The thing that surprises me the most is how much greater in magnitude the tax cuts are for the bottom 60% in Obama's plan. In the McCain plan, they are hardly tax cuts at all.
Showing posts with label tax cuts. Show all posts
Showing posts with label tax cuts. Show all posts
Tuesday, September 16, 2008
Best tax chart yet
Via Sullivan, this awesome chart from Chartjunk that takes into account the number of people in each bracket:
The thing that surprises me the most is how much greater in magnitude the tax cuts are for the bottom 60% in Obama's plan. In the McCain plan, they are hardly tax cuts at all.
The thing that surprises me the most is how much greater in magnitude the tax cuts are for the bottom 60% in Obama's plan. In the McCain plan, they are hardly tax cuts at all.
Thursday, September 4, 2008
Why we say, "the GOP is out of ideas"
The following chart shows the top US marginal income tax rate from 1913 to 2003:
In 1980, when Reagan was elected, every dollar you earned past $215,400 was taxed at a rate of 50% (70% for unearned income). After the tax revolt of the 80s, that rate was drastically reduced: to 28% at its lowest point. In the Clinton years that rose back up to 39.6% for dollars earned past $250,000 or so.
Under George W. Bush, that rate was reduced to 35%, where it remains through today. Under Obama, the top rate would move back up to where it was under Clinton: about 40%.*
From the way that Republicans have been pounding their fists and shouting to the rafters, you would think that Obama was proposing a top income tax rate increase of epic proportions. In reality, he is proposing an increase of 5%. That's right: a difference of a nickel of every dollar earned after about $300,000. And the top rate would still remain low overall by historical standards--well under the >50% seen in most of the 20th century.
But what about capital gains (i.e., money earned from investments rather than a paycheck)? The current rate is the lowest it has been since 1933: 15%. Obama would raise that to somewhere in the neighborhood of 25%, which is about where it was in the Clinton years and somewhat higher than it was during much of the 80s. So let's put that increase at 10%.
The final tally, then: the top income tax rate increased by 5%, and the capital gains tax increased by 10%--both levels raised to what they were during the prosperous Clinton years.
The Republicans carry on as if the tax revolt of the 1980s never happened--as though the wealthiest Americans--the investors, the entrepreneurs--were still forfeiting over half of their post-$200,000 income to Uncle Sam. But they are fighting a battle that Reagan already won, and that the Democrats already conceded. There is not one serious politician left who advocates that we return to the pre-Reagan tax rates. And yet still, impossibly, bloody-mindedly, the Republicans insist on more tax cuts--despite dramatically increased federal spending (on both entitlements and two concurrent wars), and despite ballooning deficits. And they continue to depict Democrats as if they were advocating the absurdly high marginal rates of the Great Society years.
We cannot, as the backwards saying goes, have our cake and eat it too. To acknowledge the necessity for a modern infrastructure, a quality education system, a functional healthcare scheme, and a superior military is to acknowledge the necessity of a tax rate that is high enough to cover these tremendous costs. Perhaps there was a time when we could believe that the Republicans would offset their tax cuts with reductions in federal spending, but George W. Bush and his agenda of big government conservatism--and his pet war, Iraq--put that idea to rest.
I've noticed lately that I've been describing the Democrats as "adults" and Republicans as "children". No where is this more true than in fiscal policy. While the Republicans shout gleeful impossibilities in between schoolyard taunts--"Obama is a celebrity! I'll pay for $1000 billion worth of tax cuts by cutting $72 billion in earmarks!** Obama eats arugula!"--the Democrats reasonably suggest, as a starting point, that we return to a tax rate scheme that has been shown to work in the past. It is almost as if the Republicans themselves don't really believe that they'll be in power, and that all they have left is the grim catharsis of pretending to be Ronald Reagan in front of an audience of their peers.
*Hm..but is this quite right? According to one blogger, the de facto rate could be higher: "Senator Obama would raise the top individual tax rate back to 39.6 percent, impose an additional 2 to 4 percent tax on earnings for some over the existing Social Security wage cap, and bring back the phase-out of the personal exemption and certain itemized deductions for higher-income taxpayers. When added up, the top effective marginal tax rate rises...from 37.9 percent to roughly 48 to 50 percent." If true, this argues against my point--however, it is unclear from this post whether the additional nickel and diming would affect a large number of wealthy people or a relative few, or what. Also, it would be unfair to factor in these hidden costs of Obama's plan without also factoring them into the historical tax rates that form the baseline we are comparing against. So I think the most reasonable thing to do is ignore the de facto tax rates for now, and look naively at the explicit tax rates to give us a general idea of where Obama's plan stands historically.
**"Permanently extending the tax cuts would reduce tax revenue by $1 trillion over four years. If Mr. McCain eliminated every earmark (including money for the gas pipeline that Ms. Palin wants to build in Alaska), the savings would total about $18 billion a year. He hasn’t offered any idea of where he’ll get the rest of the money." (NYT editorial)
In 1980, when Reagan was elected, every dollar you earned past $215,400 was taxed at a rate of 50% (70% for unearned income). After the tax revolt of the 80s, that rate was drastically reduced: to 28% at its lowest point. In the Clinton years that rose back up to 39.6% for dollars earned past $250,000 or so.
Under George W. Bush, that rate was reduced to 35%, where it remains through today. Under Obama, the top rate would move back up to where it was under Clinton: about 40%.*
From the way that Republicans have been pounding their fists and shouting to the rafters, you would think that Obama was proposing a top income tax rate increase of epic proportions. In reality, he is proposing an increase of 5%. That's right: a difference of a nickel of every dollar earned after about $300,000. And the top rate would still remain low overall by historical standards--well under the >50% seen in most of the 20th century.
But what about capital gains (i.e., money earned from investments rather than a paycheck)? The current rate is the lowest it has been since 1933: 15%. Obama would raise that to somewhere in the neighborhood of 25%, which is about where it was in the Clinton years and somewhat higher than it was during much of the 80s. So let's put that increase at 10%.
The final tally, then: the top income tax rate increased by 5%, and the capital gains tax increased by 10%--both levels raised to what they were during the prosperous Clinton years.
The Republicans carry on as if the tax revolt of the 1980s never happened--as though the wealthiest Americans--the investors, the entrepreneurs--were still forfeiting over half of their post-$200,000 income to Uncle Sam. But they are fighting a battle that Reagan already won, and that the Democrats already conceded. There is not one serious politician left who advocates that we return to the pre-Reagan tax rates. And yet still, impossibly, bloody-mindedly, the Republicans insist on more tax cuts--despite dramatically increased federal spending (on both entitlements and two concurrent wars), and despite ballooning deficits. And they continue to depict Democrats as if they were advocating the absurdly high marginal rates of the Great Society years.
We cannot, as the backwards saying goes, have our cake and eat it too. To acknowledge the necessity for a modern infrastructure, a quality education system, a functional healthcare scheme, and a superior military is to acknowledge the necessity of a tax rate that is high enough to cover these tremendous costs. Perhaps there was a time when we could believe that the Republicans would offset their tax cuts with reductions in federal spending, but George W. Bush and his agenda of big government conservatism--and his pet war, Iraq--put that idea to rest.
I've noticed lately that I've been describing the Democrats as "adults" and Republicans as "children". No where is this more true than in fiscal policy. While the Republicans shout gleeful impossibilities in between schoolyard taunts--"Obama is a celebrity! I'll pay for $1000 billion worth of tax cuts by cutting $72 billion in earmarks!** Obama eats arugula!"--the Democrats reasonably suggest, as a starting point, that we return to a tax rate scheme that has been shown to work in the past. It is almost as if the Republicans themselves don't really believe that they'll be in power, and that all they have left is the grim catharsis of pretending to be Ronald Reagan in front of an audience of their peers.
*Hm..but is this quite right? According to one blogger, the de facto rate could be higher: "Senator Obama would raise the top individual tax rate back to 39.6 percent, impose an additional 2 to 4 percent tax on earnings for some over the existing Social Security wage cap, and bring back the phase-out of the personal exemption and certain itemized deductions for higher-income taxpayers. When added up, the top effective marginal tax rate rises...from 37.9 percent to roughly 48 to 50 percent." If true, this argues against my point--however, it is unclear from this post whether the additional nickel and diming would affect a large number of wealthy people or a relative few, or what. Also, it would be unfair to factor in these hidden costs of Obama's plan without also factoring them into the historical tax rates that form the baseline we are comparing against. So I think the most reasonable thing to do is ignore the de facto tax rates for now, and look naively at the explicit tax rates to give us a general idea of where Obama's plan stands historically.
**"Permanently extending the tax cuts would reduce tax revenue by $1 trillion over four years. If Mr. McCain eliminated every earmark (including money for the gas pipeline that Ms. Palin wants to build in Alaska), the savings would total about $18 billion a year. He hasn’t offered any idea of where he’ll get the rest of the money." (NYT editorial)
Thursday, July 31, 2008
Maverick in a jetwash
Republicans have got to be worried that it's less than 100 days to the general election, and the McCain campaign is all over the place. First they base his whole candidacy on the notion that McCain has Honor, Courage, and American Pride oozing out of every pore and orifice--which is just fine. But now they are undermining that theme by launching a spate of ridiculous attack ads against Obama, one in which they make the baseless accusation that Obama neglected to visit wounded troops at a hospital because the press would not be there, and another in which they dismiss Obama as a mere substanceless celebrity on a par with Britany Spears and Paris Hilton (again making inaccurate claims). This sort of thing hurts McCain, not just because it contradicts his claims to various capitalized classical virtues, but because these schoolyard-taunt-level jabs reinforce the negative image of John McCain as short-tempered, immature, and deserving of his old highschool nickname.
And it's not just McCain's campaign strategy that's in disarray--he is all over the place on the issues, too. At first he opposed the Bush tax cuts, but now he supports them. He has also reversed himself on immigration, landing himself in the awkward position of opposing his own immigration bill. And now there are murmurs that he may not be committed to a cap-and-trade scheme to reduce carbon emissions after all. The Maverick has been systematically de-Mavericking himself.
A lot of people are using all this to level criticism at McCain, which of course is fine, but I think the root cause of all this spasmodic behavior is the fact that Republicans have put McCain in a totally untenable position. Rather than gaining an advantage during the lengthy period of time in which he had the nomination rapped up while Obama and Clinton were still duking it out, McCain was forced to spend all of his energies pandering to and consolidating the Republican base. The Rush/Hannity/Romney wing of the Republican party was unwilling to go along with McCain's deviations from Republican orthodoxy, and so he has had to gradually and painfully reverse himself on the very issues which made him stand out in the first place.
The Rushes, Hannities, and Romnies might be satisfied with the transformation they've wrought, but they've also completely hamstrung their guy for the general election. Because McCain can no longer run on his sometimes-unorthodox-for-a-Republican but always-arch-conservative record, he is forced to ineffectually attack made-up character flaws of his opponent. And the Republican establishment is following suit, leading to some weird results: "terrorist fist-jabs", seven-house-owning-heiress-marrying McCain calling Obama an elitist, Karl Rove absurdly characterizing Obama as "that guy at the country club" who "makes snide comments about everyone who passes by".* The inexplicable comparison of Obama to Paris Hilton--in a campaign ad--is just the latest installment.
Unless there is a big change in the so-called "fundamentals", McCain is going to have a hell of a time winning this thing. The Independents have cooled to him because of his tacking towards the ideological right, and the ideological right still harbors the sneaking suspicion that this guy is some kind of Independent. And since there's no Hillary--and Republicans can't really remember what Republicans not being in power is like--there's little sense of urgency in getting McCain elected.
To top it all off, the GOP continues its disturbing morning ritual of playing Russian Roulette with its foot--giving us a consistent stream of Republican indictments, contempts-of-Congress, and balls-out law-breaking. For Democrats these days, it's like God is smiling down on us and nodding, "Yes", and then holding Karl Rove in contempt.
So, we'll see if McCain can figure out a way to bounce back. I just hope he keeps cranking out those entertaining commercials.
* The most awesome thing about this story was the fact that, in Karl Rove World, it makes sense to assume that your audience can relate to "that guy at the country club". You know, like that guy you always see at the Billionaire Yacht Faberge Egg Convention whose always making those snide remarks about your Faberge Egg that's on your yacht...I fucking hate those guys.
And it's not just McCain's campaign strategy that's in disarray--he is all over the place on the issues, too. At first he opposed the Bush tax cuts, but now he supports them. He has also reversed himself on immigration, landing himself in the awkward position of opposing his own immigration bill. And now there are murmurs that he may not be committed to a cap-and-trade scheme to reduce carbon emissions after all. The Maverick has been systematically de-Mavericking himself.
A lot of people are using all this to level criticism at McCain, which of course is fine, but I think the root cause of all this spasmodic behavior is the fact that Republicans have put McCain in a totally untenable position. Rather than gaining an advantage during the lengthy period of time in which he had the nomination rapped up while Obama and Clinton were still duking it out, McCain was forced to spend all of his energies pandering to and consolidating the Republican base. The Rush/Hannity/Romney wing of the Republican party was unwilling to go along with McCain's deviations from Republican orthodoxy, and so he has had to gradually and painfully reverse himself on the very issues which made him stand out in the first place.
The Rushes, Hannities, and Romnies might be satisfied with the transformation they've wrought, but they've also completely hamstrung their guy for the general election. Because McCain can no longer run on his sometimes-unorthodox-for-a-Republican but always-arch-conservative record, he is forced to ineffectually attack made-up character flaws of his opponent. And the Republican establishment is following suit, leading to some weird results: "terrorist fist-jabs", seven-house-owning-heiress-marrying McCain calling Obama an elitist, Karl Rove absurdly characterizing Obama as "that guy at the country club" who "makes snide comments about everyone who passes by".* The inexplicable comparison of Obama to Paris Hilton--in a campaign ad--is just the latest installment.
Unless there is a big change in the so-called "fundamentals", McCain is going to have a hell of a time winning this thing. The Independents have cooled to him because of his tacking towards the ideological right, and the ideological right still harbors the sneaking suspicion that this guy is some kind of Independent. And since there's no Hillary--and Republicans can't really remember what Republicans not being in power is like--there's little sense of urgency in getting McCain elected.
To top it all off, the GOP continues its disturbing morning ritual of playing Russian Roulette with its foot--giving us a consistent stream of Republican indictments, contempts-of-Congress, and balls-out law-breaking. For Democrats these days, it's like God is smiling down on us and nodding, "Yes", and then holding Karl Rove in contempt.
So, we'll see if McCain can figure out a way to bounce back. I just hope he keeps cranking out those entertaining commercials.
* The most awesome thing about this story was the fact that, in Karl Rove World, it makes sense to assume that your audience can relate to "that guy at the country club". You know, like that guy you always see at the Billionaire Yacht Faberge Egg Convention whose always making those snide remarks about your Faberge Egg that's on your yacht...I fucking hate those guys.
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