Friday, December 03, 2010

The Republican Media- No. 25

I've done it, repeatedly. ABC News has done it (from February):

The White House is seeking to make permanent the tax cuts introduced by the Bush administration in 2001 and 2003, for individuals making less than $200,000 per year and families earning under $250,000....

Yet at the same time, those in the tax bracket above that limit -- higher than $200,000 for individuals and $250,000 for families -- will see an automatic decrease in their paychecks as the tax cuts for that income group expire at the end of this year. The tax rates will rise for individuals, from 33 percent to 36 percent and for couples, from 35 percent to 36 percent.

CBS News, even in a poll question (article, December 2), has done it



Summarizing, CBS maintains "Just 26 percent of Americans say they support extending the cuts for all Americans, even those earning above the $250,000 level, which is the GOP proposal. Another 14 percent of Americans say the cuts should expire for all Americans."

But assuming (as has always been inevitable) the tax cuts for incomes below $250,000 (households) and $200,000 (individuals) are extended, everyone gets a tax cut. The relatively affluent, in fact, get a larger absolute cut than do others, as the Center for Budget and Policy Priorities graphically demonstrates:






The lower tax rate is not on the lower income-earner but on the lower income. An individual with an income above $200,000 (or a household with income above $250,000) gains the full, maximum benefit from the Democratic tax proposal- all the cut for income at or below $200,000, at which point no additional benefit is gained. The additional tax is at the margin- for the income above the threshold.Hence, everyone wins (or at least gets a lower rate)! And if you bring in $200,000, you win as much as the billionaire, and more than he/she who earns $199,000, or $100,000, or $50,000.

When the middle-class tax cuts are extended, the lowest taxable rate will be 10%. The highest rate does not cut in at $200,000.01, because, the CBPP explains

the income tax operates as a staircase, not an elevator. This means that people who make $1 million a year do not go directly to the top “floor” (i.e., to the top tax rate, currently 35 percent) but instead take the “stairs,” paying tax on the first increment of taxable income at 10 percent, paying tax on the next increment at 15 percent, and so on until reaching the top rate.

Make all the money you want (and can); even, say $300 billion. You'll still be far better off than the middle class- and even the millionaire.

This is of more than academic- or blogging- interest. Among conservative- not even far-right, but mere conservative- talk show hosts and politicians, the cry is: everyone deserves a tax cut! Everyone does, however, receive a pay cut under the Democratic plan. It is only some income- income above $200,000/$250,000- that does not receive a pay cut. It should be the policy of the federal government to lend a helping hand (as both Republicans and Democrats believe it should, in the matter of tax cuts) to people- not to income. (This, although the GOP Supreme Court believes corporations have the same speech rights as do individuals- take that, original intent!)

When the mainstream media misleadingly implies that under one plan only the middle class gets a tax cut (such as here, here, here, and here) it parrots the GOP line that President Obama needs to veer over to the Repub side of the argument in order to compromise. But, as described (accurately) by the CBPP, the Democratic plan is the compromise, with everyone getting a cut.

With the Democratic Party and the middle class losing this message war to the GOP and its wealthy patrons, only about 1/4 (26%, to be exact) of Americans wants tax cuts extended to upper incomes, according to this month's CBS poll. That, at least, demonstrates the wisdom of an American people of whom Rush Limbaugh and some others on the right are so contemptuous.






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