December 13, 2010

Where the tax cut argument went wrong

One million and one times or more, the Bush tax cuts were described as letting tax cuts for the rich expire. But the truth is the rich would have gotten the same tax cuts as everyone else, and today would have simply lost out on the EXTRA tax cuts they had been given under the Republicans. Tax cuts the Republicans had specifically said in 2001 should expire after 10 years because even when there was a budget surplus it was obvious that their impact would greatly damage the US fiscal position.

Every single time the tax cuts was discussed, it should have been made clearer what the tradeoff entailed. Here's how I would rewrite Chris Hayes otherwise remarkably trenchant piece:

What's more, the official Republican position, expressed in a letter signed by all forty-two GOP senators, was that they would not allow the Senate to vote on anything until the extra tax cuts for the rich were extended. With 2 million people set to lose their unemployment benefits in December, this meant that the GOP was ready to put 2 million Americans out on the streets the week before Christmas, unless millionaires got to keep extra tax cuts!

Once more, here's how the tax cut argument should have been presented every single time the argument was raised:

For a full look at what these tax cuts mean as well as the pictures and charts that make it clear, check out Perrspective's piece here.

Posted by Mary at December 13, 2010 01:02 PM | Economy | Technorati links |
Comments

Unbe-fucking-lievable. And how bold these fuckers are.

Say, oh author of this article, have you heard of the idea of a “basic income”? One of the corresponding concepts proposes the following simplification of tax laws for financing a basic income (which is equally high for everyone):

“Your income” divided by two + basic income

Let me show you why this is such a great proposal by calculating thrice with this formula:

Let’s say you earn 2,400$ and the basic income is 1000$. This would leave you with 2,200$ of your wage.

2,400$ / 2 + 1,000$ = 1,200$ + 1,000$ = 2,200$

This means effectively you pay about 8% taxes (200$). With those taxes you help, among other things, to finance the basic income. But in this case the government doesn’t have to finance you. In fact you are still financing the government, despite getting basic income. But let’s take a look at another case, shall we?

You’ve only got a small job and hence earn only 1,200$. This means:

1,200$ / 2 + 1,000$ = 600$ + 1,000$ = 1,600$

So in this example the state is paying YOU money (66%, 400$). This interesting effect of this so-called “flat tax” is named “negative income tax”.

Now let’s look at what the numbers are like when you earn 12,000$.

12,000$ / 2 + 1,000$ = 6,000$ + 1,000$ = 7,000$

This means this person would have to pay 5,000$ taxes (~ 41%). So the richer you are, the more you have to support those who have low income.

By using this formula only those who have a small or no income have to be financed even though EVERYONE receives a basic income.

To sum it up: I believe that this is a necessary step for advancing our future and you should certainly busy yourself with it (that is, if you haven’t already done so). Should you have any questions or doubts feel free to contact me. I’ve got some experience with this idea.

Posted by: Demut at December 13, 2010 03:07 PM

Thanks Mary for finally admitting the truth. Was it painful? Everybody got tax relief from those 2001 and 2003 bills. What your graph indicates is how in artful our then candidate, now President was when he set his $200,000 to $250,000 levels. Indefensible they were. Obviously the level should have been more northwards of $1 million, where real millionaires reside. Why he chose to go after those making hundreds of thousands; maybe he wanted fewer of them to crowd out those millionaires.

How about that great red company Walmart and Solar City joining up to place American made solar equipment on their stores roofs in California and Arizona? Going to produce some 20 megawatts of electricity. This coincides with Walmart's usage of wind technologies in Texas and Mexico!

It's conservative to conserve

Posted by: peter the bellhop at December 19, 2010 06:10 PM

I almost don't care at this point since there are so many other things to get done and I'm not sure that Obama's agenda could move without this happening.

DADT is gone. Hopefully the Dream Act gets a real vote and perhaps we can finally have a real conversation about taxes in this country, let alone entitlement programs....nah, why bother unless you have to?

Posted by: Mark's Wine Clubs at December 20, 2010 03:58 PM