Archive for category Tax Policy
Thomas Perkins is an 82-year-old venture capitalist worth an estimated $8 billion. He doesn’t like democracy. Unfortunately for us, people like him hold the balance of power in today’s America.
Asked for an idea that could “change the world” by FORTUNE’s Adam Lashinsky, Perkins told an audience at the Commonwealth Club in San Francisco on Thursday that Americans shouldn’t be able to vote unless they pay taxes and that the wealthy should have more votes.
Perkins has houses in Belvedere, Marin County, California, and spends about two months a year at Plumpton Place, his Elizabethan mansion in East Sussex, England, which once belonged to the Led Zeppelin guitarist Jimmy Page. In 2010 he purchased the penthouse atop the Millennium Tower on Mission Street in San Francisco’s financial district.
You may remember this guy from his WSJ letter to the editor that compared what he called the “progressive war on the American one percent” to the Nazi death camps under Adolf Hitler.
When I say that capitalism is antithetical to democracy, or that the 1 Percent are trying to parlay their plutonomy into a plutocracy, this is an example of what I mean.
Media Matters gives us the short version: Liz Cheney: Get Over 2012 And Start Embracing Romneyism. Of course, it was President George W. Bush who originally said “We ought to make the pie higher.”
Cheney’s Wall Street Journal op-ed on Thursday un-apologetically recycles just about everything that voters rejected in 2012, and claims, without evidence, that “President Obama is the most radical man ever to occupy the Oval Office.”
This is from someone who was part of the Worst Administration Ever, that brought about truly radical right-wing policies from massive tax cuts for the rich to the torture of detainees and an outright war of aggression in Iraq. The Bush administration came close to wiping out the American middle class when the collapse of the financial sector caused U.S. households to lose about $16.4 trillion of net worth.
Jonathan Chait: Liz Cheney Is Even More Bonkers Than We Suspected
Even after four years of bug-eyed right-wing paranoia, Cheney’s op-ed stands out for its utter dearth of the slightest whiff of perspective or factual grounding.
This stuff is getting old. We had legitimate criticisms of the Bush administration’s actual radicalism, and Republicans dismissed it all as “Bush derangement syndrome.” Now prominent Republicans won’t stop ranting about their imaginary “radical” President Obama despite the fact he’s been center-right all along, even to the point of implementing Republican policies. At last year’s GOP convention Clint Eastwood presented a prime-time portrayal of the right-wing, yelling at an empty chair.
Tax time is coming in less than a month. Unless you’re with the 1 Percent, it will cost you. Paul Buchheit on AlterNet:
Corporations have simply stopped paying their taxes, perhaps using the 2008 recession as an excuse to plead hardship, but then never restoring their tax obligations when business got better. The facts are indisputable. For over 20 years, from 1987 to 2008, corporations paid an average of 22.5% in federal taxes. Since the recession, this has dropped to 10% — even though their profits have doubled in less than ten years.
We’re in “a golden age for corporate profits,” according to the New York Times. But not a golden age of job creation. In fact, some of the biggest and most profitable corporations are dodging taxes while cutting jobs. The list includes: General Electric, Boeing, Exxon Mobil, Verizon, Kraft Foods, Citigroup, Dow Chemical, IBM, Chevron, FedEx, Honeywell, Apple, Pfizer, Google, and Microsoft.
N.J. taxpayers protest corporate ‘dodgers’
Note: Ryan’s proposal as released Tuesday calls for a tax cut that would reduce the top bracket from 39.6% to 25% (see update below).
The so-called “fiscal cliff” law passed by the Congress and signed by the President in January restored the top income tax rate to the Clinton-era levels of 39.6 percent, and increased the capital gains tax rate from 15 percent to 20 percent. It also made the Bush Tax Cuts For The Rich permanent for all other tax brackets. Reps. Paul Ryan and Jason Chaffetz voted against it. Now Rep. Chaffetz is touting the new Ryan budget proposal – which includes $600 billion in revenue from the measure they opposed in January.
Ryan Lizza put Chaffetz on the spot this morning on CNN, pointing out that “Republicans voted overwhelmingly against a deal that raised $600 billion in revenue, and now it sounds like they’re going to put out a budget that pockets that $600 billion…”
That’s not the only policy reversal in Ryan’s proposal:
The budget [proposal] will also likely include Medicare savings from the Affordable Care Act and “adjustments for an expected decline in war spending, a move that could reduce assumed expenditures by up to $600 billion over the next decade.” Ryan has consistently derided war savings as “phantom savings” and promised to restore the Medicare cuts during his vice presidential bid.
UPDATE: The Ryan proposal released on Tuesday includes a giant tax cut for the rich (14.6 percent for the top bracket), paid for by raising taxes on the middle class and cutting the social safety net.
Americans’ personal income decreased $505.5 billion, or 3.6 percent, in January (on a seasonally adjusted and annualized basis), according to the Commerce Department’s Bureau of Economic Analysis. It was the biggest one-month drop in 20 years.
Consumer spending rose just 0.2% with most of it going toward higher heating bills and filling up the gas tank. Consumer spending accounts for about two-thirds of the U.S. economy.
The drop in income was partly driven by the end of the payroll tax cut, which means middle-class workers must pay 2 percentage points more in taxes this year on wages up to $110,000. But Congress has made the Bush Tax Cuts permanent for 98 percent of Americans, all except families with income more than $450,000 and individuals making more than $400,000.
Right-wing Republicans now declare that any ideas about raising tax rates or eliminating loopholes to boost revenue are off the table. They demand “cuts-only” deficit reduction. This means $85 billion in “automatic” austerity budget cuts kick in today (although Congress can cancel this so-called “sequester” anytime). The result will be a partial government shutdown, as many agencies are forced to furlough employees beginning in April.
Meanwhile, even Federal Reserve Chairman Ben Bernanke has said that the Washington obsession with budget deficits is hurting the economic recovery. The immediate crisis is our jobs deficit. Robert Reich:
Unemployment is still sky high. The current official rate of 7.9 percent doesn’t include 8 million people (5.6 percent of the workforce) working part-time who’d rather be working full time. Nor those too discouraged even to look for work. The ratio of workers to non-workers in the adult population is lower than any time in the last thirty years — and that’s hardly explained by boomer retirements.
Wages continue to drop because the only way many Americans can find (or keep) jobs is by settling for lower pay. Most new jobs created since the depth of the Great Recession pay less than the jobs that were lost. That’s why the real median wage is now 8 percent below what it was in 2000.
…The budget deficit and cumulative debt are not the “transcendent issue of our time.” The transcendent issue is jobs and wages. Cutting the budget deficit now will only result in higher unemployment, lower wages, and more suffering.
The next opportunity for Republican economic sabotage will be on March 27, when the continuing budget resolution expires.
Once again, President Obama is pressing for a “Grand Bargain” that basically gives the right-wing Republican Party everything they have been asking for. The President wants to implement cuts to Social Security and Medicare, coupled with across-the-board discretionary spending reductions (aka austerity budgeting), and tax reform. You may recall that Willard (“Mitt”) Romney and his running mate, Rep. Paul Ryan, talked constantly about a plan to eliminate tax deductions during the 2012 election campaign.
So, basically, Obama is telling the right-wing “Here’s something you want, and something else you want, and I’m not going to ask for anything that progressives want.” And the GOP answer so far is a big fat NO. They would rather take the blame for a partial government shutdown. Does this make sense?
Jonathan Chait tries to explain:
President Obama is offering up something — hundreds of billions of dollars in cuts to Social Security and Medicare — that Republicans say they want and which (because of their unpopularity) they have proven unable to obtain even when they have had full control of government. They are instead undertaking a public showdown against a figure who is vastly more popular and trusted, who possesses a better platform to communicate his message, and whose message itself — spread the pain among rich and middle class alike, don’t cut retirement programs more deeply than needed in order to protect tax loopholes for the rich — commands overwhelmingly higher public support.
I think the Republican Party’s behavior can be at least partly explained, though not necessarily rationalized. The main thing that’s going on is that, in the face of cross-pressures, the party’s anti-tax wing has once again asserted its supremacy.
…Part of the confusion is that Republicans have been saying for months that they really just want to stop tax rates from raising. They’re happy — nay, eager — to make the rich pay more taxes by reducing their tax deductions. Certain conservative economists believe this as well. Since Obama is offering to increase revenue in exactly this way, his plan might seem inoffensive to Republicans.
…The answer to this piece of the mystery is clear enough: Republicans in Congress never actually wanted to raise revenue by tax reform. The temporary support for tax reform was just a hand-wavy way of deflecting Obama’s popular campaign plan to expire the Bush tax cuts for the rich. Conservative economists in academia may care about the distinction between marginal tax rates and effective tax rates. But Republicans in Congress just want rich people to pay less, period.
Robert Reich offers a better strategy for President Obama: Clear up all the confusion by taking on the Republicans’ big lies directly.
The first big lie is austerity economics — the claim that the budget deficit is the nation’s biggest economic problem now, responsible for the anemic recovery.
Wrong. The problem is too few jobs, lousy wages, and slow growth. Cutting the budget deficit anytime soon makes the problem worse because it reduces overall demand. As a result, the economy will slow or fall into recession — which enlarges the deficit in proportion. You want proof? Look at what austerity economics has done to Europe.
The second big lie is trickle-down economics — the claim that we get more jobs and growth if corporations and the rich have more money because they’re the job creators, and job growth would be hurt if their taxes were hiked.
Wrong. The real job creators are the broad middle class and everyone who aspires to join it. Their purchases keep economy going.
The Obama administration doesn’t have to play this crazy game of offering right-wing Republicans everything they say they want, knowing that they will refuse to take it. What they ought to be doing is explaining to the public that the right-wing is wrong, that they are lying.
Republicans have run on big across-the-board spending cuts for literally decades.
…But here we are. For the first time I think in our history we are about to go over the precipice of genuine across-the-board spending cuts. And Republicans are completely freaking out. There’s no other way to describe it.
Delving further into Tom Allen’s Dangerous Convictions, Winning Progressive points out four specific examples of how conservatives principles have led to disastrous real world policy consequences:
- The Iraq War
- Health care
- Climate Change
Consider the area of tax policy – conservative principles say “tax cuts pay for themselves” despite significant real world evidence that’s not the case. Read the rest of this entry »
Source: Us Against Greed
Ten Numbers the Rich would like Fudged
The numbers reveal the deadening effects of inequality in our country, and confirm that tax avoidance, rather than a lack of middle-class initiative, is the cause.
1. Only THREE PERCENT of the very rich are entrepreneurs.
According to both Marketwatch and economist Edward Wolff, over 90 percent of the assets owned by millionaires are held in a combination of low-risk investments (bonds and cash), personal business accounts, the stock market, and real estate. Only 3.6 percent of taxpayers in the top .1% were classified as entrepreneurs based on 2004 tax returns. A 2009 Kauffman Foundation study found that the great majority of entrepreneurs come from middle-class backgrounds, with less than 1 percent of all entrepreneurs coming from very rich or very poor backgrounds.
2. Only FOUR OUT OF 150 countries have more wealth inequality than us.
In a world listing compiled by a reputable research team (which nevertheless prompted double-checking), the U.S. has greater wealth inequality than every measured country in the world except for Namibia, Zimbabwe, Denmark, and Switzerland.
3. An amount equal to ONE-HALF the GDP is held untaxed overseas by rich Americans.
The Tax Justice Network estimated that between $21 and $32 trillion is hidden offshore, untaxed. With Americans making up 40% of the world’s Ultra High Net Worth Individuals, that’s $8 to $12 trillion in U.S. money stashed in far-off hiding places.
Based on a historical stock market return of 6%, up to $750 billion of income is lost to the U.S. every year, resulting in a tax loss of about $260 billion.
4. Corporations stopped paying HALF OF THEIR TAXES after the recession.
After paying an average of 22.5% from 1987 to 2008, corporations have paid an annual rate of 10% since. This represents a sudden $250 billion annual loss in taxes.
U.S. corporations have shown a pattern of tax reluctance for more than 50 years, despite building their businesses with American research and infrastructure. They’ve passed the responsibility on to their workers. For every dollar of workers’ payroll tax paid in the 1950s, corporations paid three dollars. Now it’s 22 cents.
A deal to resolve the so-called “fiscal cliff” has not been announced, with only 10 hours to go until tonight’s deadline.
With the caveat that no reporter is privy to the details of the offers being swapped, here is the deal that seemed to be emerging: Democrats would get an extension of unemployment benefits for 2.1 million people; they’d patch the alternative minimum tax for a year to protect the middle class from sharp tax hikes; and they’d implement a “doc fix” to ensure that Medicare reimbursement rates to doctors don’t fall precipitously and limit patients’ access to medical care. Republicans would get to preserve Bush-era income tax rates for households making up to $400,000 (rather than the $250,000 limit Democrats prefer). They’d also get a lower tax rate and a much higher threshold for inheritance taxes (set to revert to 55 percent on estates of more than $1 million on Tuesday). And significantly, Republicans would hold onto their greatest point of leverage in upcoming negotiations over entitlement cuts, because the deal wouldn’t raise the debt limit.
Here’s what’s important about everything Democrats would get: It’s temporary; everything expires (presumably) within a year. Here’s what’s important about what Republicans would get: it’s permanent. The tax rates won’t expire.
Yesterday the Senate GOP caucus gave up on a demand to cut Social Security benefits (via the so-called “chained CPI”) as part of a deal.
“CPI has to be off the table because it’s not a winning argument to say benefits for seniors versus tax breaks for rich people,” said Sen. John McCain (R-Ariz.). “We need to take CPI off the table — that’s not part of the negotiations — because we can’t win an argument that has Social Security for seniors versus taxes for the rich.”
Even without “chained CPI,” any deal that makes the Bush-Obama Tax Cuts For The Rich permanent is a bad deal. Along with the continuing economic slump, tax cuts and the Pentagon budget are the primarily drivers of deficits. Any credible deficit reduction plan must include major economic stimulus, expiration of ALL the tax cuts for the rich, and a significant reduction in military spending.
UPDATE: Tonight, MSNBC and CNN are reporting that President Obama has abandoned his campaign promises from 2008 and 2012, and agreed to make the Bush-Obama Tax Cuts For The Rich permanent for the first $450,000 of income. That nets an estimated $600 billion in revenue over 10 years, not enough to make a dent in deficits. The AMT is fixed permanently. If you are lucky enough to inherit up to $10 million, it’s all tax free. Capital gains will be taxed at 20 percent.
Ordinary working Americans will lose the payroll tax holiday, reducing the take-home pay of the median household by $1,000. Federal unemployment benefits will be extended for one year. Earned Income Tax Credit extended for five years.
The deal sets up three more fake crises early in 2013: (1) over the debt ceiling (which the Treasury has already hit), (2) over sequestration (in two months), and (3) when the continuing resolution expires on March 27 (enabling the GOP to threaten a government shutdown). Worst of all, once again the Republicans get away with hostage-taking tactics – which will encourage them to do it again, threatening to wreck the economy unless Dems cave to their demands.
UPDATE: At 11:45 pm Utah time, the Senate is voting. Senator Tom Harkin (D-IA) delivered an eloquent speech on C-SPAN2 denouncing trickle-down theory, and the idea that $400,000 a year is somehow “middle class” when it represents the top 1 percent. He also pointed out that tax breaks for the rich are made permanent in the bill, while true middle class items like the Earned Income Tax Credit, child tax credit, tuition tax credit and unemployment benefits are only temporary. The vote was 89-8 in favor of the deal.
UPDATE: Paul Krugman:
Anyone looking at these negotiations, especially given Obama’s previous behavior, can’t help but reach one main conclusion: whenever the president says that there’s an issue on which he absolutely, positively won’t give ground, you can count on him, you know, giving way — and soon, too. The idea that you should only make promises and threats you intend to make good on doesn’t seem to be one that this particular president can grasp.
And that means that Republicans will go right from this negotiation into the debt ceiling in the firm belief that Obama can be rolled.
UPDATE: Eric Cantor Really Hates the Senate’s Cliff Deal. There’s a chance that Speaker Boehner won’t keep his promise to let the House of Representatives vote on the Senate-passed bill because House Majority Leader Eric Cantor, the No. 2 Republican in the House, is against it.
UPDATE: Tax cuts for the rich have been made permanent, mostly with Democratic votes. The entire Utah House delegation voted no.
[T]he House passed the measure Tuesday evening by a vote of 257-167, with 85 Republican votes. 151 Republicans, including House Majority Leader Eric Cantor (R-VA) and Majority Whip Kevin McCarthy (R-CA), and 16 Democrats voted against the bill.
A gaffe is when a politician says something that’s true, even though it’s not a good idea to say it out loud.
Republicans “have had trouble saying yes to a number of repeated offers,” President Obama told David Gregory in an interview with NBC’s “Meet the Press” broadcast Sunday, discussing fiscal cliff talks.
The administration’s proposal for making permanent 98% of the Bush-Obama Tax Cuts For The Rich is part of “a pretty mainstream Republican agenda,” Obama said. The fact that many Republicans are opposing raising taxes on the remaining 2% “is an indication of how far certain factions inside the Republican Party have gone,” he added. “The offers that I’ve made to them have been so fair that a lot of Democrats get mad at me.”
Democrats are right to be angry. There is nothing fair about making tax cuts for the rich permanent, when they currently enjoy the lowest tax rates in 40 years, and then say that budget cuts on the rest of Americans are needed to reduce the deficit!
Speaker John Boehner’s “Plan B” is dead on arrival in the House of Representatives. The House has adjourned until after Christmas without taking a vote on “Plan B.”
It was a tax increase on working Americans, coupled with a massive extension of the Bush Tax Cuts For The Rich on the first $1 million of income. Boehner couldn’t find the votes for it, but this didn’t matter because the Senate Majority Leader said the Senate would not consider it, and President Obama said he would veto it if somehow it got to his desk.
Because right-wing Tea-GOP House members oppose even a token income tax rate hike on multimillionaires, Boehner added a series of sweeteners from the right-wing wish list – like Christmas stockings hung by the fire (OK, not like that at all).
- Cuts to food stamps that would hurt millions of low-income Americans
- Cuts to Meals on Wheels, a program that delivers meals to seniors
- Cuts funding to health exchanges and Medicaid
- Cuts to the Dodd-Frank financial reform law that will yield no cost savings
Nobody in Washington seems to know why Boehner was wasting everyone’s time with this proposal, when all the House has to do is vote on the Senate-passed bill that makes tax cuts for the rich on the first $250,000 of income permanent. President Obama has said he would sign it.
Does it matter to average Americans if they get a tax cut on their first $250,000 or their first $1 million? I don’t even know anybody who makes $250,000 a year.