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Wednesday, December 8, 2010

Obama-GOP Tax Deal Hands $360K to Richest 0.1%

Harvard's Dr. Mankiw mostly likes the tax deal between President Obama and the still-minority Republicans. He also points to some useful number-crunching from the Tax Policy Center that breaks down who gets what from extending the Bush tax cuts for the next two years. Compared with current law—i.e., the taxes everyone would pay if we let all of the deficit-busting Bush tax cuts expire at the end of this year, as originally intended—the top 0.1% of income earners each get $360,469 more in their pockets each year.

$360,469. That's enough to cover the salaries of Kristi Noem and John Thune. Normal annual pay for members of Congress: $174,000.

The way I calculate it, the 259 richest Americans could take their gains from this tax deal and buy every member of Congress.

But they seem to have already done that.

Or let's slice that locally. About 400,000 South Dakotans file federal income tax returns. 0.1% of them would be 400 taxpayers. (South Dakota's own Fortune 400—that is a list I'd love to see.) 400 × $360,000 = $144,000,000.

$144 million more dollars staying in the richest South Dakotans' pockets... at the same time that Governor Rounds wants to cut $23 million from K-12 education. Hey Dennis! I think we just found our replacement for the stimulus dollars to fix the state budget deficit!


  1. Cory,

    I agree that the super-wealthy do not need tax cuts, but, the "still-minority" Republicans are going to become the "majority" next month, so, compromise was needed or we would have all faced higher taxes. Working class Americans can not afford higher taxes in a time of rising prices, if you have not noticed going to the local grocery store lately or filled up your gas tank. The President was correct we can not afford to play partisan games even one more year with the economic situation at dire straits. I'm sure you realize this and by the way, unemployment benefits will be extended another year. In the meantime, what will the President and Congress do to rebuild our industry to create jobs?

  2. I can certainly see the argument for passing this new $900-billion stimulus package. I even agree that we shouldn't be playing partisan games. But why, then, do the Republicans get to play (and win) their partisan game?

    More evidence that this is a partisan game by the GOP: when we passed a $787-billion two-year stimulus package that included lots of tax cuts and was 100% deficit spending, they all voted against it. What has changed to allow the GOP to support an even bigger, all-deficit stimulus package?

  3. Last I heard from Harry Reid, one of the first orders of business in the next Senate will be to change the rules on the Filibuster. It's just ridiculous that both of the measures prior to this new "deal" were killed because the Senate could only muster 54 votes instead of 60. Ridiculous.

    No wonder people are so frustrated with Congress.


  4. Q: Why do the Republicans get to play (and win) their partisan game?

    A: Because President Obama didn't have the gall to stand up to them.

    Q: What has changed to allow the GOP to support an even bigger, all-deficit stimulus package?

    A: Nothing has changed. Tweedle-Dee has yielded to Tweedle-Dum, that's all.

  5. Harry Reid might want to think twice before he pushes for eliminating the filibuster. The Dems might want that option if they lose the Senate majority in January 2013.

  6. Stan, the Senate can change its rules whenever a new class comes in. Now that we know the extent to which the GOP is willing to abuse the privilege, it would be irresponsible to allow them to continue. If that means the Dems won't have the same temptation if and when they become a minority, so be it. I think the overarching principle is that We The People want a functional government, not a dis-functional one.


  7. Charlie Johnson12/08/2010 6:08 PM

    So when it is proper to prescribe a cure when our diagnosis indicates the cure is the cause of the illness. It is insane to go down this path for another two years to follow what the last eight years have wrath. Cut the subsidies(start with federal crop insurance), raise the taxes, balance the budget, make the hard decision, be leaders, and quit being political pimps.

  8. Charlie, you sound like the Tea Party... or at least what the Tea Party would sound like if it were a real movement with principles to stick to rather than just a ball of incoherent GOP-manufactured rage.

  9. I would have preferred to see:

    (1) No change to the Social Security payroll tax (that is to say, no "payroll tax holiday")

    (2) Extension of all the Bush tax cuts for two years, except for those making $500,000 a year or more ($1,000,000 for married couples)

    (3) The estate tax modification that has been proposed

    (4) Extension of unemployment benefits only if applicants demonstrate on a monthly basis that they're actively looking for work

  10. Stan, I'd love for the two of us to be in Congress so we could negotiate. I'd bring Robert Reich's counterproposal to the table:

    "The solution is to reorganize the economy so the benefits of growth are more widely shared. Exempt the first $20,000 of income from payroll taxes, and apply payroll taxes to incomes over $250,000. Extend Medicare to all. Extend the Earned Income Tax Credit all the way up through families earning $50,000. Make higher education free to families that now can’t afford it. Rehire teachers. Repair and rebuild our infrastructure. Create a new WPA to put the unemployed back to work."

    One language quibble: Stan, you refer to extending the Bush tax cuts for everyone except those making over $500K. It's worth noting that pre-cave-in, President Obama was advocating extending tax cuts for everyone on their first $250K. That would have been more fair to high-income earners than your plan, wouldn't it?

  11. Cory, you are right on the wording details. I'm okay with Obama's pre-cave-in proposal, although I'd rather see the higher cutoff.

    Reich's proposals sound pretty good to me.

    All this said, we must make cuts as well as raise taxes. One or the other, all by itself, won't work.

    We must formulate a long-term solution to the deficit problem. No "tax holidays" or "temporary cuts." People need and want some long-term certainty.


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