“Logic, Fairness, And Common Sense”: The Final Days, The Biggest Issue, And The Clearest Choice
As we go into the final days of a dismal presidential campaign where too many issues have been fudged or eluded — and the media only want to talk about is who’s up and who’s down — the biggest issue on which the candidates have given us the clearest choice is whether the rich should pay more in taxes.
President Obama says emphatically yes. He proposes ending the Bush tax cut for people earning more than $250,000 a year, and requiring that the richest 1 percent pay no less than a third of their income in taxes, the so-called “Buffett Rule.”
Mitt Romney says emphatically no. He proposes cutting tax rates on the rich by 20 percent, extending the Bush tax cut for the wealthy, and reducing or eliminating taxes on dividends and capital gains.
Romney says he’ll close loopholes and eliminate deductions used by the rich so that their share of total taxes remains the same as it is now, although he refuses to specify what loopholes or deductions. But even if we take him at his word, under no circumstances would he increase the amount of taxes they pay.
Obama is right.
America faces a huge budget deficit. And just about everyone who’s looked at how to reduce it — the non-partisan Congressional Budget Office, the bi-partisan Simpson-Bowles Commission, and almost all independent economists and analysts — have come up with some combination of spending cuts and tax increases that raise revenue.
Just last Thursday, executives of more than eighty large American corporations called for tax reform that “raises revenues and reduces the deficit.”
The practical question is who pays for those additional revenues. If Romney’s view prevails and the rich don’t pay more, everyone else has to.
That’s nonsensical. The rich are far richer than they used to be, while most of the rest of us are poorer. The latest data show the top 1 percent garnering 93 percent of all the gains from the recovery so far. But median family income is 8 percent lower than it was in 2000, adjusted for inflation.
The gap has been widening for three decades. Since 1980 the top 1 percent has doubled its share of the nation’s total income — from 10 percent to 20 percent. The share of the top one-tenth of 1 percent has tripled. The share of the top-most one-one hundredth of 1 percent — 16,000 families — has quadrupled. The richest 400 Americans now have more wealth than the bottom 150 million of us put together.
Meanwhile, the tax rates paid by the wealthy have dropped precipitously. Before 1981 the top marginal tax rate was never lower than 70 percent. Under President Dwight Eisenhower it was 93 percent. Even after taking all the deductions and tax credits available to them, the rich paid around 54 percent.
The top tax rate is now only 35 percent and the tax on capital gains (increases in the value of investments) is only 15 percent. Since so much of what they earn is from capital gains, many of the super-rich, like Mitt Romney himself, pay 14 percent or less. That’s a lower tax rate than many middle-class Americans pay.
In fact, if you add up all the taxes paid — not just on income and capital gains but also payroll taxes (which don’t apply to income above incomes of $110,100), and sales taxes — most of us are paying a higher percent of our income in taxes than are those at the top.
So how can anyone argue against raising taxes on the rich? Easy. They say it will slow the economy because the rich are “job creators.”
In the immortal words of Joe Biden, that’s malarky.
The economy did just fine during the three decades after World War II, when the top tax rate never fell below 70 percent. Average yearly economic growth was higher in those years than it’s been since, when taxes on the rich have been far lower.
Bill Clinton raised taxes on the rich and the economy did wonderfully well. George W. Bush cut them and the economy slowed.
The real job creators are America’s vast middle class, whose spending encourages businesses to expand and hire — and whose lack of spending has the opposite effect.
That’s why the recovery has been painfully slow. So much income and wealth have gone to the top that the vast majority of Americans in the middle don’t have the purchasing power to get the economy moving again. The rich save most of what they earn, and their savings go anywhere around the world where they can get the highest return.
It would be insane to compound the damage by raising taxes on the middle class and not on the rich.
Logic, fairness, and common sense dictate that the rich pay more in taxes. It’s the key to avoiding January’s fiscal cliff and coming up with a “grand bargain” on taming the budget deficit. And it’s central to getting the economy back on track.
By: Robert Reich, Robert Reich Blog, October 28, 2012
“Populist Mitt”: Does Romney Want to Raise Taxes On The Wealthy?
At last night’s debate, the mathematical impossibility of the Romney tax plan came up, just as it did during the first Obama-Romney debate, and just as it surely will in the second Obama-Romney debate on Tuesday. The real problem with Romney’s proposal, though, isn’t just that it’s mathematically impossible, but that it’s logically strange in one important way nobody seems to have noticed yet, namely that Romney seems to be proposing big tax increases for the wealthy. I’ll get to why that is in a minute, but before I do let’s review the problem. Since Kevin Drum gave a nice explanation, I’ll just steal it:
Romney has promised a 20 percent across-the-board rate cut, which includes people making over $200,000 per year. This would reduce tax revenues by about $251 billion per year.
But wait! What about the economic growth this will unleash? That’s mostly mythical, but let’s bend over backwards here. If you incorporate the growth estimate of one of Romney’s advisors, Greg Mankiw, Romney’s rate cuts would only cost about $215 billion per year.
Next, try to pick out a set of deductions and loopholes that can be closed to make up for this revenue loss.
But wait! Romney hasn’t said exactly which deductions he would target. So it’s not fair to pick and choose specific deductions. Fine. Instead, let’s assume that Romney completely eliminates every single deduction for high earners. All of them. It turns out this would make up $165 billion per year.
So even under the best possible assumptions, Romney’s plan would cut taxes on the rich by $50 billion per year.
But Romney says he won’t cut taxes on the rich.
If you want a lengthier explanation of all this, Josh Barro gives it here. To sum up: Romney’s now-emphatic promise that he won’t cut taxes for the wealthy (“I cannot reduce the burden paid by high-income Americans,” he said during his debate with Obama, “So any — any language to the contrary is simply not accurate”) is just impossible to keep if he’s actually going to also reduce their taxes by 20 percent. And that’s where we get to the crazy part. Here’s what I would ask Mitt Romney if I had the chance:
You say you want to cut income tax rates for everyone, and pay for every penny by eliminating rich people’s deductions and loopholes. So if you’re paying for it by getting more money from the rich, that means the rich’s taxes are going up. If rich people’s taxes were staying the same under your plan, we wouldn’t be getting the money to pay for the across-the board rate cut for everyone. You keep saying wealthy people won’t see a tax cut, but what you’re actually proposing is a tax increase on the wealthy. That being the case, why go through this double bank-shot of cutting the rich’s income tax rates, then going after their deductions? If what you’re proposing is to raise taxes on the rich, why not just raise taxes on the rich, say by raising their income tax rates?
I suppose if somebody asked Romney this, he’d deliver some convoluted explanation involving tax simplification (a reasonable goal in itself, but beside the point) and the explosion of growth that will come from a tax cut. But that wouldn’t make sense either—if all those “job creators” are getting their taxes increased, won’t that hamper their ability to do their divine job-creating work? Because as Republicans never tire of telling us, if you raise taxes on job creators, the economy inevitably goes down the toilet.
So how do we account for the logical conundrum of Mitt Romney’s tax plan? Someone would have to go back and check, but I’m guessing the whole thing evolved piecemeal, in a combination of actual proposals somebody sat down and worked out, and rhetorical moves Romney made in both planned and extemporaneous contexts. After proposing the 20 percent rate cut, at some point he started promising not to cut taxes for the wealthy because he didn’t want to seem like the plutocrat the Obama campaign is making him out to be, and that backed him into a corner he now can’t get out of. I haven’t seen anybody ask him about the fact that he’s actually proposing raising taxes on the rich, even though that’s what he’s doing. Maybe when someone does, he’ll embrace his new populist self.
By: Paul Waldman, Contributing Editor, The American Prospect, October 12, 2012
“Hedging His Words”: Mitt Romney Isn’t Proposing A $5 Trillion Tax Break, It’s A $10 Trillion Tax Break
Part of Mitt Romney’s strategy in the first debate Wednesday night in Denver was to play fact-checker with false facts — also known as “lies.”
After the president said that he was proposing a $5 trillion tax break, Romney responded, “I don’t have a $5 trillion cut. I don’t have a tax cut of the scale that you’re talking about.”
He was partially correct. He isn’t proposing a $5 trillion tax break — his tax cut proposals equal more than $10 trillion over the next 10 years, according to Citizens for Tax Justice.
Romney’s new tax breaks would cost about $500 billion a year. This is on top of extending the Bush tax breaks, which would cost just over $5 trillion.
The president probably didn’t point out the full cost of the Bush tax breaks because he proposes to keep the tax breaks for the middle class at a cost of about $4 trillion. But these taxes have always been temporary and are supposed to expire. Romney is proposing making them permanent along with more cuts for a total of $10 trillion in tax breaks, as we are in the middle of a so-called debt crisis.
Romney also claimed that he is not proposing new tax breaks for the rich. “…I’m not going to reduce the share of taxes paid by high-income people. High-income people are doing just fine in this economy,” he said. “They’ll do fine whether you’re president or I am.”
Notice the key word there? “Share.”
Romney simply cannot claim that he isn’t going to reduce taxes for the richest Americans — he’s just promising that his cuts won’t benefit the rich disproportionally, just as George W. Bush falsely did in 2000.
In addition to the Bush tax breaks he promises to continue, Governor Romney wants to cut the estate tax, which only the richest Americans pay, to zero. His tax breaks will almost certainly cut the taxes the richest pay — despite his promises to remove reductions.
“An analysis by Citizens for Tax Justice found that even if millionaires were forced to give up all the tax expenditures that Romney has put on the table, his tax plan would still give a tax break of at least $250,000 on average for individuals making over $1 million,” the organization wrote in its “Debate Debrief.” “That is, he simply cannot back up his assertion that he is ‘not going to reduce the share of taxes paid by high- income people.’ And if he really is going to make up the revenues we’ll lose to his rate cuts, taxes would have to go up for other taxpayers.”
Romney has gone out his way to hide the specifics of his tax plan and is carefully hedging his words to make specious claims.
But let’s be clear about the facts. Mitt Romney is proposing a $10 trillion tax break. And he is clearly promising to cut the amount of taxes the richest Americans pay.
The fact that he has to do everything he can to hide this proves what a failure right-wing trickle-down economics have been.
By: Jason Sattler, The National Memo, October 5, 2012
“Mitt Romney, Self-Made Man”: Delusional Millionaire Son Of A Millionaire
Yes, we know that Mitt Romney thinks almost half the nation is made up of welfare-grubbing leeches unwilling to separate their maws from the teat of Big Government. But what’s honestly more remarkable to me (because the “too many non-rich Americans don’t pay taxes” line is an ancient one, and one that the Wall Street Journal editorial page has been repeating since 2002) is that Mitt Romney actually doesn’t understand, apparently, that he is a child of privilege.
Contending that he is a self-made millionaire who earned his own fortune, Romney insisted, “I have inherited nothing.” He remarked, “There is a perception, ‘Oh, we were born with a silver spoon, he never had to earn anything and so forth.’ Frankly, I was born with a silver spoon, which is the greatest gift you can have: which is to get born in America.”
Being born in America is certainly a much bigger leg up than being born in, say, Haiti. But being born in America is a much better gift, on the whole, if you’re born to well-educated parents with a relatively large household income, as Mitt Romney was. As economic inequity has risen, social mobility has declined relative to much of the rest of the industrialized world. In other words, being born in Denmark, Australia, Norway, Finland, Canada, Sweden, Germany, Spain or France would actually have been a better gift. (Especially Denmark.) Of course, that represents a decline since the days of mass unionization and liberal activist government — being born American in the first half of the 20th century really was a nice deal, as long as you survived the wars.
But the important thing is that Romney considers himself wholly a self-made man. He Built That. Hard work and his own merit are what made him a success, and, by implication, made 47 percent of the population useless mooching parasites.
This is very silly and if Romney actually believes this about himself he’s much more delusional than I thought he was.
It’s technically true that Romney “inherited nothing” when his father died, as various conservatives shouted at me on Twitter last night. He “inherited nothing” because by the time his father died, in 1995, Mitt Romney was already a very wealthy man, thanks in large part to the many advantages he enjoyed as the son of a prominent politician and corporate executive. Romney could afford, at that point in his life, to give away his father’s estate. (To charities and, notably, to his children — both common means of avoiding the brunt of the estate tax.) He gave his father’s estate away because he’d already enjoyed its many advantages.
Mitt Romney attended maybe the most prestigious private high school in the Midwestern United States. He was not a scholarship student. His father was an automotive company executive and eventually the governor of Michigan, and, by the early 1960s, a millionaire. (And one who had legitimately started from practically nothing.)
If a theoretical non-rich Mitt Romney had gone to college (57 percent of male high school graduates enrolled in college in 1965), a prestigious private school like Stanford might’ve been out of reach. When Mitt Romney attended Stanford, tuition was $1,575 a year, which is more than $11,000 in today’s dollars, and this was just at the cusp of the age of financial aid. (If Romney were black, going to college in 1965 would’ve been significantly less likely.) And if theoretical working-class Romney had managed to bootstrap himself into a good school, it would’ve almost certainly been with the assistance of the federal government, in the form of the National Defense Education Act or the Higher Education Act of 1965 (the year Romney enrolled in Stanford).
Romney spent only a year at Stanford, and finished his degree at the less prestigious Brigham Young, at which point he was accepted into Harvard Law and then the very exclusive joint law/business degree program. When that happened, his father, by the way, was a cabinet secretary. I’m just saying.
And of course while Romney was getting his degree, he didn’t have to do anything rash like “go into debt” or “work,” because, as Ann Romney helpfully explained in 1994, the young couple survived by selling stock Romney received from his father. At BYU: “Neither one of us had a job, because Mitt had enough of an investment from stock that we could sell off a little at a time.” At Harvard, Ann was able to stay home with their children despite neither parent having a job, because “we had no income except the stock we were chipping away at.”
So, yes, self-made man, no inheritance, only silver spoon was the good old red, white and blue. It’s understandable that rich men enjoy the delusion that their own inherited virtue and work ethic are solely responsible for their success, but in men like Mitt Romney, it’s a particularly bizarre delusion.
By: Alex Pareene, Salon, September 18, 2012
“We Did Build That”: The GOP Identification Of Self Worship With Virture
I was pretty much focused on the speeches in Tampa last night, and less on the videos and other trappings, and so didn’t write about the overarching theme of “We Did Build That.” It was, as the New York Times’ Bill Keller noted, pretty odd to see a retort to something Barack Obama actually never said become the dominant theme of the convention dedicated to ousting him from power.
But the one honest thing about this theme and its power among conservatives is the righteous indignation it arouses. Wealthy people, and even some not-so-wealthy people often become furious at the suggestion that their “success” is not purely and simply a tribute to their moral superiority and hard work. The flip side of this calculation, of course, is that people who aren’t so successful are not so virtuous and/or are lazy. When Virtuous Republican Businessman was putting in that extra hour of labor, Lazy Democratic Looter was asleep, or having sex, or doing something else unvirtuous. Or so goes the mythology.
This identification of “success” (i.e., wealth) with virtue, ancient as it is, has always laughably defied common human experience. The hardest working people on earth are those who are literally working to keep from starving. Relatively few of them live in the United States to begin with, and those who do are rarely Republicans. And pride over one’s “success,” particularly if it is expressed via conspicuous wealth, has been the target of stern warnings in virtually every major religious tradition.
It has taken many decades of laborious revisionist work for the devout, scripturally literalist adherents of the faith whose God and Savior was quoted as saying, “Again I tell you, it is easier for a camel to go through the eye of a needle than for a rich person to enter the kingdom of God,” to become uninhibited enthusiasts for earthly success and wealth, and despisers of the “undeserving” poor. It’s the same revisionism, of course, that makes it possible for the Roman Catholic Vice Presidential Nominee of the Republican Party to fondly view Ayn Rand as an “intellectual influence,” instead of someone whose books any Christian should abjure like a Black Mass—someone whose fondest desire was to wipe both religion and altruism from the face of the earth.
But such thoughts do not seem to trouble the delegates in Tampa, for whom Paul Ryan is their true leader for decades to come, their very own Ronald Reagan.
I’ve spent a lot of my life around the non-college educated white voters who seem to be the only “swing voters” the GOP is concerned about at the moment, and while a lot of them do indeed tend to “kick down” and resent the “undeserving poor” they view as too lazy to work, they don’t automatically admire the very wealthy—their own bosses, for example—as paragons of virtue. So I suspect this whole “We Did Build That” theme is basically for the emotional benefit of the GOP base and its donors. It says a lot that at a National Convention their hurt feelings must be so lavishly propitiated. And it is about “hurt feelings,” as TNR’s Leon Wieseltier suggests in his savage takedown of Paul Ryan and his intellectual pretensions today:
It is no wonder that Ryan, and of course Romney, set out immediately to distort the president’s “you didn’t build that speech” in Roanoke, because in complicating the causes of economic achievement, and in giving a more correct picture of the conditions of entrepreneurial activity, Obama punctured the radical individualist mythology, the wild self-worship, at the heart of the conservative idea of capitalism.
“Self-worship” is an apt term for people who have all the material abundance anyone could hope for in this life, but still burn with resentment at the “lucky ducky” working poor who don’t have federal income tax liability, and are insulted at the very idea that they owe something back to their community. I hope they enjoyed their evening of self-congratulation last night. To mention another saying by Jesus Christ with respect to self-regarding “godly” folk: “They have received their reward in full.”
By: Ed Kilgore, Contributing Writer, Washington Monthly Political Animal, August 29, 2012
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