What’s Obama thinking with tax hikes on the rich?
Thanksgiving is over, and the fiscal cliff is back on the table. Here in Georgia, Sen. Saxby Chambliss’s public feud with tax-pledge champion Grover Norquist made headlines and ramped up speculation about which Georgia Republican(s) might challenge our senior senator when he’s up for re-election in 2014.
But if there’s going to be a deal on taxes and spending before we start going over the cliff in January, our newly re-elected president will play the most prominent role. I’ve previously written about how the GOP-led House might try to maneuver with Obama. Now Greg Mankiw, a Harvard economist and former adviser to both George W. Bush and Mitt Romney, uses an op-ed in the New York Times to imagine how the president’s internal debate might be going from two perspectives: the committed liberal his critics contend he is, and the pragmatic moderate his supporters believe him to be.
The entire article is interesting and worth a read, but I’m going to highlight one section that isn’t getting much attention in the discussion of how taxes might be reformed:
MOD: According to the Tax Policy Center, if we cap itemized deductions at $50,000 and keep tax rates as they are today, we’d raise $749 billion in tax revenue over 10 years. And 96.2 percent of the extra revenue would come from the top fifth of taxpayers, with 79.9 percent from the top 1 percent.
LIB: I have a couple of concerns about that.
MOD: What?
LIB: First, if you limit deductions, people in high-tax states will be hit particularly hard, because state and local taxes are deductible.
MOD: Isn’t that fair? I don’t see why states and towns that choose to have very high taxes should be subsidized by everyone else.
LIB: These states generally have liberal agendas, which I want to encourage, not penalize. And many of them, like New York and California, vote Democratic. After they helped us win such a great victory, I don’t think we should be asking our allies to bear a disproportionate share of the burden. (Emphases and links original.)
Some context: In February, the Congressional Budget Office estimated that the deduction for state and local taxes represents about 0.3 percent of gross domestic product per year. Only four deductions were larger. In a $16 trillion-a-year economy, 0.3 percent equals $48 billion.
– By Kyle Wingfield
Tell us what you think about the site
Customer Care »
Vacation stops, manage subscriptions and more
AJC Services
Sections
Other Editions
Visitor Agreement | Privacy Statement
© 2013 The Atlanta Journal-Constitution
271 comments Add your comment
Dusty
November 26th, 2012
5:20 pm
OH my goodness, another bunch of blog tax experts and Kyle ( who should be writing business columns). They are going to set us all straight! I might as well add to the fun.
#1-The fiscal cliff looms before us . Happy New Year! No parachutes available.
#2-You can raise everybody’s taxes and SantaUSA will hardly know the difference. “Cuts” work better .Letting me spend most of my money is even better.True for me & lil’ buisiness man..
#3-Taxing the rich 4x more than others is wrong. You might as well use a gun for the hold-up.. Either way you are robbing them. The president is rich, too, in case you haven’ t noticed.
#4-The government is not your mama or your papa. Find out what independence and self reliance mean.
#5- Any body who says “Bush did it!” or “Rich Romney aint paid enuf taxes.”should be taxed at 100% for being stupid.
Happy Fiscal Fear!!
md
November 26th, 2012
5:22 pm
“Do the people advocating for higher tax rates for the wealthy not understand that most of the cost is simply passed along to someone else, trickle down style? ”
Well, the wonderful credit card bill the dems passed in essence socialized the losses of those that didn’t pay their bills and the cc card companies raised everybody’s rates, and there was nary a complaint from the masses. So no, I’m guessing they don’t understand………..
Linda
November 26th, 2012
5:24 pm
curious@2:25, The only “surplus” under Clinton was on pieces of paper called “budgets,” submitted many months in advance of the beginning of each fiscal year. There were “oops” that resulted in budget deficits each & every year, which in turn resulted in the natl. debt increasing each & every year under Clinton. The “surplus” were mere projections in the ’90s & fairy tales in 2012.
@4:57, When you sell a house, you usually keep your stuff. The Hostess brands & recipes are being purchased for the cream in the fillings, not the clutter in the attic. There could also be a little problem with shipping 18,000 union workers to Mexico.
Do the Math
November 26th, 2012
5:29 pm
Close most loop holes, reduce Social Security and Medicare accross the board a little and inplement a “need” sliding scale, change TSA to a federal training/licensing program not federal employees, re-implement small business 1-year depreciation (but not for light trucks = stupid ass program that was), stop subsidizing big oil (although symbolic), buy American out fo principal only, etc. Will we see any of this from our congress? No, none.
Dusty
November 26th, 2012
5:39 pm
Linda,
You mean TWINKIES will soon be Si-Winkies for amigos and gringos? Awwwww….
getalife
November 26th, 2012
5:43 pm
Hostess management incompetence killed the twinkie with lil debbie’s help.
Dusty
November 26th, 2012
5:45 pm
getalife
Hostess management was overcome by stalemates that killled the twinkie from the efforts of unions.
Lil' Barry Bailout - OBAMAPHONE!!!
November 26th, 2012
5:46 pm
SBinF: When the likes of Rmoney pay a lesser effective rate than me.
———————-
Is there a different tax code that applies to you but not Romney?
The latest IRS data show that the wealthy already pay higher “effective” rates than the middle class and everyone else. You’re cherry-picking the data to bolster your class envy argument. Your greed for other people’s property is disgusting and shameful.
dcb
November 26th, 2012
5:46 pm
Kyle – let’s be serious. When your headline asks “What’s Obama thinking with tax hikes on the rich?” …. the answer was originally simple – VOTES. Now its a bit more complicated. He’s president for the next four years. That motivation is a done deal. Only motivation left is to save face. Let’s not kid ourselves and believe he is thinking what’s best for the country and citizens here. Rational thinking leads one to conclude that if he was, he would be leaning toward a moderate position. But ….. how far can he lean back toward the middle and still save that face that is so important to him.
getalife
November 26th, 2012
5:46 pm
Two thumpins means pass the President’s plan.
You lost.
getalife
November 26th, 2012
5:49 pm
dusty,
Greed and incompetence.
The unions agreed to the deal but management chose bankruptcy so they get a two million bonus.
Lil' Barry Bailout - OBAMAPHONE!!!
November 26th, 2012
5:50 pm
PROUD NAVY VET: I don’t understand. People who are nmot in that tax bracket do everything in their power to protect the rich.
———————
Americans understand that the more the government takes from the private sector, the slower the private sector will grow, and the poorer everyone will be, top to bottom.
Obozo exploded spending from around $3 trillion a year under Our President Bush to $3.5 trillion every year. We can improve the situation simply by returning to Our President Bush’s spending levels, which were also way too high.
It’s the spending, stupid.
Dusty
November 26th, 2012
5:53 pm
getalife
The unions waited too long after they had killed the business. You can’t get a dead horse to move.
Lil' Barry Bailout - OBAMAPHONE!!!
November 26th, 2012
5:54 pm
getalife: management chose bankruptcy.
———————–
Management chose bankruptcy because they act on behalf of the owners (shareholders). Management determined that the owners capital could be more productively invested in something other than Hostess. Any bonuses to be paid are simply contractual obligations of the company and will be handled by the bankruptcy court like other obligations.
md
November 26th, 2012
6:08 pm
“The unions agreed to the deal but management chose bankruptcy so they get a two million bonus.”
Actually, some of the unions agreed to a deal, but one did not…..and that lead to the shutdown. The larger teamsters union had reached agreement, but the smaller Bakers union said no…..needless to say the Teamsters honored the picket line……
Another group demands all or nothing and loses the gamble…..
mike
November 26th, 2012
6:12 pm
If the Bush tax cuts were allowed to expire, that would raise $268 billion per year. If we cut Social Security and Medicare to zero it will not reduce the deficit or debt one red cent. Social Security and Medicare are self-funding and have large surpluses. The $268 billion dollar amount I found today (I can post a link if need be). I don’t know if that includes changes to capital gains and interest and dividends or not. Maybe someone here can comment on this.
Currently, about 50 cents of every tax dollar goes to fund current or past military funding (and the interest thereon) and care for military personnel. If there was ever and elephant in the room, it is military spending.
Linda
November 26th, 2012
6:13 pm
Dusty, I will feed anything that visits on our deck, except racoons. I learned the hard way. You are feeding with your attention those who are not worthy of your time nor your talents.
mike
November 26th, 2012
6:19 pm
I read an article about the Hostess mess. They interviewed a worker with the baker’s union. He was making $48,000/yr before the 1st round of cuts the union agreed to in 2007 after which his salary was reduced to $34,000/yr. In this last round of cuts the company was proposing, his salary would have been cut to $25,000/yr. Not exactly greed is it? Like the worker said, $25,000/yr isn’t worth going in to work for and he is right.
Lil' Barry Bailout - OBAMAPHONE!!!
November 26th, 2012
6:25 pm
mike: If we cut Social Security and Medicare to zero it will not reduce the deficit or debt one red cent.
——————————–
False. Social Security now spends more than it takes in. It is a “pay as you go” program. The bonds they hold that represent previous years’ excess contributions have to be redeemed for cash from the Treasury to cover the SS deficit.
http://www.factcheck.org/2011/02/democrats-deny-social-securitys-red-ink/
Lil' Barry Bailout - OBAMAPHONE!!!
November 26th, 2012
6:27 pm
mike: Like the worker said, $25,000/yr isn’t worth going in to work for and he is right.
————————–
The folks who think like you, that it’s better to live off the taxpayer dole than to put in an honest day’s work, carried the day in the last election.
Parasites. Moochers. Leeches.
Hopeful
November 26th, 2012
6:29 pm
What dose Obama understand he’s cutting out military stuff the man has never fight for this country I know men that need long term care that protect this United States and women too and now everything coming out of their pocket
mike
November 26th, 2012
6:32 pm
Lil’ Barry: the “deficit” in Social Security was actually less than the interest it earned on the Treasury bills it holds and more than covered this deficit.
The bonds Social Security and Medicare hold are still surplus even though it was stolen from the Trust Fund. Redemption of these bonds do not add to our deficit or debt.
It should be noted that the Social Security and Medicare contribution rates (i.e., the amount deducted from payrolls) were increased during the Reagan administration to accommodate the Boomers as they retire.
Could it possibly that our government doesn’t want to pay Social Security and Medicare back?
mike
November 26th, 2012
6:34 pm
Lil’ Barry: would you be willing to take a pay cut to $25,000/yr (assuming that you even work)? BTW, be careful you don’t get a “time-out” with the name calling.
Lil' Barry Bailout - OBAMAPHONE!!!
November 26th, 2012
6:36 pm
mike: Not according to FactCheck. They completely smacked down your Democrat talking point.
Cobb Mom of 4
November 26th, 2012
6:37 pm
How do you pay for 2 wars?
Lil' Barry Bailout - OBAMAPHONE!!!
November 26th, 2012
6:37 pm
mike: Lil’ Barry: would you be willing to take a pay cut to $25,000/yr
——————————–
I would not. My time is much more valuable than that, and I have not had any problem finding an employer who agreed with me.
Lil' Barry Bailout - OBAMAPHONE!!!
November 26th, 2012
6:38 pm
Cobb Mom of 4: How do you pay for 2 wars?
——————
The same way you pay for a $800 billion “stimulus”. Put it on the credit card.
mike
November 26th, 2012
6:38 pm
BTW, I cashed in my $100 gift certificate for crab legs at Whole Foods that I got for voting for Obama. They were great! There was a lady ahead of me in line but I’m not going to tell you what she bought or how she paid for it. Nor am I going to tell you what kind of car she got into or how many kids were in it. I’ll leave it to your imagination! I can’t believe you people didn’t vote for Obama. What’s wrong with you?
mike
November 26th, 2012
6:42 pm
Lil’ Bar: ” Not according to FactCheck. They completely smacked down your Democrat talking point.”
Careful, there, Lil’ Bar, you’re gonna hurt your arm patting yourself on the back. If they were to dip into their surplus, it still wouldn’t increase our budget deficit or debt. Do you get this? Or is there something about this that eludes you?
mike
November 26th, 2012
6:44 pm
Lil’ Bar: “The same way you pay for a $800 billion “stimulus”. Put it on the credit card.”
Don’t forget, Lil’ Bar, that the “Stimulus” was Bush’s doing. Obama inherited it.
Tiberius - pulling the tail of the left AND right when needed
November 26th, 2012
6:50 pm
“Don’t forget, Lil’ Bar, that the “Stimulus” was Bush’s doing. Obama inherited it.”
Yeah, ’cause don’t forget Obama was strongly against the stimulus, and campaigned and voted against it – wait . . . .
Never mind
mike
November 26th, 2012
6:56 pm
Tiberius! I’m glad you’re here! I was worried that Kyle had banned you! What a relief!
Actually, I made a mistake and I am man enough to admit it. The BAILOUT was Bush’s. The STIMULUS was Obama’s. Care to speculate where we would be today with the stimulus. The stimulus was a “one-shot deal.”
md
November 26th, 2012
6:56 pm
“would you be willing to take a pay cut to $25,000/yr (assuming that you even work)?”
Absolutely……I’d much rather have something coming in while looking for another job vs nothing…..and don’t think employers aren’t skeptical of folks that are applying for jobs while on unemployment insurance……they are.
Thomas Heyward Jr
November 26th, 2012
7:04 pm
Wingfeild……….and the other big-government Romney-bot Republican progs ought to enjoy this———–
.
“Texas Schools Teaching Boston Tea Party As Terrorist Act”
.
“A local militia, believed to be a terrorist organization, attacked the property of private citizens today at our nation’s busiest port,” wrote the teachers in charge of organizing the curriculum about the Boston Tea Party. “Although no one was injured in the attack, a large quantity of merchandise, considered to be valuable to its owners and loathsome to the perpetrators, was destroyed. The terrorists, dressed in disguise and apparently intoxicated, were able to escape into the night with the help of local citizens who harbor these fugitives and conceal their identities from the authorities.
“It is believed that the terrorist attack was a response to the policies enacted by the occupying country’s government. Even stronger policies are anticipated by the local citizens.”
.
.
Ha Ha.
silly tea partiers.
Kyle would’nt approve.
Tiberius - pulling the tail of the left AND right when needed
November 26th, 2012
7:05 pm
“Care to speculate where we would be today with the stimulus.”
Over $800 billion LESS in debt, mike.
No speculation needed.
md
November 26th, 2012
7:16 pm
The real irony is that the home of the Boston Tea party now has some of the highest taxes in the country……..
RF
November 26th, 2012
7:22 pm
“Now Greg Mankiw, a Harvard economist and former adviser to both George W. Bush and Mitt Romney”
I just don’t think that’s something I’d post on my resume….if I actually wanted to get a job or be taken even remotely seriously.
the red herring
November 26th, 2012
7:22 pm
solution–add 5% to true millionaires/billionaires tax rate and add 5% to those in the lower income class not paying fed. income tax that are making above the poverty line. that would punish those “rich” and also get some tax revenue from those that are currently draining the system. a flat or fair tax would be better than that —also obama is trying to intimidate republicans/small businesses with the “sky is falling” tactics—i say don’t take the bait—let him and the do nothing senate take the heat for it— who knows with the spending cuts in the sequestration bill we may not even need a tax hike on anybody.
Thomas Heyward Jr
November 26th, 2012
7:23 pm
md
November 26th, 2012
7:16 pm
The real irony is that the home of the Boston Tea party now has some of the highest taxes in the country……..
———————————————————————————
.
And the largest number of Federal boot-lickers.
although Georgia has too many to.
Rafe Hollister, dreading the eventual decline caused by Obamanism
November 26th, 2012
7:30 pm
mike, you keep talking about letting the Obama extended tax cuts expire. No one on either side is talking about that. Barry thinks they are wonderful for those making less than $250K. Where are all the Libs who spent ten years talking about how they only benefited the rich? Obama talked about these tax cuts only benefiting the rich, now he wants to extend 85% of the cuts, so was he lying back then, has he actually learned something, or is he lying now?
You realize if you got your wish and they all expired, the middle class would get a tax bill around $3,000-$5,000 more per year. Barry would have a heck of a lot more money to send to his campaign contributors aka green energy firms. Or, do you actually think we would use any of that money to offset the deficit?
In a time of universal deceit, telling the truth is a revolutionary act.
George Orwell
mike
November 26th, 2012
7:44 pm
Rafe: “the middle class would get a tax bill around $3,000-$5,000 more per year.”
Rafe: it’s like I’ve said over and over again, if the American public had to actually pay for wars, the wars would stop in a hurry! DUH! But even that would only close our $1 trillion deficit by one quarter. You’re living in a fantasy world, Rafe.
Like I said in an earlier post, approximately one-half of all tax revenues are spent on current or past military spending or the interest thereon.
RAMZAD
November 26th, 2012
7:49 pm
I trust that we will go over the “fiscal cliff.” It would be nice for corporate welfare queens and kings
feel what it is like to have Uncle Sam’s check stuck up in the mail box and can’t be dislodges
except in shreds.
It does not matter. the whole country is on economic deep freeze anyway. maybe a dose of sanity
will come out of the wake up call when we hit the rocks below.
I am all for it. End the Bush tax cuts forever and raise taxes for all who make more than $250,000. Bomb up the EIC, and start a conversation about reining in Medicare and Social Security. End corporate subsidies and get a few more people sitting on their own…axx or standing on their own feet.
Linda
November 26th, 2012
7:50 pm
mike(with a little m)@6:12, So, how many days will $268 B fund the fed. gov.? 8 days?
SS & Medicare are self-funding? How come the actuaries of these funds disagree?
Where are these surpluses? Are they nothing more than chits? How come the debt clock says SS, Medicare & the prescription drug program are $121.6 T unfunded?
http://www.usdebtclock.org/
How come the fed. govt. requires banks to have “reserves,” i.e. money left over after loans, but the fed. govt. can spend every penny in both the SS & Medicare funds with no “reserves” what-so-ever?
I feel so sorry for you. I feel certain that I am much older than you, but even when I was younger, I questioned everything. Critical thinking is no longer the norm for the masses replacing the Greatest Generation.
Lil' Barry Bailout - OBAMAPHONE!!!
November 26th, 2012
7:58 pm
Linda, critical thinking is soooo much less important than winning elections.
Even Pravda called the U.S. electorate “illiterate” for having re-elected Obozo.
mike
November 26th, 2012
8:11 pm
Linda: Social Security’s expenditures exceeded non-interest income in 2010 and 2011, the first such occurrences since 1983, and the Trustees estimate that these expenditures will remain greater than non-interest income throughout the 75-year projection period. The deficit of non-interest income relative to expenditures was about $49 billion in 2010 and $45 billion in 2011, and the Trustees project that it will average about $66 billion between 2012 and 2018 before rising steeply as the economy slows after the recovery is complete and the number of beneficiaries continues to grow at a substantially faster rate than the number of covered workers. Redemption of trust fund assets from the General Fund of the Treasury will provide the resources needed to offset the annual cash-flow deficits. Since these redemptions will be less than interest earnings through 2020, nominal trust fund balances will continue to grow.
http://www.ssa.gov/oact/trsum/index.html
Well, heck, Linda, I know I sure am worried. Aren’t you? BTW, the interest referred to is interest on the Treasury Bills the Social Security and Medicare Trust Funds hold.
Rafe Hollister, dreading the eventual decline caused by Obamanism
November 26th, 2012
8:12 pm
So, Mike, I’m the one living in a fantasy world. As LInda pointed out above, the “revenue” Obama wants to raise is insignificant. He only wants to raise it to “stick it to the rich” and continue his class warfare. The man is so hooked on his ideology that he would choose his version of fairness over recovery any day. Even Pravda had an article branding him as a closet communist.
The problem is spending. You can rattle on, as all the left does about the “two wars on the credit card”, but that is history. The stupid stimulus cost as much as the two wars. Time to pay off all Bush and Obama’s spending. We are stuck on stupid, spend, spend, and spend. Until we decide to stop spending, raising revenue is senseless. I don’t think, sadly, that any of the politicians want to decrease spending. The GOP talks about it, the Dems ignore the subject, and it doesn’t seem that there are many politicians in favor of actually doing anything permanent to reduce spending.
Allowing the Obama tax cuts to expire will be a severe blow to the economy. We can never retire the debt or even reduce the deficit without a growing economy. A growing economy will do more to rescue this sinking ship than any other one thing that we could do.
mike
November 26th, 2012
8:16 pm
Rafe: “The problem is spending. You can rattle on, as all the left does about the “two wars on the credit card”, but that is history. The stupid stimulus cost as much as the two wars.”
Rafe: if you can post something that substantiates that the “stimulus” cost as much as the two wars, I would be glad to see it.
Jack ®
November 26th, 2012
8:19 pm
Obama’s thinking with tax hikes on the rich is to get more votes. And it did.
JamVet
November 26th, 2012
8:22 pm
Lil BB, quoting Pravda, are we?
Wow.
Desperate times, desperate measures, huh?
Rafe Hollister, dreading the eventual decline caused by Obamanism
November 26th, 2012
8:29 pm
mike, don’t like doing research for others, but it took about 2 minutes, you could google “cost of two wars”. I got multiple sources, here is one.
Wars costs 1.1-1.2 T, Stimulus costs almost 1 T. Shows how extremely costly Barry’s Golden Calf was to America. Wasteful to the extreme, accomplished little, but will plaque us for years. Here is your article. I’m gone.
http://www.fas.org/sgp/crs/natsec/RL33110.pdf