“Take That Turkey Off The Table”: The Bush Tax Cuts For The Wealthy Are Un-American
Reading about the historic Johnstown flood of 1889 brought to mind the Bush tax cuts for the wealthy—and why the president must rid us of them now as the nation starts a new season, thankful yet sober.
The 1 percent of that era were the robber barons of the Gilded Age, with great steel, coke, and railroad wealth concentrated in Pittsburgh. They started an exclusive club, several industrial barons, including Andrew Carnegie, devoted to fishing and hunting, by the South Fork Dam. The dam the club constructed nearby overlooked several towns and villages in the rugged incline and valley below. On a terribly rainy spring day when the dam broke, an entire lake drowned those towns in torrents of water, debris and floating trees, and houses. Because the fancy club’s earthen dam was shoddy, roughly 2,200 people died in the worst natural disaster to befall an American town up to that point.
The robber barons’ summer recreation endangered the whole community’s safety and livelihood. People talked about the dam breaking all the time before it did. And that’s what I’m talking about. For too long we have lived under the yoke, under the treacherous dam of putting really rich people first. To recover from our own economic calamity, those tax cuts must be scrubbed, along with everything with George W. Bush’s name on it. Let it not be forgot, he’s the guy that took peace and prosperity and turned it all into desert dust and debt.
Taking that turkey off the table would not upset most wealthy people, who were content to live under the Clinton tax code. That is what President Obama wishes to do, but he has been thwarted once before by stubborn Republicans. This time around, he seems to have more mettle about getting rid of the significant tax break the rich have received, just for being rich. It will also bring substantial revenue badly needed by the Treasury. I grant you, there are hedge fund managers out there who see it differently than you and me.
As we mark the autumn harvest in a collective ritual that brings comfort, let’s resolve to rid ourselves of the most divisive policy remaining from the Bush years. A policy that is, in the end, unfair and un-American. And life will start looking up.
By: Jamie Stiehm, U. S. News and World Report, Washington Whispers, November 20, 2012
“Just Get Out Of The Way”: Obama’s Electoral Mandate And Where It Leaves Republicans
Sunday’s morning shows featured some astoundingly stupid comments from Republicans who claim to believe that on Election Day voters gave them a “mandate” to continue their attempts to obstruct President Obama’s agenda.
Apparently some Republican pundits are still living in the same parallel universe that allowed them to convince themselves that by now, President-elect Mitt Romney would be organizing his transition.
It really is mind-boggling. Notwithstanding all of the available evidence, they still believe that the American people want them to stand in the way of increases in taxes for the wealthiest 2 percent and to cut Medicare and Social Security benefits for future retirees.
Who got a mandate for his policies on Election Day?
The presidential campaign focused like a laser on the question of whether tax rates should be increased for the top 2 percent of Americans or whether we should adopt Romney’s proposal to lower tax rates for the wealthy by another $5 trillion, and inevitably increase taxes on the middle class.
The campaign centered on the Ryan-Romney budget that would have slashed spending on critical services for the poor and middle class, reduce funding for education, do away with Medicare and replace it with a voucher program that would increase out-of-pocket costs for seniors by $6,500 per year.
And it was clear throughout, that the Republicans continued to favor privatizing Social Security.
- The Republican presidential ticket lost by 332 electoral votes to 206 electoral votes.
- Obama got 50.6 percent of the popular vote and Romney got 47.6 percent of the popular vote.
- Democrats took two additional seats in the Senate and now hold a 55-45 edge.
- The Senate Democratic caucus now includes more Progressive members and fewer Conservative members.
- Democrats picked up at least 7 and probably 8 seats in the House, and nationwide got over a half a million more votes for their House candidates than did the Republicans — even though the Republicans continued to control the chamber.
And the verdict that was rendered at the ballot box could be seen in virtually every national opinion survey.
The election was a battle over the future of the middle class, and Obama won that battle.
A Greenberg-Quinlan Research poll found that by 51 to 42 percent the voters said Obama would do a better job restoring the middle class.
They found that by almost two-thirds, voters believed Social Security and Medicare should not be cut as part of a deficit reduction deal.
A November 15, 2012 Hart Research poll for Americans for Tax Fairness found that:
- By a strong 17-point margin, voters favor ending the Bush tax cuts on incomes over250,000 (56 percent) rather than extending the tax cuts for all taxpayers (39 percent).
- President Obama now holds a commanding position in the debate over tax policy. When voters hear President Obama’s position on the Bush tax cuts — that he will sign a bill continuing them for 98 percent of Americans but will veto a bill continuing them for incomes over 250,000 — fully 61 percent agree with this stance. By contrast, when voters are read congressional Republicans’ position — that they will pass a bill continuing the cuts for all income levels, but will block any bill ending the cuts for those making over 250,000 — only 42 percent agree while a 53 percent majority rejects its plan.
NBCNews.com’s First Read, November 15, 2012 — more autopsy 2012— additional analysis of exit polls in battleground states:
- Support for raising taxes for 250K+ earners or everyone — Nevada 64 percent, Wisconsin 64 percent, Virginia 63 percent, Iowa 63 percent, New Hampshire 61 percent, Ohio 57 percent, Florida 57 percent — national average 60 percent.
Greenberg-Quinlan found in a November poll that Americans reject austerity in favor of investment that creates jobs. They were asked to choose between two statements:
We should avoid immediate drastic cuts in spending, and instead, we need serious investments that create jobs and make us more prosperous in the long-term that will reduce our debt, too.
Or…
The only way to restore prosperity and market confidence is to dramatically reduce government spending and our long-term deficits.
The statement favoring investments was chosen by 51 percent compared to 42 percent for the statement favoring cuts.
In fact, there is little question that voters understand better than many commentators and pundits that the budget battle in Washington is not mainly about ratios of revenue to cuts, or “reining in entitlements” — it is about who pays.
Will the wealthy, who have siphoned off all of the economic growth of the last 15 years, be asked to pay to fix the deficit that resulted from the Bush Tax cuts, and two unpaid-for wars? Or will the middle class — whose income has been stagnant or declining — be asked once again to foot the bill?
Voters get it. Time for D.C. pundits to get it as well.
Voters did send a mandate to Republicans on November 6th — a mandate to wake up and smell the coffee.
Here are a few of the mandates the voters gave Republicans:
- Bad idea to be viewed as a party who mainly represents the interests of the 1 percent and has candidates that were born on third base and think they hit a triple.
- Bad idea to insult almost half of the voters with comments about the 47 percent who can’t be convinced to “take responsibility for their lives.”
- Bad idea to insult the fastest growing ethnic group in America with your plans for “self deportation” and vetoing the Dream Act.
- Bad idea to patronize American women — who incidentally represent about 52 percent of the electorate — by telling them that government must intervene in the reproductive choices that should be left entirely to them and their doctors.
- Bad idea to believe you can any longer win national races in America by insulting and alienating people of color.
- Bad idea to ignore the persistent march of demographic changes that are transforming the American electorate. In addition to the growing proportion of people of color, the millennial generation — the most consistently progressive generation in recent American history — is becoming a larger portion of the overall electorate with every passing day.
Finally, the voters sent a loud and clear message that it is a bad idea for the GOP to continue to be the party that opposes traditional progressive American values.
They voted to confirm their view that they want a society where we have each others’ backs — where we’re all in this together, not all in this alone. They voted for a society where everyone does his or her fair share, gets a fair shake and plays by the same rules. They want a society that is hopeful and vibrant and celebrates its diversity — a society where it doesn’t matter whether you are a man or woman, gay or straight — a society where it doesn’t matter where you were born, or how much money your parents had when you grew up.
In short the voters showed once again that they want the kind of a society that Barack Obama described in his first major national speech — to the Democratic Convention in 2004 — a society where there are no blue states or red states — just the United States.
Now it’s time for the Republicans to lead, follow or get out of the way.
By: Robert Creamer, The Huffington Post Blog, November 19, 2012
“The Twinkie Manifesto”: Economic Growth And Economic Justice Are Not Incompatible
The Twinkie, it turns out, was introduced way back in 1930. In our memories, however, the iconic snack will forever be identified with the 1950s, when Hostess popularized the brand by sponsoring “The Howdy Doody Show.” And the demise of Hostess has unleashed a wave of baby boomer nostalgia for a seemingly more innocent time.
Needless to say, it wasn’t really innocent. But the ’50s — the Twinkie Era — do offer lessons that remain relevant in the 21st century. Above all, the success of the postwar American economy demonstrates that, contrary to today’s conservative orthodoxy, you can have prosperity without demeaning workers and coddling the rich.
Consider the question of tax rates on the wealthy. The modern American right, and much of the alleged center, is obsessed with the notion that low tax rates at the top are essential to growth. Remember that Erskine Bowles and Alan Simpson, charged with producing a plan to curb deficits, nonetheless somehow ended up listing “lower tax rates” as a “guiding principle.”
Yet in the 1950s incomes in the top bracket faced a marginal tax rate of 91, that’s right, 91 percent, while taxes on corporate profits were twice as large, relative to national income, as in recent years. The best estimates suggest that circa 1960 the top 0.01 percent of Americans paid an effective federal tax rate of more than 70 percent, twice what they pay today.
Nor were high taxes the only burden wealthy businessmen had to bear. They also faced a labor force with a degree of bargaining power hard to imagine today. In 1955 roughly a third of American workers were union members. In the biggest companies, management and labor bargained as equals, so much so that it was common to talk about corporations serving an array of “stakeholders” as opposed to merely serving stockholders.
Squeezed between high taxes and empowered workers, executives were relatively impoverished by the standards of either earlier or later generations. In 1955 Fortune magazine published an essay, “How top executives live,” which emphasized how modest their lifestyles had become compared with days of yore. The vast mansions, armies of servants, and huge yachts of the 1920s were no more; by 1955 the typical executive, Fortune claimed, lived in a smallish suburban house, relied on part-time help and skippered his own relatively small boat.
The data confirm Fortune’s impressions. Between the 1920s and the 1950s real incomes for the richest Americans fell sharply, not just compared with the middle class but in absolute terms. According to estimates by the economists Thomas Piketty and Emmanuel Saez, in 1955 the real incomes of the top 0.01 percent of Americans were less than half what they had been in the late 1920s, and their share of total income was down by three-quarters.
Today, of course, the mansions, armies of servants and yachts are back, bigger than ever — and any hint of policies that might crimp plutocrats’ style is met with cries of “socialism.” Indeed, the whole Romney campaign was based on the premise that President Obama’s threat to modestly raise taxes on top incomes, plus his temerity in suggesting that some bankers had behaved badly, were crippling the economy. Surely, then, the far less plutocrat-friendly environment of the 1950s must have been an economic disaster, right?
Actually, some people thought so at the time. Paul Ryan and many other modern conservatives are devotees of Ayn Rand. Well, the collapsing, moocher-infested nation she portrayed in “Atlas Shrugged,” published in 1957, was basically Dwight Eisenhower’s America.
Strange to say, however, the oppressed executives Fortune portrayed in 1955 didn’t go Galt and deprive the nation of their talents. On the contrary, if Fortune is to be believed, they were working harder than ever. And the high-tax, strong-union decades after World War II were in fact marked by spectacular, widely shared economic growth: nothing before or since has matched the doubling of median family income between 1947 and 1973.
Which brings us back to the nostalgia thing.
There are, let’s face it, some people in our political life who pine for the days when minorities and women knew their place, gays stayed firmly in the closet and congressmen asked, “Are you now or have you ever been?” The rest of us, however, are very glad those days are gone. We are, morally, a much better nation than we were. Oh, and the food has improved a lot, too.
Along the way, however, we’ve forgotten something important — namely, that economic justice and economic growth aren’t incompatible. America in the 1950s made the rich pay their fair share; it gave workers the power to bargain for decent wages and benefits; yet contrary to right-wing propaganda then and now, it prospered. And we can do that again.
By: Paul Krugman, Op-Ed Columnist, The New York Times, November 19, 2012
“Caught In A Bind”: Taxes Are Certain, But What About Mitt Romney’s Cuts?
Republican Mitt Romney started his campaign calling for big tax cuts, but now he has changed course. He’s warning middle-class families not to raise their hopes too high.
Romney couldn’t have been more emphatic than he was last November at a candidates’ debate in Michigan.
“What I want to do is help the people who’ve been hurt the most, and that’s the middle class,” he said. “And so what I do is focus a substantial tax break on middle-income Americans.”
He put a middle-class tax cut at the top of his priority list: a 20 percent reduction in tax rates across the board.
“Right now, let’s get the job done first that has to be done immediately. Let’s lower the tax rates on middle-income Americans,” he said.
Then, at a debate in Tampa this January, Romney got a little more specific.
“The real question people are gonna ask is, who’s going to help the American people at a time when folks are having real tough times? And that’s why I’ve put forward a plan to eliminate the tax on savings for middle-income Americans,” he said. “Anyone making under $200,000 a year, I would eliminate the tax on interest, dividends and capital gains.”
Shaking Up Tax Plans
But then came Romney’s victory in the primaries, and a new set of goals to meet.
“Well, I think you hit a reset button for the fall campaign. Everything changes,” campaign adviser Eric Fehrnstrom said on CNN. “It’s almost like an Etch A Sketch. You can kind of shake it up, and we start all over again.”
Romney shook up his plans on the tax cuts. He still wanted to lower the tax rates, but now he was more emphatic about the need for tax changes to be revenue-neutral.
In September, he had words of caution for the crowd that filled the gym at a suburban Ohio high school.
“By the way, don’t be expecting a huge cut in taxes, because I’m also going to lower deductions and exemptions,” he said.
In other words, your tax rate might be lower, but your taxable income might be higher. He elaborated in the Wednesday night debate with President Obama.
“I will not, under any circumstances, raise taxes on middle-income families. I will lower taxes on middle-income families,” he said.
But he avoided details. He said he would work with Congress, and he quickly moved to talk about another goal: lowering the tax rate for small-business people.
“If we lower that rate, they will be able to hire more people. For me, this is about jobs,” he said.
Will The Tax Cut Stick?
As the campaign goes on, Romney gives the tax cuts more and more to do: Help the middle class, produce more jobs, keep the same amount of money flowing into the government, and more.
At the conservative think tank American Enterprise Institute, research fellow Michael Strain says Romney has plenty of tax variables he can adjust.
“There are a lot of different levers to pull here. You have the marginal tax rates, you have the amount of income that’s subject to taxation, you have the amount of income that you can deduct from your gross income to calculate your taxable income,” Strain says.
Is a middle-class tax cut possible with everything else? Strain thinks it is.
“In order to do that, you would have to have a specific plan. And we haven’t seen that from Gov. Romney yet,” he says.
But at the nonpartisan Tax Policy Center, co-director William Gale says Romney is caught in a bind.
“He has made a set of proposals that are jointly impossible to fulfill. And so something has to give,” he says.
It may be that what’s giving — as Romney told the crowd in Ohio — is the middle-class tax cut.
By: Peter Overby, NPR, October 7, 2012
“No, We Don’t Dig It”: What We Still Don’t Know About Mitt Romney’s Taxes
With the documents Mitt Romney released recently, we know a bit more about his taxes.
We know, for instance, that Romney paid a rate of 14.1 percent on $13.7 million in income on his 2011 tax return, which he achieved by purposely overpaying. Though he was entitled to deduct $4 million in charitable contributions, Romney deducted only $2.25 million to keep his tax rate above 13 percent.
(Romney, it has been pointed out, could file an amended return to claim the full deduction after the election. We’ve contacted the Romney campaign, and Michele Davis, a spokeswoman, assured us he would not do so.)
We know, according to a letter from his accountants at PricewaterhouseCoopers, that Romney has paid state and federal income taxes each year since at least 1990, which would seem to disprove Senate Majority Leader Harry Reid’s claim in July that Romney had not paid any taxes for a decade.
And we know that Romney’s tax rate since 1990 never dipped below 13.66 percent, according to his accountants. Romney paid an average effective tax rate between 1990 and 2009 of 20.2 percent.
But there’s still a lot we don’t know. “I think most of the major questions we had before [last Friday] are still out there,” said Brian Galle, a tax law professor at Boston College. Here are a few:
How much did Romney make before 2010?
While Romney has disclosed his average effective tax rate for the last two decades, he hasn’t said how much he earned in those years or how much — the dollar amount — he paid in taxes.
That’s an important distinction, said Daniel Shaviro, a tax law professor at New York University. Various tax-planning strategies may have enabled Romney to reduce his adjusted gross income in some years.
In 2008, for instance, investors everywhere lost money when the stock market tanked. Romney may have carried those losses forward, Shaviro said, and used them to reduce his adjusted gross income in 2009. While we know Romney paid at least 13.66 percent of the income he recorded on his taxes in a given year, we don’t know what percentage he paid of the money actually took home that year.
Why is Romney’s IRA worth so much?
Much of Romney’s wealth sits in his IRA, which is worth as much as $101.6 million. It’s a remarkable number, in part because Romney would have been able to contribute a maximum of $30,000 a year to his IRA while he was at Bain, from 1984 to 1999.
Galle, the Boston College tax law professor, said the most likely explanation for the outsized IRA is that Romney put in shares in Bain investments that swelled in value. According to the Wall Street Journal, Bain allowed employees to buy a special class of shares in the firm’s investments. The shares didn’t cost very much, but they could be extremely lucrative. In one deal, the Journal reported, “some Bain employees saw a 583-fold increase” in the value of their shares — an astronomical return. Because the shares were in IRAs, the profits could be plowed into new Bain deals without subtracting taxes.
Romney also may have beefed up his IRA by contributing “carried interest” — a share of the profits in funds managed by Bain. As Reuters reported earlier this year, any potential carried interest would “not be disclosed in his personal financial summary or on a federal income tax return.” In other words, even if Romney released all his tax returns, we still might not know exactly how he accumulated his huge IRA.
What about Romney’s investments offshore?
We know many of Romney’s IRA investments are based in foreign countries but it’s hard to know how much. He valued one account in the Cayman Islands at anywhere between $5 million and $25 million.
One thing we do know is that Romney pays a far lower tax rate overseas than he does here. According to Quartz, Romney paid only 2.4 percent in foreign taxes in 2011 on the $3.5 million he earned abroad.
We also know where Romney’s current overseas investments are held —Bermuda, the Cayman Islands, Switzerland, Luxembourg — and many of the firms he has invested in, including a state-owned Chinese oil company and a Chinese bank that Romney’s family trusts sold their stake in last year. But we don’t have a lot of other important documentation, including forms would show whether Romney had, as the New York Times has reported, “over the years declared all of his foreign income to the IRS in a timely manner.”
The Wall Street Journal has reported that Romney’s offshore IRA investments likely helped him avoid a little-known tax called the unrelated business income tax. The tax, “meant to discourage tax-exempt entities such as an IRA or college endowment fund from unfairly competing with for-profit, taxpaying entities by operating a business without paying taxes on it,” could have hit Romney at up to 35 percent.
The Romney campaign seems unlikely to release any more information about his finances, but that hasn’t kept reporters from digging it up. Bloomberg, for instance, analyzed securities filings to report last Thursday that Romney has set up a type of trust known as an “I Dig It” trust — a legal way for Romney to avoid estate and gift taxes and pass some of his fortune onto future generations.
By: Theodoric Meyer, Propublica, October 1, 2012
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