DemocracyNow!
December 14, 2010
"The Worse Off You Are, Your Taxes Increase": Journalist David Cay Johnston Slams Obama-GOP Tax Deal
The U.S. Senate is on the verge of approving President Obama’s controversial tax deal with Republicans. Under the deal, Obama agreed to extend the Bush-era tax cut for the wealthiest Americans and reduce the estate tax in return for a 13-month extension of jobless benefits and a handful of tax credits for low- and moderate-income Americans. We speak to Pulitzer Prize-winning investigative journalist David Cay Johnston, author of Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You with the Bill).
Excerpt of David Cay Johnston’s Interview with Amy Goodman On DN! from December 14, 2010
AMY GOODMAN: Well, David Cay Johnston, talk about the legislation that the Senate is poised to pass today.
DAVID CAY JOHNSTON: Well, you certainly cannot accuse the Republicans of leaving any money on the table. They got an extraordinarily good deal, that raises, I think, basic questions about the negotiating skills of the President. The bottom roughly 45 million families in America or households in America—and there are a little over 100 million households—they’re going to actually see their taxes go up. And that’s because President Obama’s Making Work Pay credit—$400 per person, $200 for a couple, and you got it even if you were retired or disabled—is going to go away. And it’s going to be replaced by this temporary two percent reduction in the payroll tax, the Social Security tax. Well, for about 45 million households who make less than $20,000 a year, this is a tax increase of $150 to $200 each. So, it certainly seems to me it’s reasonable going forward, given how the Republicans have emphasized they will never raise taxes on anyone and they are the party of tax cuts, that the Republicans have now become the party of tax increases on the poor.
At the top end, if you’re a two-income couple and you make a little over $100,000 each, so you pay the most Social Security tax, you didn’t get Obama’s Making Work Pay credit. You were regarded as too well off. But that Social Security payroll tax decrease is going to mean about a $4,200 tax cut for you. So, clearly, we could see the scheme of this is: the better off you are, the more help you get from the government; the worse off you are, your taxes go up.
AMY GOODMAN: You wrote a piece saying that President Obama should call their bluff. What do you think of what President Obama has done?
DAVID CAY JOHNSTON: Well, he certainly didn’t call their bluff. Remember that the Republicans are the minority party even in January. They cannot pass any legislation unless the Democrats go along with them. And there is an important issue to the plutocrats at the very top of the Republican Party who have been financing a lot of these policies through the people they donate to and put in office, and that’s the estate tax. If nothing was done, the estate tax was going to go back to a $1 million exemption and a 55 percent rate. That’s far more troubling to you if you’re a billionaire or a centimillionaire than a marginal change in your tax rate. So, I think what the President should have done was hung tough, said to the Republicans he would veto anything that didn’t meet his standards. If he had adjusted the increase—the area where taxes would go up on income to $1 million from a quarter of a million, that wouldn’t have been a big deal. And by the way, a very important point the news media keeps missing: that $250,000 was not income; it was taxable income, which is much smaller than total income.
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