The Republicans call it "class warfare". That is their reaction to any proposals to increase the taxes on the wealthy in any way, shape, or form. "Class warfare" is also their smokescreen for greed and a shield used by the GOP as political protection when the party sides with the wealthy and large corporations on any issue. The political corollary for "class warfare" is cut the spending for everybody else's programs.
So let it be called "class warfare" and let's get on with it.
President Obama has proposed several ideas for increasing taxes on the wealthy, particularly ending the Bush tax cuts at the end of 2012 for upper income earners and cutting off tax gifts for the oil industry and other large corporations. These presidential proposals have been around since Obama took office in 2009 but have gotten nowhere because of GOP intransigence on any tax increases. To that basic proposal has now been added the so-called Buffet rule (after financier Warren Buffet) which would be some form of calculation to make sure that those with annual income over $1 milliion pay something at least equivalent to taxes paid by the middle class.
To me a central feature of Obama's most recent ideas is capping itemized deductions of the wealthy at 28 percent, 11 percentage points below what would be the top tax rate if the Bush cuts for the wealthy were allowed to expire. Capping deductions gets at the sensitive problem of what to do about so-called tax loopholes such as deductions for property taxes, interest on mortgage payments, and charitable contributions. These deductions are very popular with the middle class as well as the wealthy and proposals for outright elimination is virtually impossible politically, short of a whole new flat tax rate scheme. So capping deductions for the wealthy alleviates that problem. A recent posting gave an example of how the capping would work on a mortgage interest deduction for a large, luxury home:
If a person in the top 39 percent tax rate bracket pays a mortgage interest of $20,000 per year, he saves $7,800 on his itemized deduction, but by limiting total itemized deductions to 28 percent, the return to the rich homeowner is reduced to $5,600. Thus, increasing the taxes of the wealthy is not solely reliant on the tax rate itself, but also ending the large revenue leakage that occurs by the rich using the itemized deductions as a means of getting richer.
All of this still leaves the problem of defining the income of the wealthy. The Buffet Rule proposal allows Obama to set millionaires as a specific target. But in my view, expressed several times previously, defining "wealthy" as $200,000 income for a single person and $250,000 for a married couple filing jointly sets the threshhold much too low. With high living costs in some areas, and with kids in college as pointed out by a reader, these levels don't realistically reflect "wealth". If Obama is to have any prospects for ending the upper end Bush tax cuts, the President and his Democratic congressional colleagues will have to change these levels upward. This would mean less revenue but give the Democrats a better, but still not good, chance of ending some of the Bush tax cuts.
This brings me back to the GOP assertion about "class warfare". I'm not given to quoting George Bush but in this case it would be in order to use his injudicious comment made early in the Iraq war -- "Bring 'em on". If the "class warfare" charge is taken into the larger public realm, the term "class warfare" will soon be seen for what it really is. It is not, as originally conceived, the upper and middle classes versus the lower income groups, but the upper class enriching itself at the expense of both the middle and lower income groups.
It certainly doesn't seem like class warfare, more like unfair. I do wholeheartedly agree that 200/250K should not be considered rich. To mean that seems like you're hitting the middle class. The tax deductions don't sound unreasonable at all. For people with lots of money it doesn't seem to hard hitting. I would like to see the wallstreeters paying taxes like everyone else and not the capital gains rate. Maybe the protests on wall street will have some kind of good impact that will get the Washington at least partially out of the grip of the corporate lobbyists.
ReplyDeleteThere's always a flat tax. Certainly the "rich" can afford to lose some of their tax loopholes but rich people are paying a large percentage of the taxes and within a country where 47% of the people, almost half the population don't pay any taxes at all. Still, I'm not sure what to make of it. A lot of reports have interviews with the rich who say they want to pay more. Certainly nothing is stopping them though which always amuses me. It is easy to say but there never seems to be any follow through. If that is the way they feel then just do it. They don't have to way for policy to dictate.
ReplyDeleteThere is always the option for the government to stop spending so much and tackle all the waste issues. You always hear mention about some few million dollars being just "change" but money like that would go a long way toward feeding a lot of people in local communities.Somebody's "change" is somebody else's riches.
dpchuck
ReplyDeleteThanks for your always thoughtful comments. Anything I say will sound like a Charlie mantra. Please read the latest posting.
Carole
ReplyDeleteThanks once again. I always welcomed your sometimes contrarian views. Please read the latest posting.