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NY Times: A Higher Top Rate Is ‘Just A Starter’

From the New York Times:

Tax Arithmetic Shows Top Rate Is Just a Starter

By JACKIE CALMES | December 8, 2012

WASHINGTON — Despite hints in recent days that President Obama and House Speaker John A. Boehner might compromise on the tax rate to be paid by top earners, a host of other knotty tax questions could still derail a deal to avert a fiscal crisis in January.

In other words, even if the Republicans cave on raising the tax rate on the ‘rich,’ the Democrats are going to demand more. Just like they always do.

The math shows why.

This "math" line is getting very tiresome. When has the Left ever worried about math? They have cooked the books and lied about cost projections for sixty years. (Cf. Medicare.)

Besides, math is even harder when you are stupid. And there is nothing more stupid than pretending that this is a revenue problem when it is a spending problem.

In fact, US tax revenue has gone up 10% in the last year. The problem is spending has gone up 16%. But The Times never once mentions cutting spending in this article.

Even if Republicans were to agree to Mr. Obama’s core demand — that the top marginal income rates return to the Clinton-era levels of 36 percent and 39.6 percent after Dec. 31, rather than stay at the Bush-era rates of 33 percent and 35 percent — the additional revenue would be only about a quarter of the $1.6 trillion that Mr. Obama wants to collect over 10 years. That would be about half of the $800 billion that Republicans have said they would be willing to raise.

Notice that the New York Times is suddenly low-balling the amount of revenue that would be raised by the higher rates. They are saying it will only amount to $400 billion over ten years. When even conservatives are saying the increase could be $82 billion a year, or $820 billion over ten years.

Why are they doing this? Because they want to demand more tax increases. Which is the purpose of this article.

That calculation alone suggests the scope of the other major tax issues to be negotiated beyond tax rates. And that is why many people in both parties remain unsure that a deal will come together before Jan. 1…

“The question is making sure that we hit a revenue target that’s required for a truly balanced deficit-reduction plan,” said Representative Chris Van Hollen of Maryland, the senior Democrat on the House Budget Committee. “And when the president and all of us say this is a question of math, we mean it. It’s very hard to make the numbers work without the top rates going back to the full Clinton-era levels.” …

Note the mention of "full Clinton-era levels." In other words, the increase tax rate is just the tip of the iceberg.

Seldom mentioned is that Mr. Obama’s revenue total also reflects four other changes from Bush-era tax cuts: higher tax rates on investment income from capital gains and dividends, and the restoration of two other Clinton-era provisions limiting deductions and tax exemptions for affluent individuals.

How exactly are these "Clinton-era provisions"? We are not an accountant, but we don’t remember deduction limits and tax exemptions being increased since Clinton. But we could be wrong.

But we certainly don’t remember Obama campaigning on this. But now Times says he has a mandate.

Together those changes would raise $407.4 billion over a decade — nearly as much as the president’s proposal on higher rates, which would raise $441.6 billion by 2023, for a total of $849 billion. Another $119 billion would come from higher estate taxes, opposed by Republicans and some Democrats…

Republicans want to raise all $800 billion from overhauling the tax code, erasing tax breaks for high-income households and using the new revenues both to reduce deficits and to lower everyone’s tax rates…

Roughly splitting the difference on the top rates — settling at 35 percent and 37 percent — would collect nearly $200 billion over 10 years, under half the amount that would be raised if the rates reverted to Clinton-era levels, according to data from Citizens for Tax Justice and the Institute on Taxation and Economic Policy, research groups that advocate for a progressive tax code.

In the years of debate over the Bush tax cuts, which predates Mr. Obama’s first election, $800 billion has been the rough estimate for how much revenue could be raised in the first decade by ending them for the highest-income 2 percent of taxpayers. But most attention focused on the top rates, which account for half of the revenue equation.

The remainder would come from the other four tax changes for Americans with the highest income, two raising taxes on investment income from capital gains and dividends and two restoring restrictions on the itemized deductions and exemptions claimed by high earners.

Under Mr. Obama’s plan, the tax rates for long-term capital gains and dividends, now 15 percent, would revert to 20 percent for capital gains and to 39.6 percent for dividends, the same as for ordinary income. Republicans oppose the increases, and Senate Democrats oppose the proposed tax on dividends; their bill would tax both dividends and capital gains at 20 percent.

People in both parties say that the four tax issues can be readily worked out…

In a nutshell, this article finally admits that increasing the tax rate on ‘the rich’ won’t even begin to address the deficit. So they are suggesting that we need to adopt both Obama’s plan to increase the tax rate on the rich and Boehner’s offer of doing away with tax deductions and ‘loopholes.’ So we will get the worst of both worlds.

The Times says the tax hike on ‘the rich’ should just be the beginning. And, of course, it will be just the beginning. The Democrats always want more.

Besides, The Left sees this as their once in a lifetime chance to put their boot on the throat of capitalism, and now they want to push down on it even harder.

This article was posted by Steve Gilbert on Monday, December 10th, 2012. Comments are currently closed.

2 Responses to “NY Times: A Higher Top Rate Is ‘Just A Starter’”

  1. mr_bill

    If the annual deficit were $900 quadrillion, would higher taxes be the solution? So why is it the presumed solution when the annual deficit is $1.5 trillion?

    The Republicans are going about this all wrong. They should negotiate from the point of the budget. AFTER a budget is passed, negotiate on taxes. The budget should cut spending by $1.5 trillion, in this fiscal year alone. They also need to explain things to the public. If you make $30,000 a year, spend $45,000 a year, and have an accumulated debt of $160,000, an additional $820 a year is not going to solve any of your problems.

  2. BillK

    Once again ignoring the fact that if you want less of an activity, you tax it.

    Why yes, of course people will invest at the same rate if there’s a higher tax penalty for doing so!

    Of course higher salaries won’t be replaced with other, non-taxable benefits!

    I’ve given up on hoping Americans will ever have any economic literacy whatsoever – why bother when it’s easier to repeat the “attack them!” mantra?


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