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
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271 comments Add your comment
Linda
November 27th, 2012
11:46 am
Democrats have been lying about raising taxes on millionaires & billionaires for years, which deems them serial liars.
It’s unconstitutional & therefore illegal. Taxes may be levied only on income, not wealth or net worth.
If Democrats want to raise taxes on income earners of over a million dollars, have at it. There were 268,000 of them in ‘10 & they are disappearing, down 40%. Some of them are relocating, giving up their citizenship.
Billionaire earners don’t exist in this country.
I don’t personally know any millionaire earners, but I would venture to say that most of them work around Hollywood. The state of CA has new taxes that will hit them hard, so go after what they have left. Don’t just raise their marginal rates, but limit their loopholes including those they take for eating supper with Mr. Cool.
You can easily identify liberals who are serial liars participating in class envy. They have long noses & are as green as Martians.
JDW
November 27th, 2012
11:48 am
@Linda…”I stand by my statement.”
Of course you do. That is because you are too ignorant to understand that the National Debt is comprised of two components, internal debt and external debt. Surpluses on the other hand are a measure of cash flow. During the Clinton years we used the surpluses to pay down the external debt while continuing to, per the accepted accounting rules in place since the ’60’s, accrue the SS, Medicare and Fed internal debt.
The real number that reflects the surpluses is the external debt which declined from about $3.7 trillion to $3.3 trillion from FY1998 to FY2001.
http://www.treasurydirect.gov/NP/NPGateway
Jay Money
November 27th, 2012
12:04 pm
Georgia minus Atlanta equals UTAH, a state full of uneducated, bible thumping, imbred, gap tooth goobers on welfare….Proceed Governor…
Nate Silver
November 27th, 2012
12:07 pm
Guess Linda and several others are still reeling from the election.
No surprise.
md
November 27th, 2012
12:21 pm
“Yep that’s the one…the one with the power to print the world’s reserve currency and tax the largest economy in the world. See the key issue with debt is the ability to pay it back which we clearly have.”
Yes, all fine and dandy until China makes it’s move to push it’s own reserve currency (read up on the gold China has been gobbling up to backstop their attempt), to which Russia would back them up………then we are printing worthless paper.
It is a mistake to think we are on sound footing if we continue down this road.
And one that refuses to think we can not end up like Greece is the one with a closed mind…..once upon a time GREECE didn’t think they could be like Greece.
Lil' Barry Bailout - OBAMAPHONE!!!
November 27th, 2012
12:29 pm
Nice try, JDW, but you’re cherry picking the data again. The number that matters is the amount the government has to pay back to anyone who holds our debt. The debt went up every year of Clinton’s regime. There was no surplus.
You’ve been educated on this many times and know you’re wrong. By definition, you’re a liar.
Linda
November 27th, 2012
12:33 pm
JDW@11:48, If I am “too ignorant,” why bother trying to educate me?
It doesn’t matter if the US owes China or the senior citizen, it’s still debt. I’m not so ignorant to understand that the real debt & guarantees of the US govt. exceed so many mega TRILLIONS of dollars that the country is in imminent bankruptcy.
Go peddle your propaganda to the minions.
Rafe Hollister, dreading the eventual decline caused by Obamanism
November 27th, 2012
12:33 pm
md
The best way to avoid dealing with a problem (spending) is to deny there is a problem.
Nunna Yobinnes
November 27th, 2012
12:34 pm
“Yes, Kyle. And a paycheck is a “distribution of post-tax income.” That’s why taxing earned income is also double taxation. ”
Uh, no. The corporation takes a deduction for the wages paid to its employees. So it is only taxed once.
MrLiberty
November 27th, 2012
12:34 pm
The republicans (except Ron Paul of course) have shown that they lack all principles when push comes to shove. The wave of republicans questioning their ability to show some principles and stick to their anti-tax pledge should come as no surprise to anyone. These clowns take an oath to uphold the consistution every time they begin their terms (as does every democrate in congress). None of them uphold this sacred oath. They certainly won’t care about a pledge to Grover Norquist.
Hopefully this will finally spell the demise of the republican party so a principled small government party that cares about liberty (like the Libertarian Party) can take over the helm and provide voters with a real difference from the Santa Clause party of the democrats.
We’ll see. Knowing history, we can likely expect republican voters to continue to vote republican no matter how unprincipled the candidates. I mean we didn’t get to this point because the voters believe in principles.
Nunna Yobinnes
November 27th, 2012
12:39 pm
With regard to your previous point, Kyle, you made a distinction between post-tax distribution of corporate income and post-tax distribution of individual income. I’m not sure why that should matter since double taxation is double taxation. Anyway, that argument is very convenient in the context of this discussion, but quickly abandoned when conservatives use the same double taxation argument to justify eliminating inheritance taxes.
“In fact, all taxable income is double taxed, and Republicans are simply making that argument, as needed, to eliminate taxes that they don’t like–taxes on income categories that primarily benefit the wealthiest among us.”
Boy when you get it wrong, you get it wrong. All taxable income is not double taxed. Dividends are double taxed. Wages are not.
Nunna Yobinnes
November 27th, 2012
12:42 pm
“Kyle: A paycheck is post federal tax. Any further taxes applied are state and/or local taxes, and useless to account for when discussing federal deficit (except as they apply to federal tax deductions).
But nice attempt at changing the subject.”
Wow. Democrats are arrogant and they like to tax others, but are totally stupid when arguing that wages are double taxed. HELLO – the corporation deducted the wages as an expense. The wages are only taxed to the wage earner. Think!!!
Nunna Yobinnes
November 27th, 2012
12:45 pm
“Kyle: A paycheck is post federal tax. Any further taxes applied are state and/or local taxes, and useless to account for when discussing federal deficit (except as they apply to federal tax deductions).
But nice attempt at changing the subject.”
How dense can one idiot be?
TBone
November 27th, 2012
12:49 pm
And I thought fair was where you got a funnel cake in October? The whole fair argument is unfair?!!?
Nunna Yobinnes
November 27th, 2012
12:52 pm
“I’m not opposed to an income tax structure or the double taxation on my paycheck, investment income, or inheritances (I’ve received income from all three sources). That’s how, regardless of income source, we all spread and share the burden of taxation. The alternative that conservatives propose is to give people who benefit mostly from investments and inheritances a free ride and, instead, place most or all of the burden on people whose primary source of income is labor.”
Please define what you think the first tax on wages was? Corporations do not get a tax deduction for dividends paid to investors. They do get a tax deduction for wages paid to employees. No wonder the democrats voted for Obama. They are clueless.
JDW
November 27th, 2012
12:56 pm
@Linda…”why bother trying to educate me?”
Now that is the best question you ever asked…I suppose I am an eternal optimist that likes to believe the best in his fellow humans…sometimes I am wrong.
JDW
November 27th, 2012
12:57 pm
@LBB…”The number that matters is the amount the government has to pay back to anyone who holds our debt. The debt went up every year of Clinton’s regime. There was no surplus.”
I will tell you like I told Rafe…you don’t like the rules…change them…until them live with them.
JDW
November 27th, 2012
1:07 pm
@md…
“Yes, all fine and dandy until China makes it’s move to push it’s own reserve currency (read up on the gold China has been gobbling up to backstop their attempt), to which Russia would back them up………then we are printing worthless paper.”
O’ dear another gold standard discussion…psssst there is not enough gold in the WORLD to back a currency. That is why no one does it. China on the other hand is most certainly investing in gold via production not a bad strategy if one needs to hoard hard currency because they have a controlled one.
“It is a mistake to think we are on sound footing if we continue down this road.”
It is conceivable problems could arise should we continue down this road for many years. That is why I advocate a return to the sanity of the Clinton years. Controlled spending growth, as we have done since the end of Duhbya and appropriate tax revenues with which Republicans struggle.
“And one that refuses to think we can not end up like Greece is the one with a closed mind…..once upon a time GREECE didn’t think they could be like Greece.”
When the US represents economic clout on the order of Greece I will consider the possibility until then it brings to mind the story of Chicken Little.
Tiberius - pulling the tail of the left AND right when needed
November 27th, 2012
1:07 pm
“if you are getting more than you deserve you pay more. Figure it out.”
And in this one comment, Patty proves everything that is wrong with the thinking on the left these days.
Since when does any entity, personal or governmental, get to decide what you “deserve”.
Real Athens
November 27th, 2012
3:32 pm
“Billionaire earners don’t exist in this country.”
“TEN Americans made a total of FIFTY BILLION DOLLARS in one year. That’s enough to pay the salaries of over a million nurses or teachers or emergency responders. That’s enough, according to 2008 estimates by the Food and Agriculture Organization and the UN’s World Food Program, to feed the 870 million people in the world who are lacking sufficient food.”
http://finance.yahoo.com/news/pf_article_113540.html
What a rube.
md
November 27th, 2012
3:52 pm
“O’ dear another gold standard discussion…psssst there is not enough gold in the WORLD to back a currency. That is why no one does it. China on the other hand is most certainly investing in gold via production not a bad strategy if one needs to hoard hard currency because they have a controlled one.”
You might want to read up a wee bit more…….take that gold, combine it with the soon to be world’s number one economy (as soon as 2018?), back it up with a very vengeful Russia, and see how it turns out.
One is fooling oneself if they think the world’s new #1 won’t want all the perks that come with it……we sure do/did.