How Far to the Right Has America's Tax Debate Moved?

by: David Sirota

Tue Sep 14, 2010 at 09:00

This far:

Paul noted these very numbers late last week, but they are worth showing again because they are so disturbing.

Yes, I realize it's hard to digest those numbers without gagging. But they are the numbers. And they do prove that the so-called "Bush tax cuts for the middle class" give a disproportionate amount of benefits not to the middle class, but to very wealthy people.

That, of course, means that the debate over whether to extend all of the Bush tax cuts or just the so-called "Bush tax cuts for the middle class" is, unto itself, tilted far to the right. What we're really debating is whether to do what Republicans want and extend all of the Bush tax cuts for the wealthy, or do what some Democrats want and just extend some of the Bush tax cuts for the wealthy.

Thus, this debate is yet another example of how narrow - and rigged - our policy discourse really is, and how on some core economic issues, the parties are much closer on policy than they (their media organs and even some of their professional activist groups) would have us believe.

It is also another example of how the debate's rightward tilt doesn't reflect the kind of debate the non-Beltway public is ready to have. Indeed, polls consistently show majorities favor getting rid of some or all of the Bush tax cuts, meaning public opinion is not forcing the debate to be merely between  getting rid of none or some. But that is the debate - because that debate makes sure that whatever happens, Big Money wins.

David Sirota :: How Far to the Right Has America's Tax Debate Moved?

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Imho the vDems should call the rethuglican bluff! (4.00 / 3)
Look at the table - the so called "middle class tax cuts" deliver to the wealthy, even the income millionaires, too. And we shall believe that the GOP will let these cuts expire, simply because they don't get the other cuts as well? Vote against Bush policy after they voted for it? Let their clientele pay higher taxes?

I simply don't believe they're really willing to shoot themselves in the foot just to make a cheap point in making the Dems look powerless. Their voters probably wouldn't understand this, either, I bet. So, no, as I see it, the Dems should go all in, bring this up for a vote and force the rethuglicans to show their cards. They don't have anything on their hands, there aren't any aces up their sleeves this time.

re: bluff (4.00 / 1)
the Dems should go all in, bring this up for a vote and force the rethuglicans to show their cards. They don't have anything on their hands, there aren't any aces up their sleeves this time.

these Dems don't do bluffs

Reid and Obama's first thought is compromise no matter how favorable the situation is

[ Parent ]
You're only partially right (0.00 / 0)
While it's true that Reid and Obama have blown their high ground here, there does seem to be an inkling of balls emerging:

But a tough political landscape doesn't necessarily portend a policy compromise. Shortly after McConnell announced that he had the assurances of his Republican colleagues, Reid himself put out a blistering response, hinting that he is willing to call the GOP's bluff with respect to the tax cuts debate.

"It is unconscionable for Senate Republicans to hold middle-class tax cuts hostage in order to secure more tax giveaways for millionaires and CEOs who ship American jobs overseas," Reid said. "Today's declaration by Senate Republicans means they are willing to raise taxes on the middle class and small businesses in the middle of a recession."

The White House, meanwhile, has stressed repeatedly that they don't think the president will end up having to veto a negotiated package -- expressing confidence that Congress will end up backing an extension for those making less than $250,000 a year and nothing more. Senate aides, likewise, seem to be hankering for the vote even if they lack the confidence that they'll win it.

"If you move forward with tax cuts for the middle class, you force the GOP into one of two choices," said one top Senate Democratic aide. "One: agree and support the middle class cuts; or two: stand up for lobbyists and corporate executives as they push to include the higher end tax cuts as well. We win with either option -- either the middle class cuts pass or Republicans are isolated and look awful defending tax cuts for the richest of the rich. And, even if they try to tack on a full tax cut amendment, you'll need 19 Democrats to back it to let it fly."

[ Parent ]
But we still just end up with the extension (0.00 / 0)
of some of the crappy Bush tax cuts.  Does that really sit well with you?  

[ Parent ]
Pls read my other comments, in liberalmaverick's QH, too. (0.00 / 0)
They should answer that.

[ Parent ]
no (0.00 / 0)
a. setting dividend tax at 20% permanently is downright criminal

The middle-class tax-cut package the Joint Tax Committee analyzed does not extend the reduction in the tax rate on dividends for couples with incomes over $250,000 (and singles over $200,000). President Obama has proposed, however, that the dividend top rate for high-income people be permanently set at 20 percent, rather than being allowed to return to its pre-2001 level of 39.6 percent. If Congress follows that approach and incorporates this proposal into a middle-class tax-cut package, the average tax cut that high-income households will receive from enactment of such a package will be considerably larger than the figures just cited, and the dollar amount by which the average tax cut going to high-income households exceeds the average tax cut for middle-income households will be significantly larger, as well.

b. reich's payroll tax cut idea is very good

c. I'd also like a millionaire tax bracket be instituted

[ Parent ]
896 to a family (4.00 / 1)
making 30,000 to 40,000 means a lot.

Political reality is a bitch.  The time to defeat those tax cuts was in 2001 and Democrats sold out. Now they are set in stone.

Getting rid of those over 250, hoever, is very important because it adds some small m,easure of progressivity to the system.  And the fight by the wealthy to keep their tax cuts shows that it mattters to them.

It's a small blow by an extremely weak working class against the real ruling class.      

The tax cuts were passed by reconciliation (0.00 / 0)
in a Republican majority Congress.  

[ Parent ]
But the Dems insist on passing it this time with 60 votes. (4.00 / 1)
Not especially a show of political smarts in comparison. Maybe the idea was to force the rethuglicans to at least once support a "Dem" bill, but so far, this doesn't seem to bring the desired results in the public and the media. It simply looks like the Dems are out of their wits and powerless.

Would have been much better to bring up an improved Dem bill, which doesn't benefit the wealthy so much, but gives more to the poor, and pass it with reconciliation, like the Bush rethuglicans did. That would have been a real Dem success in delivering relief to the middle class, and not a simple continuation of Bush policies. What's not to like? Too partisan? Ridiculous!

[ Parent ]
Sure (4.00 / 2)
but you can't say that the thing to do was 'block it then'.  

Hell, just call their bluff.  Let them vote against a middle class tax cut.  Make the second bill reduce taxes on the middle class beyond the Bush tax cuts.  Let's see them vote that down.  

[ Parent ]
I don't think they have a choice (4.00 / 1)
As I understand it, you can only pass one reconciliation bill per year.

Things You Don't Talk About in Polite Company: Religion, Politics, the Occasional Intersection of Both

[ Parent ]
Well, ok. But why didn't they put the tax reform into it, too? (4.00 / 1)
After all, it isn't as if it's a total surprise the tax cuts expire at the end of the year! Maybe I'm expecting too much, but imho political leadership should take such issues into account, and do some long term planning...

[ Parent ]
You're expecting too much (0.00 / 0)
This is what happens when a provision intended for budget bills starts being used for other things.  You might as well as for Congress to pass one huge omnibus bill under reconciliation rules.

One reason to not include extending the tax cuts with the health care bill is that it would completely blow up the argument that the bill would reduce the deficit.

Things You Don't Talk About in Polite Company: Religion, Politics, the Occasional Intersection of Both

[ Parent ]
A reformed tax cut would have reduced the deficit! (0.00 / 0)
Just reduce the rebates for the income over 250k, and you reduce the deficit in comparison with the Bush cuts! This would have been a solid argument.

Well, I guess the lawmakers were simply too focussed on finally passing HCR and were weary of making it more difficult by passing an omnibus bill. Just the usual lack of courage by the Dems. No risks, pls...

[ Parent ]
I think they were just in a hurry (4.00 / 1)
and wanted to get the whole thing over with.  I mean adding on tax cuts would've injected a whole new polarizing issue into the HCR debate.  Not to mention it probably would've required CBO scoring which would've taken another million years.

[ Parent ]
The tax cuts were passed with significant Democratic help (0.00 / 0)
No fewer than 12 Democrats joined Republicans to pass the 2001 tax cuts.

2 Republicans voted against the tax cuts.  If all 50 Senate Democrats had held together to vote against, we would've needed only 1 of those 2 to defeat the tax cuts even under reconciliation.

[ Parent ]
Disappeared (0.00 / 0)
Much of that Democratic help is gone.  John Breaux, Jean Carnahan, Max Cleland, Zell Miller, and Bob Toricelli are all gone.  Blanche Lincoln is likely gone.  Republican, now Democrat, Arlen Specter is gone.

Chafee is also gone from the Republican side leaving only John McCain left among GOP opponents.

Two of the others are very rich: Diane Feinstein and Herb Kohl.  Tim Johnson, Max Baucus and Ben Nelson complete the roster of Bush tax cutters.

[ Parent ]
What's more important is who replaced them, and whether or not they're an improvement (0.00 / 0)
John Breaux --> David Vitter, who will likely be reelected this year.  Not an improvement.

Jean Carnahan --> Jim Talent --> Claire McCaskill.  Probably about the same.

Max Cleland --> Saxby Chambliss, downgrade.

Zell Miller --> Johnny Isakson, about the same (or even a little better!).

Bob Torricelli --> Frank Lautenberg, improvement.

Blanche Lincoln --> likely John Boozman, moderate downgrade.

Arlen Specter --> likely Pat Toomey at this point, downgrade.

Lincoln Chafee --> Sheldon Whitehouse, improvement.

So just out of that batch of eight we've really only gotten two improvements.  Not much progress, but most ConservaDems are from conservative states anyway, so we can't expect a whole lot.

[ Parent ]
It doesn't mean as much as an elimination of payroll (4.00 / 2)
taxes on the first 20k in income would have meant, as Robert Reich had suggested.  80% of Americans pay more in payroll taxes than income taxes.  There were better tax cuts that the Democrats could have proposed, while allowing the not so helpful Bush tax cuts to sunset on schedule.  It's not an either/or.  It's not extend the Bush tax cuts or sit on your hands.  

Further, we were already set to "get rid" of those tax cuts.  They were written that way.  

[ Parent ]
It's too bad (4.00 / 1)
That the option of letting them all expire doesn't seem to be part of the discussion.

Things You Don't Talk About in Polite Company: Religion, Politics, the Occasional Intersection of Both

Well, think of the hardship for the lower incomes! (0.00 / 0)
In these difficult times, when so many of them struggle to make ends meet, Dems should be responsible for raising their taxes by several hundred dollars? Unthinkable. Especially in a situation where the candidates need every single vote. No surprise, really, that this "option" isn't on the table.

[ Parent ]
That assumes we could only extend these Bush tax cuts (0.00 / 0)
or do nothing.  That's a false choice.

[ Parent ]
I'm for Dem Tax cuts instead, too. (0.00 / 0)
But as I understood Anthony, he sounded like being against any tax cuts now. Maybe that's a misunderstanding.

[ Parent ]
I'm for a Dem tax cut instead of an extension of (0.00 / 0)
any Bush tax cut.  

[ Parent ]
. (0.00 / 0)
I'm surprised you guys still don't understand the concepts of marginal taxation and tax brackets. Let me put it this way, even if we were talking a lower income tax cut, say a tax cut from 10% to 5% on the first $10k earned, rich people would STILL come out ahead in terms of dollar benefits. Why? Because marginal taxation and they fact that they make at least $10k while not all poor people make $10k. In fact, any tax cut in a marginal tax system will show the rich coming out ahead on an INDIVIDUAL and DOLLAR basis. This is because RICH people pay into all brackets on their income. Their first 10k goes into the lowest bracket, next 30k goes into lower middle, ... etc. Since they fill up on each bracket, they will receive the full benefit of any cut on each bracket.

Its very stupid to look at taxes this way on an individual level. Lets look at the overall picture. Keep in mind that the actual number of people who are rich are very small relative to the middle class. If you look at the WHOLE revenue picture, most of the benefit goes to the middle class. Let say there were 98 non wealthy people and 2 wealthy people. Each middle class person saves 1k while each wealthy person saves 6k (rough approximations based on income data from wikipedia 250k is 98.5 percentile, median income is ~45k). Then we get 98k benefits for the non WEALTHY class and 12k benefits for the WEALTHY class in the system as a whole.

If you are against marginal taxation, that's a separate issue, but to just point out a graph that shows rich people are the big winners from a middle class tax cut shows a lack of thorough understanding and analysis.

Partially true, but not entirely relevant (0.00 / 0)
I brought this up the last time this chart was shown.  But I only wanted to make sure people read the chart correctly, because both raw numbers and percentages are worth seeing.  Both are accurate but each paints a different picture.

None of this changes David's point, though.  A truly progressive tax change, for example, could reduce the lower marginal rates as shown above but also create a new tax bracket at $1 million.  The chart shown would look much different and would be far better for the economy.

Though to tack back, the change from current, Bush level taxation to future taxation produces a chart much more to liberal's liking.  That is because the other Bush tax cut, weighed even stronger for the rich, should be repealed.

[ Parent ]
. (0.00 / 0)
True and relevant. There isn't really an injection of politics in my original post. I agree, tax cuts for the rich should be repealed. As to my point, its that the graph doesn't really show anything and is misleading at best. Its not something that should be a surprise to anyone that the rich will benefit from a tax cut of ANY kind, even a reduction on taxes for the LOWEST bracket.

Even a "truly progressive tax change" would not affect how the graph looks because it ONLY looks at one particular tax bracket. It misses the total picture to pick out something that should be inherently obvious from any study of marginal taxation. It fails to encapsulate the entire picture of taxation by pointing out one specific bracket and also misses the key point in the the NUMBER of people getting the benefit. Taken as a whole the RICH class will benefit far less than the entire public from a middle class tax cut, yet the graph tries to persuade that the rich benefit the most.  

[ Parent ]
One tax bracket: not true (0.00 / 0)
ah, no, it doesn't only look at one tax bracket.  There are two different ways you could be using the term "tax bracket" and neither is correct.

The tax change involves multiple marginal rates.  If the change only included one, the graph would grow to some number and then stay constant for everyone who earned more than the top of that margin.  This graph doesn't look like that.  Also, check out table 1 at this site.

The other meaning would be if we were looking at only one income level, obviously incorrect so I assume you meant the other possible definition.

Go back to that table 1.  If the 39.6% number were raised, just like other numbers change, the change would be more progressive and be exactly the same type of change we are talking about.

But yes, you can't make charts like this look better unless you actually include a raise as well as a reduction.  All pure tax cuts, even flat ones or ones targeted at the lower levels, will benefit the rich more in terms of raw numbers.

[ Parent ]
It's a bit late for repeal. (0.00 / 0)
It expires as they all do without any action by Congress at all.

[ Parent ]
Most here understand that. (4.00 / 1)
Didn't you see that table in Sirota's story? Shows nicely that even income millionaires profit form the cut on the first 250k.

The solution, of course, would be to twist the curve of taxation, so that at, say, 500k the rebate from the cut is gone.

[ Parent ]
Thank you, David. (4.00 / 2)
It absolutely annoys me how many people think somehow the wealthy are excluded from the extension of these Bush tax cuts.  It's so depressing that our tax debate has become so narrow.  Even here, on this board, so many people think we had two options; extend some of the Bush tax cuts, or extend all of the Bush tax cuts.  Pathetic.


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