Tuesday, September 08, 2009

Bush tax cuts versus Obamacare

The introduction to this report from the respected Citizens for Tax Justice in Washington says it all:

"Newly revised estimates from Citizens for Tax Justice show that the Bush tax cuts cost almost $2.5 trillion over the decade after they were first enacted (2001-2010). Preliminary estimates from the non-partisan Congressional Budget Office show that the House Democrats’ health care reform legislation is projected to cost $1 trillion over the decade after it would be enacted (2010-2019)."

And you won't be surprised to hear that

"many of the lawmakers who argue that the health care reform legislation is “too costly” are the same lawmakers who supported the Bush tax cuts. Their own voting record demonstrates that health care reform is not a matter of costs, but a matter of priorities."

Or that

"In 2010, when all the Bush tax cuts are finally phased in, a staggering 52.5 percent of the benefits will go to the richest 5 percent of taxpayers."

And CTJ has already noted that

"Under the House bills, roughly half of the costs would be offset with savings in our existing health care programs, while the other half would be offset with a surcharge on the incomes of wealthy taxpayers. A previous analysis by CTJ has shown that this surcharge is a reasonable approach to financing health care reform and would only affect 1.3 percent of taxpayers. Another CTJ analysis concludes that the surcharge will likely have no significant impact on small businesses, despite some of the misinformation that has surrounded this topic."



Anonymous Anonymous said...

"In 2010, when all the Bush tax cuts are finally phased in, a staggering 52.5 percent of the benefits will go to the richest 5 percent of taxpayers."

And the richest 5% of income earners paid an even more staggering 60.63% of all federal income tax revenues. So they are getting jacked by the Bush tax cuts.

10:57 am  
Anonymous TJN said...

Hmm, yes, statistics can be misleading, can't they?

In fact, the clue to your misunderstanding is in the words "all federal income tax revenues." You see, the wealthiest increasingly don't pay income taxes. They shift their wealth so that they get to pay things like capital gains taxes, at a much lower rate. This statistic is one of the great deceptions in the tax debate. See here, for an illustration.
Now I don't have the top 5% data to hand, but I do have the top 1% data. According to IRS data in 2009, the richest one percent of Americans paid over 40.4 percent of all federal income taxes. The Tax foundation boomed that this “clearly debunks the conventional Beltway rhetoric that the ‘rich’ are not paying their fair share of taxes” .

Now let’s look at the real story. In this period, the richest 1% Americans owned almost half of all the stocks, bonds, cash and other financial assets in the country – and rising. This is a story about stratospheric wealth and inequality. They pay so much tax because they’re so stupefyingly rich. For the richest one percent, in fact, the real tax rate is only a whisker higher than the 30 percent percent average for the country as a whole. And let's face it: the rich hide more of their wealth offshore, so their real tax rates are usually substantially lower than their declared tax rates. An IRS study in October 2008 found that taxpayers earning true income between $500,000 and $1 million a year understated their adjusted gross incomes by 21% overall in 2001, compared to just 8% for those earning $50,000 to $100,000.

As the tax writer David Cay Johnston notes in his book Perfectly Legal: “The sound bites of politicians in both parties bear as much connection to the reality of the tax system as my third grandson’s belief in Santa.”

12:53 am  

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