The tax repeal issue. Who has the better position?

[Karmadillo]

Tom Oliphant (link and excerpt below) is again writing on the issue of repealing the recent tax cuts/credits. On its face, Kerry's proposal of a selective repeal sounds compelling. I think it would be difficult for the Democratic nominee to run in the general election arguing tax cuts and credits given the middle and lower classes should be taken back. Partial repeal would also appear to benefit the economy by putting/keeping money in the hands of those most likely to spend it. If Oliphant is correct, Dean, too, recognizes some of the problems with a total repeal and is working on developing tax reform that benefits those with modest incomes.

Anyone want to take a shot at explaining the merits/demerits of the two proposals (partial versus total repeal)? I'd be especially interested in hearing proponents of a total rollback suggest how this could be advantageously argued during the general election.

Link:

Economic focus helps Kerry
By Thomas Oliphant, 8/31/2003

<edit>

It sounds tough, and it appeals to the anti-Bush in most Democrats these days, to call for the repeal of all of the tax cuts. However, that means far more than the unconscionable slashes in the top rate paid by the most wealthy, the cut in taxes on stock dividends, and the lowered capital gains rate.

It also means the recent increases in the child tax credit, the new bottom rate of 10 percent, the much broader 15 percent bracket, and the easing of the so-called marriage penalty. This is where working America lives in tax terms and the impact of complete repeal would be enormous, both on families with a tough enough struggle to make ends meet and on a fragile economy that needs more, not less, consumer spending.

This portion of Kerry's speech deserves repeating: "We shouldn't make it harder for middle-class families to make ends meet and we shouldn't turn our backs on making the 21st century work for all of us. But some in my party are so angry at George Bush and his unfair tax cuts that they think the solution is to do the exact opposite."

Anger, the source of Dean's surge, is a poor substitute for sound policy. His proposal would raise the income tax burden on middle-income households by as much as $2,000 a year, putting a ridiculously brutal squeeze on families, the elderly included, that are being pinched by hard times and the rising cost of essentials as never before.

Kerry's proposal shows how concentrating on the top-rate tax cuts and other high-income areas yields more than enough money to stimulate the economy in the short-term, but also to slash the deficit over time so massive federal borrowing doesn't choke off recovery.

more...

[AP]

1. Taxes were regressive before Bush tax cuts, and are more regressive now

By repealing the tax cuts for the top income earners, and leaving the middle class tax cuts, you will have created a more progressive tax structure without having to be accused of raising taxes. You just say that you undid one part of Bush's injudicious tax plan. It's actually quite clever.

If you're rich, you benefit from inequitable tax burdens, and if you're going to watch your taxes go up, you're going to want to make sure they go up on the little guy too, so that the little guy still hurts enough to take a low-paying job, which creates profits for your business, for example (and that's just one tiny reason why the rich benefit from regressive taxation). The rich and big corporations want to see all tax breaks repealed, if they see their tax breaks repealed.

So, Kerry has the smart strategy here. In fact it's really smart. t

[AP]

3. Another thing, America is going to get more productive just

by raising tax revenues. It's going to get more productive by equalizing tax burdens (which, in this climate, means unburdening the middle class). Even if not cutting taxes on the middle class means you forego some tax revenue that you could spend on scho ols and such, you're going to see that shifting more wealth into the hands of the middle class is going to have some very positive effects on the economy.

Fixing America's problems is about the allocation of the tax burden even more than it is about the absolute amount of revenue raised.

We just got to stop burdening the working and middle class as much as we do in the US. It's way counterproductive.ú

[David Dunham]

2. Kerry Hammered Nailed Dean on Repealing Middle Class Tax Breaks

Senator Kerry correctly pointed out that Dean's plan to repeal the entire Bush tax cut will seriously raise taxes on middle class families. The taxes for my family, with two kids, will be raised over $2000 if Dean's repeal goes through. Dean, for example,want to repeal the $1000 per child tax credit and reinstate the marriage tax penalty. Dean's position is elitist and fails to recognize that middle class voters like these tax cuts and will vote their pocketbooks. Unless Dean changes his position on this issue, Kerry and other candidates will nail Dean in ads in tax-concerned New Hampshire and other states.

[madfloridian]

5. Caught you 4 times.

If you want to stand for Kerry, don't post the same thing on all these different threads.

[wuushew]

4. Didn't Russert say Kerry's plan made it impossible to balance the budget?

without something like outright elimination of the Defense department or social security?


Somebody have the transcript?

[AP]

6. Russert is not the kind of guy who's going to let a progressive taxation

strategy pass uncriticized.

How does Russert think America's going to survive into the second half of this decade if we continue to shift the tax burden to the middle class and working class, like Bush has.

Another thing, this is the whole reason GE is so behind Bush. GE bought itself a president who would create a tax haven for the super wealthy individucals and super large corporations who donate money to the republicans party. Whoring it for them, like Russert does on MTP is just part of the package deal they give to Bush.

of course Russert is going to pooh-pooh any plan for tax progressivity.Ñ

[AP]

7. It bears repeating: You trust GE Russert on sound tax policy?.

GE bought themselves a president with the intention of him creating unsound tax policy. s

[Karmadillo]

9. Fun reading on Russert from David Podvin

http://www.makethemaccountable.com/podvin/media/020109_Russert.htm

<edit>

“I still believe,” Russert said, leaning across the table. “I believe in everything I ever did. But I also know that I never would have become moderator on Meet The Press if my employers were uncomfortable with me. And, given the amount of money at stake, millions of dollars, I don’t blame them. This is business.”

The executive agreed. “But are you concerned about losing yourself? You know, selling out?”

Russert pounded the table. “Integrity is for paupers!”

<edit>

In 1992, Russert enthusiastically led the media frenzy about the relationship between Gennifer Flowers and Democratic presidential nominee Bill Clinton, but he refused to report about a similar relationship between incumbent Republican President George Bush and Jennifer Fitzgerald. Four years later, Russert focused on questions about Clinton fundraising, while studiously ignoring the lengthy record of well-documented influence peddling by Republican nominee Bob Dole.

Throughout 2000, with less pretense of objectivity than ever, Russert dutifully echoed the Republican theme that the Democratic nominee was “dishonest”. Week after week, the topic on Meet The Press was the “repeated lying” of Al Gore. One lowlight of Russert’s descent into shameless propagandist occurred when it was revealed that George W. Bush had been convicted of drunk driving in Maine, thereby proving that the Republican candidate had been deceitful when he was questioned about whether he had ever been arrested.

Russert’s immediate response on national television was, “The question on everybody’s mind is, ‘Did the Gore campaign have something to do with the release of this information?’”

That was not the question on everybody’s mind; a poll taken immediately after the revelation showed that most Americans did not believe that Gore was involved.

It was, however, the question being faxed nationally by the Republicans in a memo circulated to their operatives who were responsible for diverting attention from the fact that their candidate was guilty of, for want of a better term, “repeated lying”.

As media mogul and future Fox network founder Rupert Murdoch noticed, Russert’s brazenly partisan approach attracted large numbers of white male viewers. In 2000, Meet The Press earned a $50 million profit for General Electric, which was sixty times more than when Russert was named moderator.

During the 2000 presidential campaign, Russert established a link between Meet The Press and the G.O.P. opposition research team that was responsible for digging up dirt/manufacturing dirt on Al Gore. On election night, after conferring with Welch, Russert demanded that Gore quit the race before the legally mandated recount took place in Florida. The next morning, on the Today Show, he repeated the demand. During the recount, Russert actively campaigned for Bush, going so far as to insist that Democratic vice presidential candidate Joe Lieberman endorse the counting of illegally cast military ballots that would benefit George W.

lots more...

[Donna Zen]

8. If I were running....

which thank god I'm not, I would frame the proposal as a trade off.

Want all children to be covered by health insurance...okay, here's the money. This money is slated to be returned to those making over $500,000. The children of the wealthiest country in the world deserve care, so I believe this is a more American way to spend our dollars.

The same goes for job growth which should a targeted tax package rather than a give away to the largest bush donnors.

IOW, make it a question of using taxes to benefit the many rather than the greedy. Be specific about the amounts and make the issue ours: bush wants to give this money to XYZ and I want to give it to the special interests of the American People not the Greedy Ol' Party.

[Eloriel]

10. What people are forgetting

is that the taxes are being shifted to the middle class via states having to raise them. Our Repug governor in Georgia was going to raise taxes (I don't even remember if he succeeded or not), and the AL Repug governor is trying to do that too because they have to.

Property taxes are going up, sales taxes in some states, college tuition, etc.

The other thing that people are forgetting is that if you have healthcare for all, that will give many families a HUGE boost in either income or coverage or both.

Plus there's the overall suppression of job creation, etc., by the sheer fact of the deficit, so getting rid of that will also be a tremendous help on the economy AND on job creation.

I'm sorry, I just don't think that "Clinton-era taxation" was so terrible for most Americans.

Sure, it's nice to pay less taxes, but few people (except the wealthy, who are severely undertaxed) were grumbling. NO ONE EVEN WANTED Bush's tax cuts, yet he rammed them through anyway. Poll after poll showed that Americans would have rather used the money for other things.

Eloriel

[AP]

12. So, federal taxes shouldn't be more progressive?

What you say is all very, well, long. But none of it explains why this chance shouldn't be taken, as Kerry proposes, to make federal taxes more progressive.

[AP]

11. People should care more about this topic. Progressive taxation

is the CENTRAL ISSUE OF 2004. Of course, it's all very covert, because it's so hard to talk about, but it's the thing the Republicans care most about, it's the thing that the Democrat I support needs to address in way which Americans will grasp.

[AP]

13. I know it's late, but I thought people would care more about this issue.

It's important.@

[Karmadillo]

14. Bump. Any takers from the morning shift?

n/t

[dsc]

15. The sad fact is that we can't afford them

I realize that fiscal sanity is a tough sell for many people here but I would think the 90's should have proven that point once and for all. At the very least if Kerry is going to go around calling the repeal of the tax cut on the middle class a tax increase he needs to use the deficit figures which assume its continuation. That would greatly increase the deficit and bring his budget way out of balance. We can't be running these huge ass deficits. Interest rates are already increasing which for those with flexable mortgages is a big ass tax increase. The typical homeowner saves more on their mortgages under Clinton than the tax cut could ever hope to give them. Again the equation is pretty simple. Reasonable taxes + balanced budgets + fiscal sanity = great economy + low interest = bigger and better off middle class.

[AP]

16. We can't afford a regressive tax code.

I really can't believe people are taking Russert's word for what we can afford and can't afford. It's not like Russert went around saying we couldn't afford Bush's tax cut package when it was passed. But now we can't afford to undo it if it's undone in a way that more progressive?

OK, that makes no sense.

Again, you're going to see the middle class become more productive and contribute more to the economy if they're undburdned by the tax code.

If we can't afford to undo Bush's damage by just reversing the tax cuts for the top 6%, then we have to find a way to raise more revenue in a progressive manner. Cruz Bustamante is, I believe, proposing another tax band at a much higher income level. I think Edwards suggested something similar. Making cap gains tax more progressive (as Edwards suggests) is another possibility.

Bush was right to cut taxes on the middle class, but he was throwing them a tiny tiny bone to get them to shut up about the HUGE tax cuts for the wealthy. Kerry is right to not give those cuts back.

[dsc]

18. I am not taking Russert's word for it

it is simple, common sense. The current deficit is $480 billion but that includes a SS surplus of well over $100 billion and the assumption that the middle class tax cuts will expire. The SS surpluss is dwindling to the point that it won't exist in 2017 (a scant 4 years after the next President will leave office if he gets 2 terms). The real, honest deficit for those keeping the tax cut is well over $600 billion and could be $700 billion as it also doesn't include Iraq.
page 67 of 11 August 2003 Time illustrates my point nicely.

In an article entitled Score a Better Loan it is pointed out that a change of 3% in mortgage rate translates into a $162,177 difference on a 30 year, 200k mortgage. Assume a more modest 100k mortgage, then it is only $81,088.50. That is over $2,700 a year and we haven't even discussed credit cards, car payments, and other such things. On the same page in an article entitled Bond Market Mayhem it states that 10 year bonds have gone from 3.1% to 4.5 % in just a month and a half due to the growth in the second quarter. Middle class and the poor are borrowers. Huge deficits lead to increased interest rates which hurt borrowers and help investers. That is as regressive as it gets.

[AP]

19. The biggest reason the economy sucks is because the middle class

-- which is the engine of economic growth -- is way overburdened.

Progressive taxation is about the best thing you can do to start unburdening the middle class.

You'll close the debt (most importantly, as a % of GDP) by increasing GDP and economic activity by unburdening the middle and working class.

[dsc]

20. Then explain Clintonomics

He did what I am prescribing not what you are prescribing. And though I didn't not it in the first post the growth for the second quarter was a respectable 2.4% which is what the bond market responded to. History has proven you can't have all three of these things: low interest rates, high enough levels of growth to increase wages, and massive deficits. Right now we have the 1st and the 3rd but we may be moving into the 2nd and the 3rd. Both senarios screw the middle class about whom your purport to care. Only the 1st combined with the 2nd which is what Clintonomics gave us is good for the middle class. Return to Clintonomics save the middle class.

[Karmadillo]

21. Didn't Clinton raise taxes on the rich?

Wouldn't the repeal of the tax cuts on the rich plus Kerry's goal of reducing the deficit to one-half of its current level during his first time (a goal similar to that of the Clinton Admin) have a chance of leading to similar results?

Also, and this is unrelated to the argument going on between you and AP, but wouldn't it be extremely difficult to sell the middle class on the repeal of their tax cuts? I'm thinking the "liberal media" would use such a policy to Gore the Democratic nominee.

Here's a Krugman article on the Clinton tax policy:

http://www.pkarchive.org/economy/ClintonTaxPlan.html

A big fight is looming over one of the key elements of Bill Clinton's economic program: higher income taxes for wealthy Americans. Families with taxable incomes above $ 140,000 currently pay a tax rate of 31 percent. The Clinton plan will raise that rate to 36 percent, and families with taxable income over $ 250,000 will pay 39.6 percent. To block these increases, the Republicans have wheeled out heavy intellectual artillery. Harvard's Martin Feldstein, a former Reagan adviser who fell out with his boss over federal budget deficit reduction, claims that new taxes on the rich will raise very little money and may even end up increasing the deficit.

Raising taxes on high incomes makes sense. During the 1980s, the incomes of the top 1 percent of families doubled in real terms while the incomes of middle-class households stagnated and the poor got poorer. The tax policies pursued by the Reagan and Bush administrations were not the main cause of the growing inequality in the United States, but they did favor the well-off. Now we face a huge budget deficit, much of it to pay interest on the debt run up under Reagan and Bush. It's not irrational to think that those who prospered most during the 1980s should pay a large share of the bills from that decade. It is also politically crucial for the Clinton administration to place as much of the new tax burden as possible on high-income families. After all, what is the alternative? Leaving aside the usual rhetoric about eliminating waste and fraud, the only serious option is to raise taxes or cut benefits for the middle class and poor. So while the president has called for a little bit of sacrifice from all Americans, he wants to concentrate the pain on people with high incomes. Indeed, he proudly declares that 70 percent of the taxes he proposes to raise will come from only 2 percent of the population.

Rich reaction. Nobody knows for sure how rich American families will react to Clinton's new tax initiatives. Think of a family that currently has a taxable income of $ 200,000. The Clinton program will raise the rate on the top $ 60,000 of that income from 31 to 36 percent; if the family doesn't change the way it works and saves, it will pay $ 3,000 in additional taxes. But suppose that the family decides, in the face of these higher taxes, to work a little less or to increase contributions to a tax-deferred retirement plan. If these steps reduced taxable income by $ 10,000, for example, the tax revenue will be $ 600 less than before.

Clinton's economic advisers have not released the assumptions and methodology behind their revenue estimates, but reports indicate that they assume no reduction in work effort and only a small amount of tax avoidance. In fact, it is possible that some high-income families may actually work harder because of higher taxes. Suppose a couple earning $ 200,000 a year has a $ 600,000 mortgage, two children in expensive colleges, large car payments and lavish tastes. To maintain this lifestyle, the couple might redouble their efforts in the workplace to compensate for the income lost to higher taxes.

more...

[Donna Zen]

17. Once again...

Of course progressive tax policies are the way to go. But letting a millionaire Russert, speaking for billionaires like Jack Welsh, frame the issue will not make the issue clear. They have decided to support the big lie: halting the enactment of certain taxes cuts or repealing them altogether (depending on whose camp your in) is somehow raising taxes. By specifically moving on a dollar for dollar basis the tax cuts into electorate demands, one can reframe the issue. Example: do we support the elimination of inheritance taxes for a very few or would you perfer lower/stable property taxes for the very many? With the increase in the child tax care credit can you afford to build your own school, provided varied programs for your kid, and fix the road in front of your house? Huh?

Keep playing on their turf and they will always have the homefield advantages.