Some facts about the distribution (of the tax cut) benefits
The most complete accounting . . . (the Democratic Underground) can find on the breakdown of benefits comes from a recent AP article.
Even so, it is far from complete, and it tends to hide how much this deal favors the rich. The largest single bulk of the $858 billion deal would come from a reduction in income tax.
The AP article notes that the bill reduces the highest marginal tax rates, on individual incomes above $379,150, from 39.6% to 35%, while reductions on those with individual incomes below $8,500 are reduced from 15% to 10%.
Let’s calculate what this comes out to regarding average benefit for those in the top bracket vs. those in the lowest bracket, given that the average income in the top bracket is about $1.6 million, and assuming (a generous assumption) that the average income in the lowest bracket is $8,500:
Rightrdia should mention only that the most affluent American itemize deductions and that most capital gains and dividends go the the affluent.
That comes to more than 38% of the total package, and the good majority of these benefits go primarily to the wealthy . . .
How will this $858 billion tax give-away be paid for?
. . .(I)t should be noted that $120 billion of it, 14% of the total, will come out of the Social Security Trust Fund.
So how will the remaining $738 billion be paid for?
Rightardia suspects most will be added to the national debt. As the Democratic Underground explains:
Everyone will NOT benefit from (these tax cuts). One way or another, this deal causes some Americans to pay for the tax breaks of other Americans. With this particular bill, the money will be paid to the upper 1% of earners from the rest of us – as well as from our children and grandchildren.
On the “temporary” nature of the tax cuts
The above noted figures assume that these tax cuts will be “temporary” – the term used by our president to sell this deal to the American people. But what if it’s not temporary? Or what if it’s “temporary” for only the next 20 years . . ?
So are these tax cuts “temporary”?
Well, if a Congress with large Democratic margins in both houses and a Democratic President couldn’t come up with a better deal than this, then what is the likelihood that a Congress with a large Republican majority in the House will let this deal expire? . . .(T)he chances of that are close to zero – unless the American people finally wake up, understand what’s going on, and demand something better.
Additional downside to this give-away to the wealthy
Since Ronald Reagan began his presidency in 1981 the income and wealth gap between rich and poor has been continually widening, so that now it is at record levels, even greater than the gap that existed in 1929 and ushered in the Great Depression.
Furthermore, the United States has the greatest disparity between rich and poor of any of the industrialized nations.
Our best economists believe that this wealth gap was a major cause of the Great Depression.
This was recognized by FDR’s Chairman of the Federal Reserve (1934-48), Marriner Eccles, who wrote in 1951 an explanation of the role that the extreme wealth gap of 1929 had in causing the Great Depression:
As mass production has to be accompanied by mass consumption, mass consumption, in turn, implies a distribution of wealth to provide men with buying power equal to the amount of goods and services offered by the nation's economic machinery. Instead of achieving that kind of distribution, a giant suction pump had by 1929-30 drawn into a few hands an increasing portion of currently produced wealth….
By taking purchasing power out of the hands of mass consumers, the savers denied to themselves the kind of effective demand for their products that would justify a reinvestment of their capital accumulations in new plants. In consequence, as in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When their credit ran out the game was stopped.
On Presidential leadership
Many of President Obama’s supporters have expressed the view that he didn’t have any choice in this matter. They argue that the Republicans tied the tax giveaway to the rich to benefits desperately needed by the unemployed and the middle class.
But why did Obama stand by and allow them to do that by making a deal with them, rather than putting up a fight?
Thom Hartmann discusses this point:
President Obama should have been publicly DEMANDING an “up or down vote” in the same way that the Republicans were screaming and shouting for such a vote on Bush’s Supreme Court nominees.
President Obama’s office should have been coordinating talking points for Democrats in the House and Senate for every radio and television appearance they made. After all, it’s an easy sell. The middle class tax cuts are already what most Americans want.
Instead of a coordinated effort including regular public statements and press conferences on being entitled to an “up or down vote” on tax cuts for the middle class, the President capitulated. The deal that he made with the Republicans provides only very short-term relief and at a HUGE cost.
Rightrdia ahas also pointed out that thee Democrats could have changed the filibuster rules in the house to neutralize ideologues like Jim DeMint in the Senate.
Now that the the Republicans are talking about filibustering the START treaty, the Democrats are talking about changing the cloture rules in the Senate aka the Nuclear Option. Why didn't the Dems doe this before the "Great Obama Tax Give-Away."
source: http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x41629
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Even so, it is far from complete, and it tends to hide how much this deal favors the rich. The largest single bulk of the $858 billion deal would come from a reduction in income tax.
The AP article notes that the bill reduces the highest marginal tax rates, on individual incomes above $379,150, from 39.6% to 35%, while reductions on those with individual incomes below $8,500 are reduced from 15% to 10%.
Let’s calculate what this comes out to regarding average benefit for those in the top bracket vs. those in the lowest bracket, given that the average income in the top bracket is about $1.6 million, and assuming (a generous assumption) that the average income in the lowest bracket is $8,500:
- Average income tax reduction in top bracket: $73,600
- Average income tax reduction in bottom bracket: $425
- Ratio of average savings in top bracket to average savings in bottom bracket: 173:1
- Income tax reductions : $186.8 billion
- Itemized deductions: $20.7
- Capital gains: $25.9 billion
- Dividends: $27.3 billion
- Taxes on estates over $5 million: $68.1 billion
Rightrdia should mention only that the most affluent American itemize deductions and that most capital gains and dividends go the the affluent.
That comes to more than 38% of the total package, and the good majority of these benefits go primarily to the wealthy . . .
How will this $858 billion tax give-away be paid for?
. . .(I)t should be noted that $120 billion of it, 14% of the total, will come out of the Social Security Trust Fund.
So how will the remaining $738 billion be paid for?
Rightardia suspects most will be added to the national debt. As the Democratic Underground explains:
So our children and grandchildren will be encumbered by this problem so that multi-millionaires and billionaires can have their tax breaks.
Everyone will NOT benefit from (these tax cuts). One way or another, this deal causes some Americans to pay for the tax breaks of other Americans. With this particular bill, the money will be paid to the upper 1% of earners from the rest of us – as well as from our children and grandchildren.
On the “temporary” nature of the tax cuts
The above noted figures assume that these tax cuts will be “temporary” – the term used by our president to sell this deal to the American people. But what if it’s not temporary? Or what if it’s “temporary” for only the next 20 years . . ?
So are these tax cuts “temporary”?
Well, if a Congress with large Democratic margins in both houses and a Democratic President couldn’t come up with a better deal than this, then what is the likelihood that a Congress with a large Republican majority in the House will let this deal expire? . . .(T)he chances of that are close to zero – unless the American people finally wake up, understand what’s going on, and demand something better.
Additional downside to this give-away to the wealthy
Since Ronald Reagan began his presidency in 1981 the income and wealth gap between rich and poor has been continually widening, so that now it is at record levels, even greater than the gap that existed in 1929 and ushered in the Great Depression.
Furthermore, the United States has the greatest disparity between rich and poor of any of the industrialized nations.
Our best economists believe that this wealth gap was a major cause of the Great Depression.
This was recognized by FDR’s Chairman of the Federal Reserve (1934-48), Marriner Eccles, who wrote in 1951 an explanation of the role that the extreme wealth gap of 1929 had in causing the Great Depression:
As mass production has to be accompanied by mass consumption, mass consumption, in turn, implies a distribution of wealth to provide men with buying power equal to the amount of goods and services offered by the nation's economic machinery. Instead of achieving that kind of distribution, a giant suction pump had by 1929-30 drawn into a few hands an increasing portion of currently produced wealth….
By taking purchasing power out of the hands of mass consumers, the savers denied to themselves the kind of effective demand for their products that would justify a reinvestment of their capital accumulations in new plants. In consequence, as in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When their credit ran out the game was stopped.
On Presidential leadership
Many of President Obama’s supporters have expressed the view that he didn’t have any choice in this matter. They argue that the Republicans tied the tax giveaway to the rich to benefits desperately needed by the unemployed and the middle class.
But why did Obama stand by and allow them to do that by making a deal with them, rather than putting up a fight?
Thom Hartmann discusses this point:
President Obama should have been publicly DEMANDING an “up or down vote” in the same way that the Republicans were screaming and shouting for such a vote on Bush’s Supreme Court nominees.
President Obama’s office should have been coordinating talking points for Democrats in the House and Senate for every radio and television appearance they made. After all, it’s an easy sell. The middle class tax cuts are already what most Americans want.
Instead of a coordinated effort including regular public statements and press conferences on being entitled to an “up or down vote” on tax cuts for the middle class, the President capitulated. The deal that he made with the Republicans provides only very short-term relief and at a HUGE cost.
Rightrdia ahas also pointed out that thee Democrats could have changed the filibuster rules in the house to neutralize ideologues like Jim DeMint in the Senate.
Now that the the Republicans are talking about filibustering the START treaty, the Democrats are talking about changing the cloture rules in the Senate aka the Nuclear Option. Why didn't the Dems doe this before the "Great Obama Tax Give-Away."
source: http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x41629
Subscribe to the Rightardia feed: http://feeds.feedburner.com/blogspot/UFPYA
Netcraft rank: 6974 http://toolbar.netcraft.com/site_report?url=http://rightardia.blogspot.com
Rightardia.blogspot.com
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