By: Eugene Robinson, Opinion Writer, The Washington Post, September 19, 2011
Blame Budget Shortfall On Tax Cuts For The Rich
Let’s leave aside the question of fairness, for now. The paramount question is whether the United States is generating the revenue it needs to fund the public structures that are essential for business and individual prosperity—things like transportation networks, schools, healthcare, college, and many other important functions of government in a capitalistic society. By any indicator the answer is that the United States is falling short in providing both the revenue to fund these services as well as providing for their ongoing maintenance and modernization.
Federal tax revenue is lower than it has been in half a century. The federal government’s revenues from income taxes on households make up 6.4 percent of GDP; which is 1.1 percentage points lower than half a century ago, and 3.8 percentage points lower than the peak in the boom year of 2000. Our current tax revenues are not only low relative to historical levels, but they rank low internationally as well. Our total tax revenues, including federal, state, and local taxes, comprise 27 percent of GDP, a level far lower than most of our peers in the developed world. In fact, among the 33 nations of the Organisation for Economic Co-operation and Development, only three (Korea, Turkey, and Mexico) take in proportionately less tax revenue than we do.
And so we come to the question of whether the richest in America are paying their fair share. The reality is that the steep fall in federal tax revenue was caused largely by cuts in the tax rates for the very wealthiest households. The current marginal tax rate for the highest income bracket—in other words, the tax rate on income above a threshold for the wealthiest taxpayers—of 35 percent is among the lowest since WWII, far lower than the 80 percent rate during the high-growth 1960s and the 39.6 percent rate of much of the 1990s. Of course, most rich households do not pay the published rate—after taking into account deductions and other big tax benefits, the actual percentage of a rich household’s entire income paid in taxes has also fallen precipitously, dropping from 31.3 percent for millionaires in 1993 to 22 percent today.
So, no, the rich are not paying their fair share of taxes—neither as defined by historical American norms or by international standards. And, the result of that shirking of responsibility is sluggish growth, diminished social mobility, declining educational attainment, and lost business efficiencies due to our insufficient and often outdated transportation and information networks.
By: Tamara Draut, U. S. News and World Report, December 16, 2011
Republicans And Taxes: Let’s Get Real About The GOP
It would be marvelous to believe that the congressional supercommittee is going to reach a bipartisan deal. Well, actually, I’m not so sure it would be marvelous, substantively. We’ll get to that. But politically, it would be nice to see Washington function for a change. Hard experience suggests to us, however, that when all the smoke clears, there will be no deal. What will happen then? The Republicans will then go in for even emptier posturing than they’re engaging in now, this time with regard to defense cuts. You think things can’t get worse? Just wait.
For a while, when the committee’s six Democrats and six Republicans were able to talk to each other in vague generalities, Washington was able to pretend that things were looking pretty hopeful. There was no precise reason for this hope. Some senators told me that their colleagues on the committee weren’t even telling them anything. But Washington elites cling to hope of bipartisan common sense winning out the way M. Night Shyamalan fans swear that he’s going to regain form in the next movie, for real this time.
But eventually and inevitably, the negotiators had to start talking numbers. And as soon as they got to specifics, two things happened. First, they realized how far apart they were. Second, the leaks started, at which point the rest of us realized how far apart they were.
Let’s compare the plans. The Democratic proposal, released by senator and committee member Max Baucus the other day, looks to cut $3 trillion from the budget. The Republican plan, leaked in parts to The Wall Street Journal and Politico after Baucus moved, cuts just $2 trillion. If it seems odd to you that Democrats are proposing more deficit reduction than Republicans, you aren’t alone. The reason is that the Republicans—surprise, surprise—are doing it all by cuts with no tax revenue, while the Democrats include $1 trillion to $1.3 trillion in new revenue.
Now, Republicans will repeat in these coming weeks that their plan does include “revenue.” And in a way, it does. It’s just not tax revenue. Or wait—it is tax revenue! But from a tax decrease! Yes: The GOP plan says the government will raise $200 billion by cutting corporate and individual taxes. You know, the way the Bush tax cuts increased revenue, which is to say, not in the real world, but in the minds of Mitch McConnell and other delusionals who think the Bush tax cuts raised revenue. So when they go around saying “our plan raises revenues,” remember their track record.
If the time comes for Pentagon cuts, will the Democrats be willing to hold the line and risk the silly accusation of being “soft on defense”? I think we know the answer.
It bears noting, once again, that the Democrats have said with the Baucus plan that they’re ready to deal if Republicans will. Their plan includes $500 billion in entitlement program cuts. They’re prepared to attach increases in Social Security benefits to the so-called chained consumer price index, which would decrease benefits, especially for those in their 80s. That’s not some token nothing. That’s a real concession, so much so that liberals are going to be up in arms about it as time marches on. That chained CPI bit probably wouldn’t make it through Nancy’s Pelosi’s caucus, but other entitlement cuts will. So the Democrats are at least showing up to play some ball.
But the Republicans are staying in the dugout. They aren’t even bothering to take the bus to the stadium. A trillion in taxes, one dollar in taxes, it doesn’t matter; Republicans will not permit a tax increase of any kind. I’m bored of writing this sentence, so you, poor reader, must be even more bored of reading it, but it has to be said, because so many others are out there peddling the falsehood that both sides are equally to blame for the impasse: No—the impasse exists because of Republicans and taxes. Period. If the GOP moved on taxes, the Democrats would give ground on entitlements, as they have now signaled yet again. And the Democrats should not and cannot accept a deal in which there are no tax increases, because they have two-thirds of the country with them and because it’s the right thing.
Put it all together and the odds of an agreement seem long indeed. Could this rump effort of 100 bipartisan House members and 40 bipartisan senators move the boulder? It’s like asking if a Boy Scout could light a fire with two sticks in the rain. Maybe. The conditions have to be just right, and no one really knows what those conditions are.
Assuming no deal, here’s what I’m told is likely to happen after everyone has acknowledged the collapse. The Republicans will, as John McCain and others have suggested, turn up the heat on the question of defense cuts. They will introduce legislation to exempt the Pentagon from cuts. Now remember—these cuts to the Pentagon, 15 percent, were agreed to by both parties in the August debt-ceiling deal. But Republicans, being the clever dialecticians that they are, will decide that the course of history has changed, and that deal will mean no more to them than one of those secret treaties Lenin routinely abrogated back in the day.
So they’ll advance a bill saying: cuts to domestic social programs, sure; cuts to Pentagon, nyet. It will pass the House. It will go to the Senate, and all the Republicans will be for it, and they’ll need 13 Democrats. So then the questions will be: will the Democrats be willing to hold the line and risk the silly accusation of being “soft on defense”? And will the White House also hold the line—bucking, of course, its own defense secretary, who agrees with the Republican position? I think we know the answer.
So the Republicans will have killed another deal with their indefensible and immoral position on taxes, and then, having stuffed that carcass in the trunk, they will retroactively work to kill the deal they agreed to last summer, and spend December demagoguing about how Democrats are going to leave America defenseless and throw hundreds of thousands of poor aeronautical engineers into the streets.
Your tax dollars at work.
By: Michael Tomasky, The Daily Beast, October 29, 2011
Ten Reasons Why Immigration Reform Is Important To Our Fiscal Health
All eyes in Washington these days are on the new congressional super committee. The 12 members from both parties in both chambers of Congress have been assigned the task of developing a plan to reduce the federal deficit by $1.5 trillion over the next decade or risk setting off deficit-cutting triggers that will force sharp cuts to both defense and domestic spending.
There are many ways the members of this committee can reach the $1.5 trillion target between now and their Thanksgiving week deadline. We at the Center for American Progress understand that comprehensive immigration reform is not among the deficit reduction options on the table but want to urge the super committee to consider it. Comprehensive immigration reform is one key to boosting economic growth and thus helping to solve our nation’s fiscal problems.
Here are the top 10 reasons why immigration reform, or the lack thereof, affects our economy.
Additions to the U.S. economy
1. $1.5 trillion—The amount of money that would be added to America’s cumulative gross domestic product—the largest measure of economic growth—over 10 years with a comprehensive immigration reform plan that includes legalization for all undocumented immigrants currently living in the United States.
2. 3.4 percent—The potential GDP growth rate over the past two years if comprehensive immigration reform had gone into effect two years ago, in mid-2009. (see Figure 1)
3. 309,000—The number of jobs that would have been gained if comprehensive immigration reform had gone into effect two years ago, in mid-2009. A GDP growth rate of 0.2 percent above the actual growth rate translates into, based on the relationship between economic growth and unemployment, a decrease in unemployment by 0.1 percent, or 154,400 jobs, per year.
4. $4.5 billion to $5.4 billion—The amount of additional net tax revenue that would accrue to the federal government over three years if all undocumented immigrants currently living in the United States were legalized.
Revenue generated by immigrants
5. $4.2 trillion—The amount of revenue generated by Fortune 500 companies founded by immigrants and their children, representing 40 percent of all Fortune 500 companies.
6. $67 billion—The amount of money that immigrant business owners generated in the 2000 census, 12 percent of all business income. In addition, engineering and technology companies with at least one key immigrant founder generated $52 billion between 1995 and 2005 and created roughly 450,000 jobs.
Taxes generated by immigrants
7. $11.2 billion—The amount of tax revenue that states alone collected from undocumented immigrants in 2010.
Negative consequences of mass deportation
8. $2.6 trillion—The amount of money that would evaporate from cumulative U.S. GDP over 10 years if all undocumented immigrants in the country were deported.
9. 618,000—The number of jobs that would have been lost had a program of mass deportation gone into effect two years ago, in mid-2009. A mass deportation program would have caused GDP to decrease by 0.5 percent per year, which, based on the relationship between economic growth and unemployment, translates to an increase in unemployment by 0.2 percent, or 309,000 jobs, per year.
10. $285 billion—The amount of money it would cost to deport all undocumented immigrants in the United States over five years.
The upshot
Most Americans and their elected representatives in Congress would be pleasantly surprised to learn about the substantial benefits of comprehensive immigration reform to our nation’s broad-based economic growth and prosperity, and thus our ability to reduce our federal budget deficit over the next 10 years. Given how difficult a challenge the super committee faces, we cannot afford to ignore any viable options for strengthening our economy. We hope the super committee takes these top 10 economic reasons into account as they move forward with their deliberations.
By: Angela M. Kelley and Philip E. Wolgin, Center For American Progress, September 29, 2011
Obama’s Tax Plan Is Common Sense, Not Class warfare
“Class warfare!” scream the Republicans, in a voice usually reserved for phrases such as “Run for your lives!”
Spare us the histrionics. The GOP and its upper-crust patrons have been waging an undeclared but devastating war against middle-class, working-class and poor Americans for decades. Now they scream bloody murder at the notion that long-suffering victims might finally hit back.
President Obama’s proposal to boost taxes for the wealthy by $1.5 trillion over the next decade is a good first step toward reforming a system in which billionaire hedge-fund executives are taxed at a lower rate than are their chauffeurs and private chefs.
Republicans whine that, since they oppose raising taxes on the rich — and control the House of Representatives, which can block such legislation — Obama’s proposal should be seen as political, not substantive. This is just a campaign initiative, they say, not a “serious” plan to address the nation’s financial and economic woes.
But that’s pure solipsism: Whatever does not fit the GOP’s worldview is, by definition, illegitimate. By this standard, Obama could propose only measures that are in the Republican Party’s platform — which obviously would defeat the purpose of being elected president as a progressive Democrat in the first place.
Outside of the Republican echo chamber, polls consistently show the American people consider unemployment to be the nation’s most urgent problem, not deficits and debt. Obama was on target with the American Jobs Act he proposed this month; the only question was what took him so long.
Americans do have long-term concerns about debt, however, and by large margins they see an obvious solution: a balanced combination of spending cuts and tax increases. In other words, they want precisely the kind of approach that House Speaker John A. Boehner (R-Ohio) rejected during the debt-ceiling fight — and that he vows to reject again.
Why did Republicans begin squawking about class warfare even before Obama had a chance to announce his proposals? Because by calling on the rich to pay “their fair share” of taxes, the president has hit upon a clear and simple way to illustrate how unequal and unfair our society has become.
Since the beginning of the Reagan years, the share of total income captured by the top 1 percent of earners has doubled while the share taken by the bottom 80 percent has fallen. The rich are getting richer at the expense not only of the poor but of the middle class as well.
Studies demonstrating this trend tend to be dry and, let’s face it, sleep-inducing. But the perverse disparity in tax rates between the super-rich and the rest of us is enough to grab anyone’s attention.
The very wealthy earn much of their income through dividends and capital gains, which are taxed at 15 percent. This low rate would apply specifically to a wildly successful hedge-fund manager who made, say, $50 million last year. By contrast, an insurance company executive who made $500,000 — just 1 percent of what the hedge-fund manager took home — would pay a top marginal income tax rate of 35 percent. Even a teacher who made just $50,000 — 0.1 percent of the hedge-fund haul — would pay a top marginal rate of 25 percent.
Obama proposes tax legislation that would erase this disparity. He also vows that, unless Congress enacts comprehensive — and fair — tax reform, he will allow the Bush tax cuts for households earning more than $250,000 a year to expire at the end of 2012.
The overall plan that Obama announced Monday would cut deficits by about $4 trillion over the next 10 years — without gutting programs that bolster the middle class and aid the poor. New tax revenue and money saved from ending the wars in Iraq and Afghanistan make up most of the total.
Obama’s proposed savings in Medicare and Medicaid are modest and tailored so that their impact is progressive. The president correctly decided that ensuring Social Security’s long-term solvency should proceed on a separate track. All this should be heartening to those who really want to preserve these vital programs.
The headline from Obama’s plan, though, is the call for wealthy Americans to pay taxes like everybody else. If Republicans believe the current system is fine, Obama said, “they should be called out. They should have to defend that unfairness. . . . They ought to have to answer for it.”
We’ve already heard their answer.
And we’ve heard Obama’s retort: “This is not class warfare. It’s math.”
Good News!: If Top Tax Rates Return To Reagan Era, Bill O’Reilly Might Quit
Fox News’ Bill O’Reilly boasted the other day that he enjoys “more power than anybody other than the president.”
Apparently, though, this rather extraordinary degree of influence over national affairs isn’t quite enough for the conservative media personality. In fact, O’Reilly is so concerned about his potential tax burden under the “Buffett Rule,” he told his television audience last night he might just quit working altogether.
“I must tell you I want the feds to get more revenue. I don’t want to starve them as some people do. We need a robust military, a good transportation system and protections all over the place.
“But if you tax achievement, some of the achievers are going to pack it in. Again, let’s take me. My corporations employ scores of people. They depend on me to do what I do so they can make a nice salary. If Barack Obama begins taxing me more than 50 percent, which is very possible, I don’t know how much longer I’m going to do this. I like my job but there comes a point when taxation becomes oppressive. Is the country really entitled to half a person’s income?”
In case anyone’s interested in the relevant details, let’s clarify a few things.
First, we don’t know if President Obama is eyeing a top rate of 50%, and even if he did, the likelihood of congressional passage would be roughly zero.
Second, a top rate of 50% does not mean O’Reilly would lose “half” his income. I know this can seem a little complicated, but that’s just not how marginal tax rates work.
And third, a 50% top rate for millionaires and billionaires would be a departure from the recent past, but to describe it as “oppressive” is to forget much of the 20th century.
In Ronald Reagan’s first term, for example, the top rate was — you guessed it — 50%. Did Reagan’s “oppressive” tax rates prevent robust economic growth? Did “the achievers” decide to “pack it in”? No and no.
For nearly all of Dwight Eisenhower’s presidency, the top rate was 91%. That’s not a typo. Did this Republican president’s “oppressive” tax policy prevent the U.S. economy from growing in the 1950s? Apparently not.
That said, if O’Reilly is contemplating retirement to avoid helping America pay its bills, I’m not inclined to discourage him.
By: Steve Benen, Contributing Writer, Washington Monthly Political Animal, September 20, 2011
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