Tax Cuts

President Obama’s logic is unassailable, regarding his proposed extension of only the middle class tax cuts enacted under W. Bush:

…we all say we agree that we should extend the tax cuts for 98 percent of the American people.  Everybody says that.  The Republicans say they don’t want to raise taxes on the middle class.  I don’t want to raise taxes on the middle class. So we should all agree to extend the tax cuts for the middle class.  Let’s agree to do what we agree on.  Right?

Well, right? Who can’t see the logic in that? This who:

A spokesman for John Boehner said of a threatened presidential veto of a bill that extended the middle class cuts but also included an extension of tax cuts for the wealthy:

We’ve heard it all before, but the president has even fewer Democratic allies in Congress than he did two years ago, when he signed a full extension. No one believes the president would really derail our economy just to fulfill his quixotic desire for small business tax hikes.

A spokesman for Mitch McConnell said:

It’s certainly interesting that the president’s commitment to raising taxes on nearly a million small businesses would extend to him vetoing a bill that, to get to his desk, would have passed in both a Republican House and a Democrat Senate.

Whether Republicans will get away with, as Mr. Obama said, holding the middle class hostage once again in order to protect the wealthy from tax rates that existed under a prosperous Clinton administration, remains to be seen. That will ultimately be up to those 98 percent of the American people who will get the middle class tax cut.

But I want to note here that of those 98 percent, about half of them can’t wait to sprint into a polling station in November and pull the lever for Romney and the Republican Party, which has time and again elevated the welfare of the wealthy over the welfare of the middle class and which has implicitly threatened to bring down the whole American economic house if rich folks don’t get to keep their tax cut.

The reality that so many folks are willing to vote against their own economic interests, as well as the larger interests of the country, is depressing. No, let’s be honest. It is shameful.

19 Comments

  1. Treeske

     /  July 10, 2012

    People will continue to vote against their own interests as long as they accept the disinformation fed to them.

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    • Yes, but how do we get them to stop accepting it? I have tried to reach certain individuals I know–all of whom know my background as a former committed conservative–and none of them that I know of has budged away from their–admittedly religion-based–worldview. Conservative religion, as I have argued time and again, is an almost insurmountable obstacle to thinking and once planted deeply is almost impossible to root out of the mind.

      It’s so powerful it even clouds the way folks see tax policy. Depressing.

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      • King Beauregard

         /  July 11, 2012

        I haven’t had a good test subject to try it on, but the point I would try to make wouldn’t be political at all. Just this: the greatest possible heresy in Christianity is to fail to exhibit love, and given what a poor job most churches do exhibiting love, Satan has apparently sunk his claws into most of them. If your church isn’t absolutely overflowing with love, get out of that particular church before Satan sinks his claws into you too.

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        • Ah, I like that approach. Perhaps an enlightened preacher could preach something along the lines of, “Sinners in the Hands of An Angry God,” except with the Great Awakening coming in an understanding that government is God’s instrument to achieve more equitable wealth distribution and a just society!

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          • King Beauregard

             /  July 12, 2012

            That sounds like it’s pushing it. While there is a specific political outlook I’d personally like people to adopt, there is no way to guide people there, certainly not without them concluding I was just trying to manipulate them.

            But that’s beyond the scope of this anyway. If people can recognize that some (many? most?) American churches have a pernicious spiritual effect on them and they need to abandon those churches for better ones, I imagine I can trust their consciences to guide them to overall decency. They might end up disagreeing with me on a lot of matters, but they’ll at least end up somewhere I can respect.

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            • I agree with you, of course. And that’s the problem on our side of the debate. We don’t want to manipulate people, preferring they draw the right conclusions themselves, without having to “guide” them there. The problem is, I fear, our preference for such a strategy is why the country is so full of followers of windbags like Rush Limbaugh.

              I could never have imagined how difficult it is these days to get folks to agree on just what constitutes “overall decency.” Seems not that long ago there was a consensus on roughly what that meant, but now the Republican Party has changed so much that the consensus has disappeared. Heck, we can’t even agree that undermining America’s credit worthiness is a bad idea!

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      • King Beauregard

         /  July 12, 2012

        Continuing the conversation way out here so the column doesn’t get any narrower …

        It’s not that I refuse to manipulate anyone on moral grounds (though I am certainly hesitant), it’s that such a manipulation is doomed to failure. It’s like how churches do a terrible job at attracting outsiders when they’re “selling”, and are much more successful when they are simply “welcoming”. The customer can smell the difference, and while there are no guarantees they will respond to the latter, they will certainly recoil from the former.

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  2. ansonburlingame

     /  July 10, 2012

    If you are one of the 50 million people without HC insurance today, maybe the lack of a tax increase will help you pay for the now mandated HC insurance, but I bet it will not pay for all of it.

    Think of it as taking about $2,000 (or) so out of your pocket and putting back in maybe $500, for 50 million Americans.

    We have been down this path of only increase taxes on the rich before. Obama is pulling another Chicago style politics using political opportunism to get his way. It did not work before and I doubt that it will work again.

    Federal revenues need to go up and federal spending needs to go down, all at the same time and ALL Americans should be willing to bear that burden, together. But not under this President, no way. He is far too much of a divider.

    Anson

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  3. Jane Reaction

     /  July 10, 2012

    What a fool believes:You will again vote against yourself.

    Health insurance is not the topic Anson. Fairness is.

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  4. Grant

     /  July 10, 2012

    I think Robert Reich explains President Obama’s tax policies very clearly at this URL: http://robertreich.org/post/26903999855

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    • Loves me some Reich, who makes the point I try to get folks to understand all the time:

      He’s proposing that everyone receive a continuation of the Bush tax cuts on the first $250,000 of their incomes. Any dollars they earn in excess of $250,000 will be taxed at the old Clinton-era rates.

      Get it? Everyone is treated exactly the same. Everyone gets a one-year extension of the Bush tax cut on the first $250,000 of income. No “class warfare.”

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  5. Former Governor John Sununu had a reply for this issue on Andrea Mitchell’s noon CNBC show today and he appeared to have her a little flummoxed on it. His position is that while only about 3% of small businesses are likely to have to pay a higher tax rate under the Obama proposal, it is those 3% which are the largest and which would be the most likely to hire or not hire in response to such a tax. Mitchell seemed unprepared for the charge and offered no answer. There could be something to it I think.

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    • Grant

       /  July 10, 2012

      I think some perspective is called for here. Going back to the pre-Bush tax rate for income over $250,000 will cost those taxpayers $440 per $10,000 of taxable income. That’s a raise from 35% to 39.4%. Is that really going to keep those folks from hiring if they need employees?

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      • Well, Grant, since you raise the issue, my guess would be no. It would be a matter of business calculation, balancing expected volume of business against costs, with due consideration of the fact that only profits, or income taken from the business, is taxed and that all business expenses including employee salaries and benefits are deductible.

        There is one one other fact not usually admitted by the Conservative side: Surveys show that U.S. business in general is sitting on something like a Trillion dollars in cash, reluctant to use it because of economic uncertainty caused by Greece, Europe, and the Middle East mess. So, that being the case, why would any kind of tax relief, or tax restoration for that matter, change their minds about what to do? I say it would have little effect. But, as I said above, it might have some. I was hoping someone would come up with some facts about it.

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        • Without getting into it too deeply, Jim, I would say a salient “fact” about the effect such relatively minor tax policy has on “job creators” is the fact that from 1994, when the original tax rates went into effect, until they were temporarily–important word there–lowered in 2001, more than 20 million jobs were created in the U.S.

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    • While I can understand a business on the threshold of the ACA’s employer mandate (50 or more “full-time equivalents”) not adding that extra person (even though the terms don’t appear that onerous to me), it is impossible for me to imagine that any business worth the name would not hire a needed employee only–and I mean only–because its taxes on income only over $250,000 (we shouldn’t forget that; they get the tax cuts on income up to that amount) are going from 35 to 39.6%.

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  6. ansonburlingame

     /  July 11, 2012

    For Grant and others,

    25 x $440 = $11,000 increase in taxes for that $250K small business. It the business is making $1 Million that comes out to $44,000 increased taxation. Yep there are some jobs in that amount of money. Not a lot of jobs, but some, for sure.

    But most of us are really missing the point as “mini-pundits” at least in my view.

    Our country is in deep economic trouble, across the board economic trouble. We as a nation CAN get out of that trouble in my view but it will require a united effort by all Americans. Some group of politicians are not going to be able to pull a rabbit out of the hat to correct basic and underlying flaws in our economy.

    Federal revenues need to increase and federal spending needs to come down, all together. That is the fundamental course that we as a nation to undertake, again together. The ultimate goal is a balanced budget., call it living within our means.

    But politicians are pitting one side against the other and everytime some solution is suggested we get in the ridiculous fights over who pays and who benefits. ACA is a prime example as are the ongoing fights over Bush tax cuts. And if anyone had the guts to start addressing the tax codes OMG would the calculators be humming to see who pays and who benefits, again.

    Anson

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    • Grant

       /  July 11, 2012

      Actually, that small business doesn’t have ANY increases for the first 250,000, so if their taxable income is $1,000,000, they’ll pay an additional 33,000 (75*$440).

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  7. ansonburlingame

     /  July 12, 2012

    You are correct Grant. My error. But $33K is, well, $33K lost to the bottom line of that business. How that affects dividends, salaries, money into the pockets of owners (or out of their pockets) is too complex for me to grasp.

    Don’t get me wrong. I have no problem with a 4% tax hike on the “rich”. But I also still believe that ALL Americans must pull together to add “needed” revenues to the federal treasury. ALL Americans making “living wages” were paying those tax rates before 2001. People today making such wages should be able to bear the burden today as well. But I assume we do not tax unemployment benefits as well so the unemployed (maybe 12 million) as well as the 50% of wage earners (another 75 Million or so) would still pay no income taxes!

    But you know I hope that changing the tax codes is the “right” way to go. Start with a clean sheet of paper and make it very simple and transparent to all. Taxes should fund government only. But we have been using tax codes to incentivize behavior now for a long time and look how complex it has become.

    Why not just add up income for each earner, all income and then tax it accordingly to fund the federal government. Pick a certain level of income, say the poverty level, upon which no one pays any income taxes. The progressively increase the tax rates for various levels of income, with no deductions, above that level.

    You could file a tax return on a post card with such a system but watch out for the unemployment rate for lawyers and CPAs!

    Anson

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