypocrisy.

As I’ve said before, this is elementary-school arithmetic, folks. Let’s say you’ve decided you could afford to start working part-time, but you’ve encountered an emergency — say, you need a new car — and suddenly, you’re head over heels in debt. You need to do two things: Cut spending and go back to work fulltime, i.e. increase revenues. Simple as that.
You can’t any more repeal the rules of arithmetic — two plus two still equals four — any more than you can repeal the laws of physics.

From the WSJ:

Democrats are aiming to push legislation extending Bush-era middle-class tax cuts ahead of midterm elections. But with Republicans and several Democrats advocating a similar extension for high-earners, too, prospects for passage before November balloting appear uncertain.

So Democrats already are planning to turn the issue into a campaign theme—by blaming Republicans if the legislation fails. The looming battle over taxes and spending is likely to be a dominant one in Washington, stretching into next year, as the government begins to address chronic budget deficits.

“The Senate will move first, and it will be a test to see whether Republicans filibuster” to block the bill in a bid to also win tax cuts for higher earners, said Rep. Chris Van Hollen of Maryland, head of the House Democrats’ re-election effort.

“If you can’t get it out of the Senate, then you take it to the election,” Mr. Van Hollen said in a recent interview. “You say to the American people that Republicans want to continue to hold middle-class tax relief hostage for an extension of tax breaks for [the well-to-do]. That will be the debate.”

A spokesman for Senate Majority Leader Harry Reid confirmed on Sunday that the Nevada Democrat “intends to take a bill [to extend middle-class tax cuts] to the floor in September.” . . .

About 2% of U.S. households earn more than $250,000 annually, according to recent statistics. Still, the Senate-first strategy feeds into one of the Democrats’ broader themes—that Republicans are clinging to policies of former President George W. Bush.

The strategy also could mute Republican criticism that Democrats are doing nothing to address the tax cuts’ expiration. And by having the Senate move first, it might allow vulnerable House Democrats to avoid politically risky votes to raise taxes on higher earners, or add to future budget deficits.

Rebuplicans argue that increasing taxes on the wealthy kills job creation, but there is absolutely no evidence that’s so. Raising taxes on the wealthiest Americans would hike their taxes to the same rate which they paid under Bill Clinton, a time of no budget deficit and widespread prosperity. By contrast, George Bush’s tax cuts helped produce a mind-boggling budget deficit while creating NO jobs. The years between 1999 and 2008 were what economists are calling a “lost decade,” in which the net number of jobs created was ZERO.
This is a battle Democrats should take up with relish,.

A chart from the Wall Street Journal shows how various income brackets would be affected if the tax cuts were allowed to expire:

NA-BH188_TAXES_NS_20100725185218

444 comments Add your comment

GB

July 27th, 2010
7:38 am

Is there any limit to the government’s greed? Is there any limit to Tucker’s willingless support confiscatory tax policies?

Look at the chart. Under the current tax, with the Bush rate in effect, the federal government takes over one-quarter of the money earned by the couple making $1,000,000. Obama and Tucker think it is fair to up that to over 30%.

Look at the couple making $50,000. Now they pay about 1.4% in federal taxes. Obama and Tucker want to lower this 1.4% to LESS THAN ZERO and give them money taken from other taxpayers.

This is theft. And people opposing more theft are the bad guys in the Bizzarro World Obama and Tucker live in.

Granny Godzilla

July 27th, 2010
7:38 am

Darn! I was hoping to post that graph myself today.

The question is, why is the GOP calling for the largest increase to our
deficit in history?

Why are they questioning the wisdom of their former leader who planned
for those cuts to be temporary?

[...] is the Democrat strategy… Democrats are aiming to push legislation extending Bush-era middle-class tax cuts ahead of [...]

Bubba

July 27th, 2010
7:54 am

Thanks for publishing the chart. It helps me see clearly that rich people really do pay most of the taxes. Good information. Keep up the good work.

LeeH1

July 27th, 2010
7:55 am

Ahh, the GOP. The best government money can buy!

MAC

July 27th, 2010
8:00 am

Why not increase taxes on all Americans if it’s such good policy?

ctucker

July 27th, 2010
8:06 am

Bubba, We have what’s called a “progressive” income tax system. Who do you think should pay most of the taxes?

hahahahahaha!!!!

July 27th, 2010
8:09 am

And so are some, soon to be a lot, of prominent Democrats. What you are wanting is one of the largest tax increases in this nation’s history, which is beyond moronic during one of it’s worst economic down turns in its history. This is the longest unemployment has been this high EVER. Obama and his Communist policies are imploding and I’m loving every second of it!!!

Peadawg

July 27th, 2010
8:10 am

“Who do you think should pay most of the taxes?”

Democrats should put their money where their mouth is. Cynthia, did you send the government more than you owed them back in April?

Granny Godzilla

July 27th, 2010
8:10 am

hahahaha

largest increase to deficit in history……..

Granny Godzilla

July 27th, 2010
8:11 am

Peadawg

Did you send them less because that’s what you thought was fair?

common sense

July 27th, 2010
8:11 am

You are right Cynthia. Since poor people have always been the ones to give me employment, which I’m sure you’d agree with, right Einstein?

Which makes more sense? To take more money away from the people that actually drive the economy and are actually responsible for people having jobs, or to steal their money which in turn helps create even less jobs than we already have? Man….that’s a thoughy……

MAC

July 27th, 2010
8:12 am

Your constant game of assigning all the 1999-2001 dot com job losses to Bush instead of Clinton is misleading at best and a flat out lie at worst.

Granny Godzilla

July 27th, 2010
8:14 am

common sense

“To take more money away from the people that actually drive the economy”

Problem with that…..they’ve had their tax cut AND managed to drive the economy over the cliff.

Peadawg

July 27th, 2010
8:14 am

“Did you send them less because that’s what you thought was fair?”

I sent them what I was told to send them. But all Democrats talk about is increasing taxes…but I doubt you or Cynthia sent them more than you owed. Y’all are all talk.

Rick

July 27th, 2010
8:15 am

Low income earners should be just as respsonsible for supporting our government as high income earners.

This earned income credit is baloney, a large percentage of these deadbeats made all the wrong decisions about applying themselves when they were in K-12.

The federal government could save $102 billion each year if they would use E-Verify to deny jobs to illegal aliens here in the US. Why isn’t the non-enforcement of our immigration laws not seen as an added drain on local taxpayers and ultimately the federal budget?

Yes, the GOP should not be fighting these tax increases at this time, but for the long run, these low income earners should be pulling their fair share of the load. If you get any “earned income credit” (how is it earned?), you should not be able to vote in the next election cycle. Let’s apply the idea of no taxation without respresentation both ways. If you don’t pay income taxes then you don’t have the right to be represented.

We are close to the tipping point where 47% of the nation pays no federal income taxes. Increase this a couple of percent and the government will become solely a vehicle for income re-distribution. Not a principle this country was founded on!

T-Town

July 27th, 2010
8:15 am

My question is “who decides what is fair?” I have never seen so many with so little to risk so eager to spend and take what doesn’t belong to them and call it fair.

southerngal

July 27th, 2010
8:19 am

All earners who earn more than 250k(no matter how many children) should not be allowed to itemize.

Granny Godzilla

July 27th, 2010
8:21 am

So Peadawg

You handsome devil, if you were Patrick Henry Peadawg you’d
say “Give me liberty, but not if it makes me uncomfortable”?

Talk about all talk,

Bubba

July 27th, 2010
8:22 am

Bubba, We have what’s called a “progressive” income tax system. Who do you think should pay most of the taxes?

I think the rich should pay most of the taxes. And they do. But I think they should pay at the same rate. I am opposed to progressive taxes.

T-Town

July 27th, 2010
8:26 am

As usual, tax the other guy as long as it doesn’t affect me. Of course, if I get more than tax the other guy some more, it’s only fair.

quod erat demonstrandum

July 27th, 2010
8:27 am

I just wonder why the more you succeed the greater the percentage of your money the government should take?

Time for a flat tax – a straight 12% across the board.

Better yet, repeal the 16th and 17th amendments.

MAC

July 27th, 2010
8:29 am

The objective of tax policy in a global economy ought to be to attract worldwide capital to the U.S. and not to capture maximum revenue from citizens to fund maximized spending by the politicians.

Under this Administration and Congress, capital investment and by definition JOBS will continue to be invested in other countries with more certain and favorable tax policies by those companies large enough to do so.

Almost all of the job growth in this country in the last 20 years has been from SMALL business. Small business can’t allocate capital around the world and Small business is being killed by increased regulation, taxes and uncertainty. Small business is not hiring. Small business is mostly S corp, LLCs and Partnerships who, by definition, pay taxes on profits on a flow through basis as individuals even if the profits generated are kept in the business for investment and growth and no cash is actually received by the shareholder owners. Expect continued job losses and high unemployement levels from these tax cuts expiring, employer health care mandates and other numerous tidbits found buried in the big bills recently passed.

Tall

July 27th, 2010
8:30 am

“The question is, why is the GOP calling for the largest increase to our
deficit in history?”

Granny G: Can you develop this argument a little further? I like to read Ms. Tucker’s columns to see what other folks think. I’m very much to the right. What I find consistent with most of the people who post here, including Ms. Tucker, is that cynicism substitutes for logic. Or are these stabs an attempt at comedy?

If you think upper income taxpayers – or “the rich” – are some inexhaustible resource to be exploited, guess again. They can hire tax accountants and tax attorneys, elect to defer income or move to states with lower tax rates. See LeBron James choice of Miami over New York City.

MAC

July 27th, 2010
8:32 am

Why not eliminate all individual tax deductions and tax credits if it’s such good policy?

T-Town

July 27th, 2010
8:33 am

Lets all sing with the Beatles:

Let me tell you
How it will be.
There’s one for you,
Nineteen for me,

‘Cause I’m the taxman.
Yeah, I’m the taxman.

Should five percent
Appear too small,
Be thankful I don’t
Take it all.

‘Cause I’m the taxman.
Yeah, I’m the taxman.

If you drive a car,
I’ll tax the street.
If you drive to city,
I’ll tax your seat.
If you get too cold,
I’ll tax the heat.
If you take a walk,
I’ll tax your feet.

Taxman!

‘Cause I’m the taxman.
Yeah, I’m the taxman.

Don’t ask me what I want it for,
(Uh-uh, Mr. Wilson.)
If you don’t want to pay some more.
(Uh-uh, Mr. Heath.)

‘Cause I’m the taxman.
Yeah, I’m the taxman.

And my advice to
Those who die.
(Taxman!)
Declare the pennies
On your eyes.
(Taxman!)

‘Cause I’m the taxman.
Yeah, I’m the taxman,
And you’re working for no one but me.
(Taxman!)

Good Grief

July 27th, 2010
8:34 am

The problem is, many of the people who will be affected by a repeal to the Bush tax cuts are small business owners who report their business income as personal income. These people would now see their taxes jump to around 30%. Couple that with the increases in tax pressure that will hit these people under ObamaCare and you’ll see more jobs lost than created.

We have a government that punishes success by means of this “progressive” tax.

Thomas

July 27th, 2010
8:36 am

Got to love it- make 50k and get a check from your neighbors to do so. How insulting. What will be fun is to read the next couple of weeks where folks will write in that “everyone pays income tax”. It is my firm belief that only the top 2% should pay all the tax and the rest pay none- then and only then will the economy take off.

Good Grief

July 27th, 2010
8:39 am

QED @ 8:27
“Better yet, repeal the 16th and 17th amendments”

Amen!

Scout

July 27th, 2010
8:39 am

All I know is those “Obama” bumper and window stickers are pretty much gone around here !!

My how times have changed !

Granny Godzilla

July 27th, 2010
8:41 am

From TPM

According to the Center on Budget and Policy Priorities, however, fewer than 2 percent of the small businesses in the country face either of the top two tax brackets, which are the ones in question, while 34 percent are in the lowest tax bracket. 14 percent of small businesses actually qualify for the Earned Income Tax Credit, which is only available to low-income working people.

Plus, “many of the roughly 650,000 filers with small-business income who face one of the top two tax rates are merely passive investors who have nothing to do with running the business”:

Under the Treasury definition [of small business], for example, the $84 of income President Bush received in 2001 from a passive investment in an oil and gas company made him a “small-business owner.” About 35 percent of “small-business owners” with incomes above $200,000, and about 58 percent of “small-business owners” with incomes over $1 million, received some or all of their business income in the form of passive investments. The Treasury definition also counts as “small-business income” the fees that CEOs are paid for sitting on corporate boards.

meinpvb

July 27th, 2010
8:42 am

In any other context this would be called robbery! If the government can do this, why can’t I go to a bank and steal their money? They have enough and I need more. Instead I work out a budget and follow it without having to take my neighbor’s money. Perhaps Obama should follow this. It has been shown numerous times that when you let the “wealthy” keep their money they put it back into the economy through jobs and purchases. Obama is on a slippery slope. Why does he decide who is too wealthy and should pay more? Boy, would I love to see his tax return.

bill johnson

July 27th, 2010
8:42 am

* The Obama Administration and Congressional Democrats have said that they want to raise taxes in the top two income tax rates in January 2011. Under their plan, the 33 percent rate will rise to 36 percent, and the 35 percent rate will rise to 39.6 percent automatically in January. These rates affect families and small business owners earning at least $200,000 per year

* Unlike corporations, small businesses usually don’t pay their own taxes. Rather, business profits flow through to the business owner. The business owner pays taxes on her small business by adding the profits to her income tax form. Therefore, personal income taxes are the same thing as small business taxes.

* According to the IRS, most small business profits pay taxes in households making more than $200,000 per year. The IRS keeps track of two types of small business income: sole proprietors, and “pass-through” entities like partnerships and S-corporations.

* All small businesses. There were 30 million tax returns reporting small business income in 2008. On net (profits reduced by losses), these owners reported business profits of $981 billion. A large chunk of this net profit–$488 billion—faced taxation in households making more than $200,000 per year. A majority of small business profits will face a tax rate hike under the Obama-Pelosi-Reid plan.

* Sole proprietors. There were 22 million tax returns reporting sole proprietor income in 2008. On net (profits reduced by losses), these owners reported business profits of $264 billion. A large chunk of this net profit–$90 billion—faced taxation in households making more than $200,000 per year. 34 percent of sole proprietor profits will face a tax rate hike under the Obama-Pelosi-Reid tax hike plan.

* S-corporations and partnerships. There were 8 million partners and S-corporation shareholders in 2008. On net (profits reduced by losses), these owners reported business profits of $717 billion. A majority of this profit–$398 billion—faced taxation in households making more than $200,000 per year. 55 percent of S-corporation and partnership profits will face a tax rate hike under the Obama-Pelosi-Reid tax hike plan.

Mary Elizabeth

July 27th, 2010
8:43 am

Granny Godzilla,
I would change one word in your sentence above (8:14). Insert WHICH instead of AND to read: “They’ve had their tax cut WHICH managed to drive the deficit over the cliff.” Last paragraph from NY Times columnist Paul Krugman’s 2/22/10 column entitled, “The Bankruptcy Boys,” reads:
“But there is a kind of logic to the current Republican position: in effect, the party is doubling down on starve-the-beast. Depriving the government of revenue, it turns out, wasn’t enough to push politicians into dismantling the welfare state. So now the de facto strategy is to oppose any responsible action until we are in the midst of a fiscal catastrophe. You read it here first.”
Note: By “welfare state” Krugman was referring to Medicare and Social Security, entitlements which the Middle Class has paid into and has benefitted from.

Thomas

July 27th, 2010
8:47 am

Granny- traditional lib arguement- when it works against you, use statistics- small businesses being destroyed, violent crime in Phoenix, when it works for you list the names of those effected- Jessica Colotl. truly perverse way of thinking (or not)

Eric Pearson

July 27th, 2010
8:48 am

Taxes are a necessary fact of life. Those with the biggest piece of the pie should pay the biggest share of taxes. It only makes sense. I think for most of those people, paying a bigger share is not an issue. For those who do have an issue with it, maybe your reward will await you on another plane.

MAC

July 27th, 2010
8:49 am

Tax the recipients of all alimony payments over $25,000 a year at 50%.

Tax all child support payments over $1500/month per child at 50%.

Granny Godzilla

July 27th, 2010
8:50 am

Stats and charts and graphs…..oh my.

Pluto

July 27th, 2010
8:50 am

Is there no end to the divisiveness of you progressives. If it’s not about race baiting then it’s the class envy angle. Do progressives really get a willie over their neighbors taxes being raised? Wasn’t Geitner somewhat in arrears with his “contributions” prior to his elevation to the ruling class? This bunch of Ivy League intellectuals makes me value my lowly UGA degrees more everyday.

T-Town

July 27th, 2010
8:52 am

And when you remove the value to invest and the investors remove their money causing the market to fail, then small businesses owners have no one to invest in their product. Who do we tax then?

Good Grief

July 27th, 2010
8:54 am

The problem with raising taxes on the top 2% is that, if you keep taking someone’s money for long enough, they’ll eventually get fed up and leave. Then what do we do? Tax the next top 2%?

I’m tired of hearing politicians say that the lower and middle income families pay more than their fair share. The bottom 50% of wage earners in this country pay roughly 3-4% of taxes, yet they are told that is too much. The top 1% of wage earners pay roughly 15-18%. Talk about progressive.

Granny Godzilla

July 27th, 2010
8:59 am

“if you keep taking someone’s money for long enough, they’ll eventually get fed up and leave.”

Fine by me.

Let them try to a better Nation…..

The Nerve

July 27th, 2010
9:00 am

If a corporation did what the government does, you liberals would be hissing a poutrage over how “greedy” they are being. What’s the difference here?

OH yea…..the redistribution of wealth and the further propagation of wealth envy and class warfare. That’s the difference.

Raise taxes on EVERYONE and cut spending across the board.

Ragnar Danneskjöld

July 27th, 2010
9:02 am

Perhaps we can all agree that the democrat’s “advocacy” for the poorest 98% – since they took control in 2006 – hasn’t worked according to their plan. Or maybe it did. Time for a change we can believe in.

Good Grief

July 27th, 2010
9:02 am

But Granny, if the richest people leave, who will you rob… er, tax, to pay for your social outreach programs, and Medicare, and Social Security, and Obamacare? See, they way I see it, at least to Liberals, the answer they first find is NEVER to cut spending, but to raise taxes. I mean, the money belongs to the government, right? Screw the people who earned it. Better to buy votes than actually have a policy that betters the country.

Ragnar Danneskjöld

July 27th, 2010
9:02 am

Sorry grammar police, should have been “democrats’s” (per Strunk.)

From the 2%

July 27th, 2010
9:02 am

Great. Since I clear over $1,000,000 a year, I’m going to have to pay at least $300,000 in taxes. Who in the world can even survive on only $700,000 a year? My God that’s only $58,300.00 a month after taxes. Not right I tell ya, not right!!

Granny Godzilla

July 27th, 2010
9:03 am

make that

“try to find a….”

T-Town

July 27th, 2010
9:03 am

“Let them try to a better Nation…..”

Yeah, I can always find someone else to pay my way.

Wahoo

July 27th, 2010
9:04 am

Cynthia when will you learn the distinction between being rich and having a high (taxable) income?

One is an income statement item and the other is a balance sheet item. Perhaps you already understand the distinction between income and wealth, and deliberately equate them in an effort to distort. (By the way, when you do this, it makes you sound like you don’t really know what you’re talking about.)

It is preposterous that a couple that makes $50K can’t even pay $688 per year.