We’ll hear much about the Republican and Democratic tax cut plans over the next few months. It’s worth realizing that this debate focuses almost exclusively on income over $250,000: for most Americans, it’s utterly irrelevant. Both plans would retain the Bush tax cuts for taxable income under $250,000 as this figure shows:
Obama is not proposing that families making up to $250,000 a year keep their tax cuts while families making more than that don’t. He’s proposing that every family keep their tax cuts on their first $250,000 of taxable income (which is not the same as “income” or “earnings,” by the way).
That includes families with taxable income of $260,000, $1 million, $5 billion, $3 trillion, or whatever Jay-Z and Beyonce make in a year. Everyone would continue to pay a lower tax rate on their first $250,000 of taxable income under Obama’s plan. To report that Obama only wants to maintain tax cuts for families making less than $250,000 is simply false.
And you should note that, if you’re in the bottom sixty percent, you’ll actually pay less in taxes under the Obama plan:
Admittedly, it’s not that much, but, trust me, at that level every dollar helps. Finally, it’s worth remembering why this matters–and why the wealthy should pay more (boldface mine):
…I am fully aware that taxes don’t fund spending and that they only serve to regulate demand yada, yada, yada, and I am also aware that with a large output gap, raising taxes on anyone just works to sustain that output gap so long as that “revenue” is not recycled back as government spending in some form.
However, as a matter of equality and PRINCIPLE I think it’s about time somebody other than the poor and middle class see their taxes go up. That’s right, I said the poor and middle class have had their taxes increased–BIG TIME!
It’s time we all begin to learn a fundamental lesson, that spending cuts are the fiscal equivalent of tax increases and the bulk of the spending cuts (tax increases) over the past several years have been targeted at the middle class and poor.
Whether you are talking about cuts in education, Medicare and Medicaid, food and nutrition, Veterans benefits, social programs, public safety (fire, police), you name it…there has been an unrelenting and rising stream of tax increases aimed at middle and lower income people. All the while, the rich have been getting tax break after tax break along with a larger share of national income and wealth. Like Warren Buffet said, it’s outright class warfare and it’s HIS class that is winning.
The other thing to keep in mind is that there is competition for inelastic goods, such as housing and college education. Income inequality makes college much more expensive for everyone (although the rich can still afford it).
Although I don’t think you’ll be hearing much about any of this during the ongoing political silly season.