Tuesday, November 9, 2010

Guest Voz - Ezra Klein: Explaining Tax Cut Proposals Democratic vs Republican Proposals

Tax cuts for the middle-class are also tax cuts for the rich
I think people are actually quite confused about how the tax cuts work. So here's Annie Lowrey:
Pop quiz. Say you make a steady $250,001, every year. How many dollars of additional income tax will you pay if the Obama administration’s tax plan goes through? A thousand dollars? A few thousand? Nope. Three cents.
Here’s how it works. Your taxes below $250,000 remain the same. And on that excess $1, your income tax rate increases from 33 percent to 36 percent. For most earners making between $250,000 and $500,000 a year, the Obama plan would increase income tax liability by just a few hundred dollars — an average of $600, according to the Center for Economic and Policy Research’s Dean Baker.

Annie is comparing the Republican tax cuts vs. the Obama tax cuts. But if you compare the Obama tax cuts to a world without either set of tax cuts, you learn something interesting: The rich are still getting a big tax cut.

Obama's "tax cuts for the middle class" aren't actually tax cuts for the middle class. They're tax cuts on all family income up to $250,000. So if you make $300,000 a year, you're getting a tax cut on $250,000. That's a serious tax cut! That's why the graphs showing how different taxpayers make out under the Obama and Bush tax plans all show a tax cut for the rich under Obama's plan. (see picture)

Now, the tax cut for the rich is obviously much larger under the Republican plan, and rich people would prefer a big tax cut to a modest tax cut. But that doesn't change the facts of the situation: Under Obama's tax plan, everyone gets a tax cut, including families making more than $250,000 a year.


The Arizonian said...

Oh really.....

U.S. Debt Proposal Would Cut Social Security, Medicare
"The co-chairmen of President Barack Obama’s debt-reduction commission will propose cuts to Social Security and Medicare, as well as reductions in income tax rates in exchange for curbing tax breaks,"

Now why would they do that?

Dee said...

Alan Simpson's recommendation. I wrote about this on my latest post.

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