Category Archives: Bush Tax Cuts

United for a Fair Economy Applauds Obama Revenue Proposal

FOR IMMEDIATE RELEASE


Boston, MA (September 20, 2011): United for a Fair Economy (UFE) applauds President Obama’s proposal to raise $1.5 trillion in revenue by increasing taxes primarily on the wealthiest one percent of taxpayers and corporations. Over the last decade, the richest Americans have seen their income and wealth soar while benefitting from sharply reduced taxation.

“At a time of unprecedented economic inequality, extensive unemployment, and deep concern over our country’s long-term fiscal health, it is entirely appropriate and economically sound to institute progressive taxation as the best solution to our nation’s challenges,” said Lee Farris, senior organizer on federal tax policy at United for a Fair Economy.

President Obama’s proposal seeks to let the Bush tax cuts expire for upper-income taxpayers, close corporate tax loopholes, end oil and gas subsidies, and limit the amount that high earners can deduct. According to Citizens for Tax Justice, only the richest five percent of taxpayers would pay additional taxes under Mr. Obama’s proposal, with 75 percent of the increases paid by the richest one percent.

United for a Fair Economy especially supports President Obama’s proposed “Buffett Rule,” that would establish a minimum tax on taxpayers making $1 million or more in income, and would limit the benefit they receive from the 15 percent tax rate on investment income.

“People making more than $1 million a year should not pay a smaller share of their income in taxes than middle-class families pay,” said Farris.

UFE is encouraged that the President vowed to veto any deficit reduction package that cuts benefits to Medicare recipients but does not raise taxes on the wealthy and big corporations.

Given UFE’s decade-long campaign for a robust estate tax, UFE views the President’s proposal for the estate tax to return at its weakened 2009 level as a missed opportunity to raise much-needed revenue from multi-millionaire inheritors to improve our nation’s fiscal health.

United for a Fair Economy urges Americans to tell Congress to reform our tax code so wealthy individuals and large corporations pay their fair share. We support the tax package developed by Rebuild the Dream, which includes taxing capital gains and investment income at the same rate as income from wages, new higher tax brackets for millionaires and billionaires, a stronger estate tax, and ending offshore tax havens for corporations and individuals. UFE also supports HR 1124, the Fairness in Taxation Act.

United for a Fair Economy is a national, independent, nonpartisan, 501(c)(3) non-profit organization located in Boston, MA, which works to rein in economic inequality and promote a more broadly shared prosperity. More at www.faireconomy.org.

Leave a comment

Filed under Buffett Rule, Bush Tax Cuts, Fairness in Taxation Act, Millionaire'sTax, President Obama, press release, United for a Fair Economy

On income taxes and job creation, history debunks GOP views

By Star-Ledger Editorial Board
Sunday, July 17, 2011

We’re used to politicians stretching the truth, but this is getting ridiculous. For months now, congressional Republicans have refused to support any debt ceiling and budget deal that would raise taxes on the wealthy because, these economic wizards tell us, the rich are “job creators.”

Tax increases would discourage these job genies from expanding their businesses. Unemployment, already at 9.2 percent (which says something about the job-creation myth, doesn’t it?), would get even worse, they insist. The problem with this economic philosophy? It’s garbage.

Even Warren Buffett, one of the richest men in the world, knows that: “The rich are always going to say, ‘Just give us more money and we’ll go out and spend more and then it will all trickle down to the rest of you.’ But that has not worked the last 10 years, and I hope the American public is catching on.”

The American public, it seems, is catching on, even if Republicans want to twist the truth about that, too. Speaker of the House John Boehner keeps insisting, “The American people don’t want us to raise taxes.” House Majority Leader Eric Cantor says, “This economy is ailing and we don’t believe, nor do the American people believe, raising taxes is the answer.”

Think again. Americans believe Congress should raise taxes on the wealthy.

A new Quinnipiac survey asked voters if they support a budget deal with only budget cuts or a blend of cuts and taxes on corporations and the rich. Only 25 percent said cuts only. Sixty-seven percent want cuts and a tax increase on the wealthy.

Republican leaders are not only misrepresenting what the American people want, they’re covering up Republican numbers, too. In a recent Gallup poll, only 26 percent of Republicans favored lowering the debt with cuts alone. In just about every poll — ABC News, Washington Post, Bloomberg, Reuters — Americans want spending cuts and they want the wealthy to pay a larger share.

But maybe the American people are wrong. Let’s check the history. Did giving the wealthy a break with the Bush tax cuts of 2001 and 2003 help create jobs? Uh, no. From the end of the 2000-01 recession, just when the first Bush tax cuts took effect, until the beginning of the Great Recession, the economy grew at a slower pace than in any postrecession recovery period since World War II. Pay, adjusted for inflation, fell. And it took 39 months to get the number of jobs back to where it was before the 2000-01 recession.

Despite the same promises of jobs, the economy limped along. And the additional tax cut in 2003 didn’t rev it up, either.

President Bill Clinton faced vociferous opposition to his 1993 budget plan, which raised the top tax rates from 31 percent to 39.6 percent. Republicans called it the “Kevorkian Plan.”

So, what happened? Unparalleled economic growth. The nation’s unemployment dropped from 6.9 percent to 4 percent. The deficit shrank, and in 1998, the federal government boasted a surplus for the first time since 1969.

It seems the economy can survive a tax hike on the wealthy after all. And the tax hike did wonders to reduce the deficit as well, as designed.

More evidence: During the 1950s and early 1960s, when America experienced sustained growth, marginal tax rates on the rich were the highest they’ve ever been — 91 percent for the top bracket. (Even President Ronald Reagan, the Republican economic poster boy, raised taxes after he cut them.)

But Republicans keep chanting the same nonsense — without offering historical evidence to back it up. Instead, they want to bring the nation to the brink of default while protecting corporations (who are sitting on billions in profits) and fat cats — while everyday Americans are squeezed by high gas and food prices, plunging home prices and lower wages.

Let’s call the job-creator stuff what it is: a myth.

Leave a comment

Filed under Bill Clinton, Bush Tax Cuts, Congressional Republicans, Conservatives, debt limit, editorial, Eric Cantor, great recession, John Boehner, President Obama, tax cuts, the Star-Ledger, unemployment

>White House says N.J. benefits from proposed tax cuts

>

I posted the following just for some balance to offset the argument of the previous post.

From Tom Hester Jr. @ NewJerseyNewsroom.com
12/15/10

New Jersey stands to benefit if the House acts quickly on a bipartisan package that extends unemployment benefits and tax cuts, White House officials said Wednesday.

As many 4.7 million New Jerseyans would see more money in their paychecks because of the proposed 2 percent payroll tax cut. If the legislation is not approved, a typical working family faced a tax increase of over $3,000 on Jan. 1.

At least 321,774 New Jerseyans who have been jobless for an extended period would continue to receive jobless benefits under the legislation. If the package is not approved, the jobless benefits would end in the weeks ahead.

The package also includes an extension of the American Opportunity tax credit, which was used by 281,000 New Jersey families last year to help pay for college tuition.

Additional tax cuts in the legislation that also are geared at middle-class families include the Earned Income Tax Credit, designed to help families to climb out of poverty, and the Child Tax Credit extension, that would make sure families don’t see their taxes jump by up to $1,000 for every child.

“This tax cut plan, while not perfect, will help to grow our economy and create jobs in the private sector,” President Obama said. “It will help to lift up middle class families, who will no longer need to worry about a New Year’s Day tax hike. It will offer emergency relief to help tide folks over until they find another job. And it includes tax cuts to make college more affordable; help parents to provide for their children; and help businesses, large and small, to expand and hire. We worked hard to negotiate an agreement that’s a win for middle-class families, and a win for our economy, and we can’t afford to let it fall victim to delay and defeat. So, I urge Members of Congress to pass these tax cuts as swiftly as possible.”

White House officials described the proposals as responsible, temporary measures designed to support the national economy that will not add costs by the middle of the decade. Obama does not believe it is affordable to make the high-income tax cuts permanent and will continue to make his case for why the administration cannot extend these measures beyond 2012.

The Senate voted 81-19 in favor of the bipartisan tax cut package Wednesday afternoon. It now moves to the House of Representatives for consideration.

Leave a comment

Filed under Bush Tax Cuts, New Jersey, New Jersey Newsroom, President Obama, tax cuts, the White House, Tom Hester

>NJPP Monday Minute 12/20/10: Deficit be Damned: Everyone Gets a Tax Cut Next Year

>
This Christmas, we’ll all be getting a gift from Congress – two more years of Bush-era tax cuts. Never mind that Congress is paying for them with a credit card; they’ll square up the $860 billion bill with the Obama Administration down the road.

The thing is, the biggest gifts went to the wealthiest taxpayers.

A recent analysis by Citizens for Tax Justice, a Washington-based public interest research and advocacy organization, estimates that the compromise plan agreed to between President Obama and Republicans in Congress would give 25 percent of the total value of the tax cuts to the wealthiest 1 percent of all Americans. The President had originally proposed not extending the tax cuts for those with income of more than $250,000 a year.

The CTJ analysis also estimates the impact of the compromise on a state-by-state basis. In New Jersey, that’s an average benefit of $443 for the poorest 20 percent of earners and an average benefit of $93,350 for the wealthiest 1 percent.

The compromise plan extends to everyone the current federal income tax rates for two years, cuts the estate tax to below the 2009 level and cuts Social Security payroll tax deductions for all workers by 2 percent.

Income Taxes
Federal income tax rates were lowered twice during the Bush administration, in 2001 and again in 2003. Although each act had its own legislative history and impact, the two are generally lumped together in terms of their effect on taxpayers and the economy. The two acts significantly lowered federal marginal income tax rates for nearly all taxpayers. Both were set to expire at the end of 2010.

The debate in Washington has centered on whether the tax cuts should be extended and who should benefit. The president’s plan favored lower and middle income families and allowed rates to rise on the wealthiest taxpayers. Congressional Republicans wanted the current tax rates made permanent for all.

Congressional Republicans prevailed-but only temporarily. The tax cuts were extended two more years, at which time they will be subject to another debate.

Estate Taxes
The debate on the estate tax centered on Obama’s effort to maintain estate taxes at the 2009 level, which exempts the first $3.5 million of an estate and taxes the remainder at a rate of 45 percent. The compromise exempts the first $5 million and taxes the remainder at 35 percent.

Payroll Taxes
The compromise includes a 2 percent payroll tax cut (from 6.2% to 4.2%) for all workers. That is significantly less than the president’s “Making Work Pay” proposal, which would have eliminated the 6.2 percent payroll tax on the first $6,450 ($12,900 for couples) in earnings. The impact of this 2 percent cut is greater on lower income earners because only the first $107,000 of income is subject to payroll taxes.

According to CTJ’s analysis, the top 1 percent of taxpayers in New Jersey with incomes averaging $1.8 million will receive over 30 percent of these benefits from the income tax and estate tax provisions. When payroll taxes are taken into consideration, lower and middle income earners fare better. While some of the tax cuts have boosted take-home pay for middle class families, the tax cuts for the wealthiest are poorly designed short-term stimulus and, more important, ineffective long-term economic policy. Increasing the take-home pay of low- and moderate-income families will lead to more spending and a boost in demand for necessary goods and services, which in turn creates more jobs. By contrast, tax cuts for the wealthy are more likely to be tucked away as savings, which is a relatively ineffective boost to the economy.

Many have argued that tax cuts for the wealthy increase the incentive to invest or create small business jobs, and that these benefits eventually trickle down to average families. But the economic record tells a different story. Of the 10 economic expansions since 1949, the expansion between 2001 and 2009 ranks last in terms of economic growth, national investment, employment and employee pay.

Economist Mark Zandi of Moody’s Analytics estimates (see Table 4 in the report) that every dollar spent making the Bush tax cuts permanent generates only 35 cents of economic activity (permanent corporate tax rate cuts yield only 32 cents). Comparatively speaking, a dollar spent on infrastructure (investing in a transit tunnel under the Hudson River, for example) yields $1.57 return on investment; a dollar spent to prevent layoffs of teachers or police or firefighters yields $1.41; and a dollar to temporarily increase food stamps yields $1.72.

It’s too bad the Obama compromise will only boost paychecks, instead of lifting the entire economy.

Leave a comment

Filed under Bush Tax Cuts, estate tax, income taxes, Monday Minute, Moody's, New Jersey Policy Perspective, payroll tax, President Obama, Social Security

>President Obama’s Weekly Address: Tax Cuts & Unemployment Insurance

>With President Obama visiting troops in Afghanistan, Vice President Biden says Congress must extend both the middle class tax cuts and unemployment insurance for the sake of those families and the broader economy.

http://www.whitehouse.gov/sites/all/modules/swftools/shared/flash_media_player/player5x2.swf

Leave a comment

Filed under Afghanistan, Bush Tax Cuts, economy, middle-class tax cuts, President Obama, unemployment benefits, Vice-President Joe Biden, weekly address

>How Tax Brackets Work

>The following blog post was written by Dave Johnson over at the website Campaign for America’s Future and it explains in very simple details how tax brackets work. So don’t fall for all the rhetoric surrounding the issue of whether to allow the Bush tax cuts to expire before you understand how tax brackets actually work. There is a lot of miss-information out there specifically designed to mislead the American public into believing the if the tax cuts were to expire, many would be burdened beyond their means which is simply not true:

This discussion of whether to get rid of the Bush tax cuts for the rich has been a learning experience. I have been listening on the radio and reading the comments at blogs. The main thing I am concluding is that people just do not understand how tax brackets work.


When people talk about raising taxes on people “who make more than” a certain income they really mean that they are going to raise it ONLY on the income that comes in after a certain income is received, not on the person’t entire income.


Here is what I mean. Suppose they say they are going to raise taxes on incomes above $250K. People seem to think that this means if you earn $250K plus a dollar, that you owe an additional tax on the entire $250K. This is not correct. I actually hear stories about people who give away money, and do other things to avoid going “into a higher bracket” because they think they have to pay additional taxes on their entire earnings.

Here is how it really works. What happens is that the first $250K is taxed just like it has been, but anything that is made over $250K — and only the amount over $250K — is then taxed at the higher rate. The tax on the amount below $250K is not changed.

Example: Suppose the tax increase is 5% on income over $250K. This means that a person who reports income of $250K plus one dollar will be taxed an additional 5 cents. FIVE CENTS!

Yes, that’s right, if it is 5% they are talking about then it means a 5 cent tax increase on people who make $250,001.

Let me repeat that. If you make $250,001, and they raise taxes 5% on people who make over $250K, then you will have to pay 5 cents more. Five cents. F.I.V.E. C.E.N.T.S. That is what people are so upset about. 5 cents.

If it is 5% a person making $260K might pay an additional $500. That’s right, the proposed tax increase is approx. $42 a month on people making $260K, about $21,600 a month. Forty-four dollars out of twenty-one thousand. THIS is what all the right-wingers are screaming about. THIS is what all the Ayn Rand cultists are threatening to stop working over. THAT is how tax brackets work.

Leave a comment

Filed under Bush Tax Cuts, Campaign for America's Future, Tax Brackets

>NJPP Monday Minute 8/23/10: Extending Bush Tax Cuts for Top 2% Shortchanges the Economy

>
When Democrats in New Jersey raised the top rate on the state income tax last year, it was billed as a one-year, temporary increase on millionaires. When it expired this year, Democrats voted to renew the increase for another year. Republicans, emboldened by Gov. Christie’s veto threat, said “no.” They reasoned that Democrats purposefully wrote the expiration into the legislation, and so it should be allowed to expire.

In Washington, D.C., the partisans argue opposite sides of the “expiration” debate.

Republicans a decade ago enacted what came to be known as the Bush tax cuts, the signature domestic policy legislation of the Bush Administration. That legislation enacted tax cuts with an expiration date at the end of this year. Republicans want to renew the legislation. Democrats in Congress (echoing Republicans in New Jersey) argue the bill was written with an expiration date, and so it should be allowed to expire.

If it feels a little like a funhouse mirror, well, there’s a reason.

None of the partisan back-and-forth is about good fiscal policy or philosophical differences. It’s entirely about gaining political advantage.

But it should be pretty clear by now tax cuts haven’t spurred the nation’s economy. In fact, the worst economic collapse since the Great Depression happened on the heels of deep federal tax cuts. It makes almost no sense, from a policy perspective, to continue such cuts.

A study earlier this year by the non-partisan Congressional Budget Office of 11 options for stimulating economic growth placed tax cuts dead last in effectiveness. Top among the options for creating jobs and jump-starting the economy: job-creation tax credits; extended unemployment benefits and funds to help states balance their budgets with fewer cuts in services.

A proposal by President Obama would allow the tax cuts to expire for the highest-income taxpayers while temporarily extending the cuts for the other 98 percent. Effectively, the plan would restore taxes on households with incomes of $250,000 or more to the same levels as ten years ago, except for tax cuts enacted as part of the American Recovery and Reinvestment Act.

This chart from the Center on Budget and Policy Priorities uses the CBO analysis to break down the cuts by income category:

The CBO study found that allowing the tax cuts to expire for those earning $250,000 a year or more – the wealthiest 2% of all taxpayers – would provide $40 billion in public funds over the next two years to invest in economic programs to boost the economy. Extending the cuts for the high-income earner would likely spur after-tax investments that would increase the GDP by about $10 billion, the CBO said. By comparison, the Center on Budget points out using the economic multipliers in the CBO analysis, investing $20 billion into state fiscal relief and $20 billion in job-creation tax credits would generate about $32 billion in GDP. That’s a tripling of the effect of extending the tax cuts.

For taxpayers in New Jersey, Obama’s proposal would mean an average federal tax cut of $2,245 in 2011 taxes over what would have been owed in 2001. For 80% of New Jersey taxpayers, that’s actually more than the Republican proposal for extending the tax cuts, according to a state-by-state analysis by Citizens for Tax Justice. Higher income households would still reap substantial savings: at least $10,000 for those with incomes of $350,000 or more.

It seems clear that given the anemic effect tax cuts have in stimulating the economy and the immediate impact of channeling those savings back into the economy, the Obama proposal is the middle ground that will provide revenue for improving the economy at the same time it provides relief for the greatest number of taxpayers who have been hardest hit by the economy.

2 Comments

Filed under Bush Tax Cuts, Congressional Budget Office, economy, Gov. Chris Christie, Middle Class, Monday Minute, New Jersey Policy Perspective