Monday, July 9, 2012

Taxation

Obama recently said that he would fight to extend the Bush-era tax cuts for the middle class only for one more year. This would mean a tax increase on anyone making over 250K/year. As you might imagine, there's been a lot said about this announcement.

For one thing, Liberals are pretty happy. They see this as Obama drawing a line in the sand. To them, it means that middle class will have more purchasing power while the wealthy pay their fair share. Win-Win. They see this as further evidence that Obama can still be a staunch Democrat and can hold to his ideals if he's pushed.

Republicans, on the other hand, are not. They see this as a tax increase on "job creators" and as "punishing success." They believe that the tax cuts should be made permanent across the board, setting us up with a new top tax rate cap that can never be broken. They see this as being a disastrous move for the economy, and see it as Obama playing partisan politcs with the economy.

Finally, the nut-job Conservative groups see this as a violation of all that America stands for. They believe that, since Obama is a Marxist/Socialist/Fascist/Communist/Etc..ist, that whatever he advocates for is bad. Therefore, this is bad. To them, the solution is to cut everyone's taxes to as close to nothing as possible, and kill the government's ability to do anything. That is true liberty.

Here's the thing. Extending middle class tax cuts is a popular move. Refusing to extend tax cuts for the wealthy is a calculated risk. Obama has to know that he's not making any friends in the wealthy circles, but I think he's banking on people being pleased with his keeping their income taxes low. He wants people to look at their own situations, not those of people the idolize, and make their minds up from that.

The problem is, not everyone does that. There is no reason for a middle class person to demand that the wealthy receive a tax cut. There's no sense to that. You could argue, I suppose, that tax cuts at the top help the economy, but that has been debunked so many times that anyone continuing to believe it is either deliberately ignorant or deliberately deceptive. In fact, high taxes at the top helps people by giving the government what it needs to do its job. Without that tax revenue, governments are forced to cut programs that help the poor. So, really, higher taxes on the wealthy help the poor and middle classes more than tax cuts.

5 comments:

samp said...

Caution....Originally Obama was going after those who made a million dollars or more...today it has been reduced to those making 250G..why? How low will it really go? Maybe all the way down to you and me and others like us. AND why for just one year? If he's so bent on penalizing successful Americans why not make it permanent? That should send a loud message to anyone who is trying to become a success in this country.

Chain-thinker said...

Exactly. If he's so bent on penalizing them, wouldn't he end the tax break permanently? So, doesn't that show he's not really trying to punish success? Rather, he's acting responsibly. You can argue about whether it's better to cut spending or raise taxes, but in a slow recovery like this, with millions still out of work, you can't conceivably cut funding to programs that help those people survive day-to-day. And, these are personal income tax rates. These are not corporate tax rates, and their not capital gains rates. So, how does this hurt businesses? It doesn't.

samp said...

Hey if he/congress/you and me really want to try and have a "fair" tax system in this country we'd have the 48+% who pay NO taxes pay their "fair" share so they would have some "skin in the game". As it stands they don't give sh-- what the tax rates are because they don't have to pay any. I know there are some legitimate none-payers BUT 48% of the population...REALLLY????

Chain-thinker said...

I agree, 48% is a high number. Part of that is the unemployed whose welfare-type income does not meet the minimum level for taxation, or does not qualify. Then, there are those who don't make enough money to reach the minimum level of taxation, even if they are employed. The rest take deductions that reduce their taxable income to that level. I don't know how you would get more people to pay taxes while ensuring that you're not targeting those who are hard working poor, but that would be an important thing to consider before expanding the tax base.

And I think they do care what the tax rate is because many of them get away with 0 taxes because their deductions reduce their rate to 0. If they started at a higher tax rate, they may end up having to pay something. And while we're on this subject, keep in mind that many large corporations pay nothing in taxes, or pay relatively little and, in some cases, get money back from the government. Let's sort that out too while we're at it...

samp said...

Just to be clear. I don't care who makes up the 48% who don't pay any taxes. With the exception of the very poor and those earning too little, every single American should share in these times including big business...tell me...how can someone who doesn't pay taxes get a tax return? Not sure how that works. One the President's biggest contributors and "friends" GE made in the neighborhood of $5 Billion and paid (if you can believe the news) zero taxes. Hmmmmmmm It would take a change by the legislature to do away with these big loopholes for their biggest contributors..i.e. businesses. These guys can't even get the country's budget passed. Ridiculous and disgraceful. Just like the taxes they pay, the chances of Congress doing away with these big business loopholes is ZERO.....