How the "Tax Cut" issue can work wonders for the Democratic party

[scheming daemons]

The Obama administration, along with Nancy Pelosi and Harry Reid, will introduce a bill that keeps the Bush tax cuts for those individuals earning less than $200,000 and couples earning less than $250,000..... but allows the tax cuts for those above those amounts to "expire".


The GOP... who wants *ALL* of the tax cuts to be extended will have two possible courses of action:


1. Accept the bill, since it gives them SOME of what they want (continuation of tax cuts for those under the $200K/$250K amount).

Results: Obama gets to sign a very popular extension of tax cuts for the middle and lower classes, while simultatneously allowing the top tax brackets to return to the pre-2001 levels. This will bring $5 trillion into the treasury over the next 10 years, significantly cutting our annual deficits and not hurting the economy at all.


2. Filibuster the bill, since it doesn't preserve ALL of the Bush tax cuts. This will cause the tax cuts to expire on December 31st, 2010 - as originally written into the legislation.

Results: Obama gets to place the full blame for the middle and lower classes seeing their taxes rise on the obstructionist GOP. "Because they wanted to protect their wealthy friends, the GOP stopped us from extending the cuts for everyone else." This also results in nearly $7 trillion in deficit savings over the next 10 years.



The purest definition of win-win, if we play it right.


In one case, the GOP capitulates and Obama gets to keep a campaign promise for the middle and lower classes and the upper class starts paying their fair share again.

In the other case, the GOP's obstructionism can be clearly and succinctly labelled as the "culprit" for the lower and middle classes seeing their tax rates return to Clintonian levels (which really isn't that bad, remember?)



The GOP is in a box on this issue.


If we play it right.

[pinto]

1. Winners and Losers Under Obama’s New Tax Plan (via Darwin's Finance)

Winners

Making Work Pay tax credit - $400 for individuals, $800 for a couple filing jointly through 2011. This was already in place for 2009, 2010.

Middle Class Income Taxes – Extending the tax cuts enacted under Bush for families making less than $250,000 and individuals making less than $200,000.

Hiring Businesses – Budget would give companies a $5,000 tax credit for each new worker they hire in 2010. Businesses that increase wages or hours for their current workers in 2010 would be reimbursed for the extra Social Security payroll taxes they would pay. I question how helpful the second part is. Would this just make companies rethink a new hire since they could employ overtime for less money now? Some new hire decisions on the fringe may suffer.

Research Outfits – Make the research and experimentation tax credit permanent, saving businesses about $83 billion over the next decade.

Business Capital Outlays – Extend a provision allowing businesses buying equipment such as computers to accelerate depreciation through 2010, saving them $20 billion over the next decade.

Losers

High Income Earners – Raise the top two income tax rates for individuals, from 33 percent and 35 percent, to 36 percent and 39.6 percent, respectively. Result: nearly $1 trillion in higher taxes on couples making more than $250,000 and individuals making more than $200,000 by not renewing Bush-era tax cuts for them.

Investors - Increase the top capital gains tax rate from 15 percent to 20 percent for families making more than $250,000 a year and individuals making more than $200,000. This may have a gradual impact on stock market returns. With a higher capital gains rate, high net worth investors may shift to other assets with a more desirable net return profile.

Oil and Gas Companies & Multinationals - Increase taxes on U.S. companies with major overseas operations, and plans to increase taxes on oil and gas companies to the tune of about $39 Billion over the next decade. Also, restrict the ability of international companies to defer taxes on profits made overseas, raising about $26 billion over the next decade.

Charities – Since many charities rely on contributions from high income earners, the new limit on itemized tax deductions high earners can claim for charitable donations, mortgage interest and state and local taxes, will likely hurt.

Banks/Financials - Enact a “financial crisis responsibility fee” on large firms that may be “too big to fail”, raising $90 billion over the next decade.

Fund Managers – Change the way profits by investment fund managers are taxed, raising an additional $24 billion over the next decade.

http://www.darwinsfinance.com/obama-tax-budget

[Scurrilous]

2. K & R

:thumbsup:

[hfojvt]

3. nice, but why go above $150,000 for individuals?

An individual making $200,000 would pay another $1200 in taxes. Since there are 14.3 million filers in 2005 making over $200,000 and another 10.3 million making over $100,000 per year. If just 1 out of 10 of them are single, then that takes in at least $1.7 billion a year. Not that much in the big picture, but almost enough to pay for Liheap at $2.6 billion.

[scheming daemons]

4. Because $200K was the number he gave in his campaign promises

[hfojvt]

8. I assumed that was for household income

not individual income and I always thought it was too high. $250,000 for a couple should translate to $125,000 for an individual.

[scheming daemons]

9. No.... It's $200K for filing an individual return... $250K for joint-filers.

[Bigmack]

5. All very good... but....

The rightwingnut emails are already out there for our fact-challenged brethren. They've been told that if the tax cuts for the rich expire, the middle class will pay more in taxes.

Seen this in many emails and LTTE. The little alternate universe that those people live in is already set against removing that tax cut.

Lakoff is right... framing is everything, and the Repubs get out there first... every time.

[scheming daemons]

6. Which is why I bolded the phrase "if we play it right"

...

[Jack_DeLeon]

7. Sounds good to me...

It would suck if there the tax cuts expire for everyone.

I'm currently in the 10% bracket, it would hurt to pay 50% more taxes if I end up in the 15% bracket.