2012 Tuesday: Obama gives ‘tax the rich’ one more heave

We learned a few things yesterday with President Obama’s announcement that he wants to extend the current individual income tax rates for one more year, but only for those making less than $250,000 a year:

  • The current rates — commonly described as the “Bush tax cuts” even though they have been in full force for nine years, two years of which required Obama’s signature — apply to more than just “the rich.” Otherwise, how could they be extended for everyone who isn’t rich?
  • Even Obama understands that the economy is still too weak to withstand a major tax hike during the next presidential administration (his second, or Mitt Romney’s first). That is a pretty strong, if tacit, admission that his entire first term has failed to see a middle-class recovery of any consequence, just a stop to the bleeding — at most. Once upon a time, he theorized that such a result would lead to a “one-term proposition” for himself.
  • This move has nothing to do with being serious about the deficit, because the vast majority of the budgetary effects relate to the rates for sub-$250,000 earners, and always have.
  • If Obama were serious about the deficit, he would join other notable Democrats — and Republicans — in embracing the proposals of the Bowles-Simpson report he commissioned. Among other things, this would mean lowering rates across the board, while broadening the tax code to eliminate loopholes, carve-outs and subsidies/spending disguised as tax breaks.
  • If it doesn’t have anything to do with the deficit, it’s plainly about politics. But it’s the same “eat the rich” politics that Obama and the Democrats tried in 2010 — and which cost them spectacularly in the midterm elections. Maybe he thinks it will play better this time because his opponent is (like him) a rich guy, but I suspect most Americans still care more about what each candidate’s policies mean for their own wallets than those of other people.
  • Even other top Democrats think $250,000 is too low of a threshold: House Minority Leader Nancy Pelosi and Sen. Chuck Schumer previously argued for keeping rates steady for anyone earning up to $1 million. Obama is out of step with his own party’s leadership and trying to lead Democrats even further to the left on this issue.
  • This president still doesn’t have any new ideas. Tax the rich, borrow and spend more money, make government bigger with proposals that in some cases have been around for decades — these are the same things he’s been trotting out for four years, with the result of mediocre approval ratings and an electorate sour on the direction the nation is taking.
  • There is an enormous opportunity for Romney to talk about the need to avoid the path on which Obama would take us — to explain the benefits of free enterprise and the fairness of rewarding people for the work they do and the risks they take. But he must make that case, and not count on a strategy of criticizing Obama’s class-warfare rhetoric.

The basic campaign messages of each side so far amount to:

Romney: Obama has failed!

Obama: Never mind that; Romney is an evil, rich capitalist!

Of the two, Romney’s message has the better chance of resonating with American voters. But he must pair it with a vision of what success would look like and how he would lead us there. Obama is giving him yet another opportunity to do that. He has to start acting on those opportunities.

– By Kyle Wingfield

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335 comments Add your comment

Love me some Reagan

July 10th, 2012
12:14 pm

Has the economy ever flourished with higher rates than we have today and the one’s proposed for those making over 250K?

Tiberius - pulling the tail of the left AND right when needed

July 10th, 2012
12:15 pm

“Like everyone of his recent predecessors he will dutifully take his marching orders from his paymasters on Wall Street, K Street and in corporate board rooms across the land.”

And yet, he’s the ONLY candidate calling for getting rid of corporate tax loopholes.

Go figure.

Aquagirl

July 10th, 2012
12:16 pm

And does it really matter to you what Romney’s religion is, or are you simply typing in more talking points because you don’t like his policies?

Yeah, you’re interrupting the discussion about the Mooslim in the White House. How tacky.

Remember, without Mormons we would never have had Battlestar Galactica. So we owe them a debt that can never be repaid.

AU Liberal in ATL

July 10th, 2012
12:16 pm

The only people I hear using the word evil are the talking heads on TV. The Obama campaign has not charaterized any person or any business as evil. President Obama is without question our best option to make positive differences for the entire country. Anyone, ANYONE who is not rich and votes for Romney is a fool. A FOOL!

AU Liberal in ATL

July 10th, 2012
12:16 pm

Make that damn fool!

I demand to see Cheesy Grits Birth Certificate- Long Form Please

July 10th, 2012
12:17 pm

9 years of the Bush tax cuts.

Where are all the jobs ?

I thought if we gave the rich huge tax breaks then we would have full employment.

AmVet

July 10th, 2012
12:17 pm

And yet, he’s the ONLY candidate calling for getting rid of corporate tax loopholes.

Cite, please. With specific recommendations…

eagle1

July 10th, 2012
12:17 pm

The so called rich already pay 50% of the taxes in this country! The top 1% pay 40% of the taxes! Obama believes in punishing hard work and success! He has to take more from the successful and give to people who lay up on their rear ends and do nothing but suck the life out of the government! Leaches! He is building a welfare state. Plain and simple. It’s time for Obama and his gay agenda to go!

I demand to see Cheesy Grits Birth Certificate- Long Form Please

July 10th, 2012
12:17 pm

Has the economy ever flourished with higher rates than we have today and the one’s proposed for those making over 250K?

Yes.

See Clinton years.

Love me some Reagan

July 10th, 2012
12:18 pm

Getting rid of loopholes and lowering the rate to get as close to the same liability as possible, has exactly what impact?

I demand to see Cheesy Grits Birth Certificate- Long Form Please

July 10th, 2012
12:18 pm

The so called rich already pay 50% of the taxes in this country!

Wrong. Romney only paid 15 percent.

Thats alot less than me or you.

Kyle Wingfield

July 10th, 2012
12:18 pm

JDW @ 11:34: I have long advocated moving in the direction Bowles-Simpson points to. Reasonable people can disagree about how far we go on any particular detail (how low the rates go, how many exemptions are eliminated, etc.).

And how exactly is raising rates on some people moving “slowly” — or otherwise — in the same direction as Bowles-Simpson? It is the opposite of moving in that direction!

Love me some Reagan

July 10th, 2012
12:20 pm

I’m for phasing in the tax rates under the Clinton years and phasing out the EITC.

I demand to see Cheesy Grits Birth Certificate- Long Form Please

July 10th, 2012
12:21 pm

The rich in this country dont pay much in taxes.

They have fancy lawyers and accountants to get around that sort of thing.

Its the middle class that pays the bills.

AmVet

July 10th, 2012
12:21 pm

Despite making more than a billion dollars, some of the nation’s super rich manage to pay an extremely low tax rate.

The top 400 earners in the U.S. paid an average tax rate of 18 percent, according to a Bloomberg TV report noticed by Think Progress. And though that’s a far lower rate than the 26.5 percent that many families making less than $100,000 pay annually in taxes, some of America’s super-rich have been able to whittle their tax bill down even more, paying a tax rate as low as one percent, according to Bloomberg.

How? Many of the super rich take advantage of a variety of tax loopholes to lower their tax burden. For some of America’s rich, most of their wealth comes from stock appreciation, according to Bloomberg, which some billionaires don’t end up defining as taxable income.

These findings echo earlier reports, which suggest that the super rich may not be paying their full share in taxes. More than 1,400 millionaires paid no U.S. income taxes in 2009, according to an August report from the Internal Revenue Service.

In addition, 25 percent of all millionaires pay a smaller percentage of their income taxes than millions of middle class households.

eagle1

July 10th, 2012
12:22 pm

EITC is nothing but welfare! How can you get back more than you pay in? Nothing but a handout! Taxes are nothing but legalized pickpocketing!

Kyle Wingfield

July 10th, 2012
12:22 pm

AmVet @ 11:45: “New”? I’ve been writing about that for at least two years, if not longer.

Tiberius - pulling the tail of the left AND right when needed

July 10th, 2012
12:24 pm

“Cite, please. With specific recommendations…”

I suggest you Google “Romney’s tax plan”, AmVet.

And as to specific recommendations, does “All of them” count? :roll:

I demand to see Cheesy Grits Birth Certificate- Long Form Please

July 10th, 2012
12:25 pm

Ive been hearing that trickle down crap my whole life.

It goes like this.

Lets give the rich all the money and they will create jobs for everyone. You see it will trickle down to us.

Us middle class and poor people cant be trusted with money. Only the rich posses the knowledge to create business etc.

The problem is it never trickles. It just stays at the top.

Ever been to the Biltmore house? How much of their money do you think trickled down ?

The rich just get richer and can afford a second home in Aspen instead of just the one.

Kyle Wingfield

July 10th, 2012
12:25 pm

JDW: And that 423-page piece of legislation has gone nowhere in Congress. It has as much chance of becoming law as Obama’s unanimously opposed budgets. So what makes you think it’s worth even the paper it’s printed on?

Love me some Reagan

July 10th, 2012
12:25 pm

If tax rates are the end all of end all, where are the jobs?

Are average tax rates for the top earners and major corporations less today or more than they have been on average over the last 50 yrs?

AmVet

July 10th, 2012
12:26 pm

The top 1% pay 40% of the taxes!

Not correct.

They pay 38% of the federal personal income tax.

Not “taxes.”

Read this article from Forbes. (Or don’t…)

http://www.forbes.com/sites/joshbarro/2012/01/30/do-one-percent-of-americans-pay-38-percent-of-taxes/

stands for decibels

July 10th, 2012
12:26 pm

Has the economy ever flourished with higher rates than we have today and the one’s proposed for those making over 250K?

You can pick a year that constitutes “flourishing” and check for yourself, below.

http://taxfoundation.org/article/us-federal-individual-income-tax-rates-history-1913-2011-nominal-and-inflation-adjusted-brackets

Just to check, I looked at 1962. Our GDP grew 5.17% that year, I guess we were doing ok.

Inflation adjusted, the tax rates for income above 250K was 50%. there were a bunch of brackets above that level, though–when you got to income over 1 million (again, adjusted for inflation), the rate grew to 81%.

and yes, I know JFK thought this was excessive, and eventually legislation was passed to bring these rates down (which, I believe, LBJ wound up signing into law). However, somehow, America muddled through all this punishment of “job-creators.”

Tiberius - pulling the tail of the left AND right when needed

July 10th, 2012
12:27 pm

“The so called rich already pay 50% of the taxes in this country!

Wrong. Romney only paid 15 percent.”

Actually, correct.

Romney’s 15% is included in the 50% of income taxes paid by the rich. And it’s closer to 75% of all taxes, btw, depending on your definition of “rich”.

eagle1

July 10th, 2012
12:27 pm

Do you Koolaide drikers miss Bush yet? Gas goes from $1.89 a gallon to $3.59 a gallon under Obama. Groceries go up 30% under Obama! Unemployment stay at 8.2% or higher under Obama! And this man wants 4 more years on the job!!!! Wake up America! Enough is enough!

Jefferson

July 10th, 2012
12:29 pm

Some will hold on to kissing butt because they know they don’t deserve what they get.

Tiberius - pulling the tail of the left AND right when needed

July 10th, 2012
12:29 pm

“Getting rid of loopholes and lowering the rate to get as close to the same liability as possible, has exactly what impact?”

Well the first thing it will do is put a lot of K Street lobbyists out of work. :D

Jefferson

July 10th, 2012
12:30 pm

Yard birds get pushed around.

JDW

July 10th, 2012
12:31 pm

“And how exactly is raising rates on some people moving “slowly” — or otherwise — in the same direction as Bowles-Simpson? It is the opposite of moving in that direction!”

Bowles Simpson advocates eliminating Tax Expenditures to create a higher effective tax rate that the one in force today. By increasing taxes to the pre-Bush Tax rates Obama is doing EXACTLY what is recommended albeit for only a portion of the population. From the plan….

“The committee assumed that the Bush tax cuts would be extended for lower earners, but would be allowed to expire for the two highest brackets.”

Any adjustment downward in those rates must be accompanied by a decrease in Tax Expenditures.

Kyle Wingfield

July 10th, 2012
12:32 pm

Love me some Reagan @ 12:18: It takes the tax-code distortion out of decision-making, for one thing. Which, for starters, should make for a more efficient use of resources, greater wealth creation, and higher tax revenues.

Jefferson

July 10th, 2012
12:33 pm

Fear and greed, runs the life of a republican.

Kyle Wingfield

July 10th, 2012
12:34 pm

Cheesy Grits @ 12:18: You cannot be serious. You are trying to refute the proportion of all taxes paid by an entire group by comparing it to the effective tax rate of one person??

Love me some Reagan

July 10th, 2012
12:34 pm

Kyle

That is debatable but I see your point.

I demand to see Cheesy Grits Birth Certificate- Long Form Please

July 10th, 2012
12:35 pm

Do you Koolaide drikers miss Bush yet?

Absolutely not. He got us in this mess.

Two wars he never bothered to finance and cut taxes at the same time.

No American President in history has ever cut taxes during wartime. Didn’t stop Dubya.

When Obama took over the economy was in free fall. Dubya himself said ” This sucker could go down ”

We are just now recovering from the last round of disastrous Republican policies.

And you want to go back to that ? Thanks but no thanks !!!

Love me some Reagan

July 10th, 2012
12:35 pm

“Well the first thing it will do is put a lot of K Street lobbyists out of work.”

Since both parties are in love with lobbyists, we can agree with that

AmVet

July 10th, 2012
12:36 pm

Kyle, fair enough.

But again, I implore where are the specific, substantive recommendations?

Where is the political will to end these giveaways, handouts, bailouts and taxpayer funded welfare for the few?

The Boehner/Paul Ryan wing of the GOP will hear of NO increase in revenues, right? Even the “back door” variety, right?

ONLY spending cuts and privatizing Medicare, right?

It’s OK, Tiberius, I get it. Reasonable requests to you for corroboration are met with deflection.

Here’s the problem: Romney says he’d make sure that the tax cuts are revenue neutral. He’d cut some spending and get rid of existing tax loopholes to pay for them. Everyone wants a simpler tax code, right? But it’s one thing to say that simpler is better. It’s another to say which deductions, each of which benefits a class of people, should be scrapped. And Romney won’t say which spending he’d cut, or which loopholes he’d close—and, in theory, this would be on top of additional spending cuts that’s he’s also declined to name. It’s tax reform mystery meat.

LOL at the mystery meat reference!

I demand to see Cheesy Grits Birth Certificate- Long Form Please

July 10th, 2012
12:37 pm

If lower taxes on the rich meant more jobs dont you think unemployment would be lower than 8.2 % when the rich have had some of the lowest taxes in the history of this country the last 9 years ?

Just sayin

Lil' Barry Bailout (Revised Downward)

July 10th, 2012
12:39 pm

Of course it’s all politics. Very few Democrats pay income tax, so they understand quite well that Obozo’s aim is to stick it to the Republicans who are already carrying nearly all the burden.

AmVet

July 10th, 2012
12:39 pm

Do you Koolaide drikers miss Bush yet?

I miss him like I miss a heat rash!

JDW

July 10th, 2012
12:40 pm

@Kyle…”And that 423-page piece of legislation has gone nowhere in Congress.”

Of course not…I wonder who is holding that up? :roll:

I demand to see Cheesy Grits Birth Certificate- Long Form Please

July 10th, 2012
12:41 pm

Very few Democrats pay income tax,

Actually its the other way around. Rich Republicans pay very little in taxes.

Like Romney they keep it in Swiss bank accounts and Cayman Islands.

Love me some Reagan

July 10th, 2012
12:41 pm

“Very few Democrats pay income tax”

Translation: I have no ability to converse with facts, but I regurgitate talking points that I allow myself to be brainwashed with very well.

Tiberius - pulling the tail of the left AND right when needed

July 10th, 2012
12:43 pm

“He got us in this mess.”

Repeating it a thousand times doesn’t make it true.

Love me some Reagan

July 10th, 2012
12:43 pm

“Do you Koolaide drikers miss Bush yet?”

You mean Republicans. They miss him so much that he is MIA on the campaign trail. He is a cancer to the Republican Party. They know it and he knows it; hence the low key.

Peadawg

July 10th, 2012
12:43 pm

“Very few Democrats pay income tax,”

I’m sure you’ve got a link to back up that claim, right?

Lil' Barry Bailout (Revised Downward)

July 10th, 2012
12:44 pm

Sorry, Cheesy, but it’s well documented that nearly half of Americans pay zero, and we know who they’re voting for–the Marxist promising them ever more of the income earned by the productive class.

I demand to see Cheesy Grits Birth Certificate- Long Form Please

July 10th, 2012
12:44 pm

41 And Jesus sat over against the treasury, and beheld how the people cast money into the treasury: and many that were rich cast in much. 42 And there came a certain poor widow, and she threw in two mites, which make a farthing. 43 And he called unto him his disciples, and saith unto them, Verily I say unto you, That this poor widow hath cast more in, than all they which have cast into the treasury: 44 For all they did cast in of their abundance; but she of her want did cast in all that she had, even all her living.

I wonder if Jesus would be worried about how much the rich pay in taxes ?

Or would he be more concerned with taking care of the poor ?

Tiberius - pulling the tail of the left AND right when needed

July 10th, 2012
12:45 pm

“He’d cut some spending and get rid of existing tax loopholes to pay for them.”

Thanks for proving my point, AmVet.

ALL of them.

I demand to see Cheesy Grits Birth Certificate- Long Form Please

July 10th, 2012
12:46 pm

Sorry, Cheesy, but it’s well documented that nearly half of Americans pay zero,

Ever heard of sales tax ?

FICA ?

The poor pay plenty. They pay a great deal more of the little they have than people like Romney.

Darwin

July 10th, 2012
12:47 pm

I’ve asked this many times. Prior to the present Democratic administration, when wsa the last time the Republicans harped so loudly about deficit spending? (Answer: Clinton a dministration) It’s disingenous for the Republicans to harp about deficit spending only when they don’t occupy the White House. I simply can’t take the right wing seriously when they don’t care about government spending when “their guy” is in the White House. You have to be for something, not just against.