Favorite

Politics, tax policy converge 

Seldom are the stars aligned so that good politics and good policy are exactly the same, but the Democrats and President Obama enjoy that lucky constellation in the fight to extend the Bush tax cuts.

But many Democrats are so paralyzed by the success of Republican and chamber of commerce propaganda that they can't exploit the first unalloyed political bonanza they have had in a year. Some of them, like Sen. Joe Lieberman and a timorous Arkansas Democrat or two, just go on and join the Republicans rather than correct them. It's easier and maybe safer, at least in Arkansas.

Obama's plan, supported by Democratic leadership in both houses, would extend the full tax cuts of the Bush era except the richest 1 or 2 percent of Americans, and the richest ones would still get bigger tax cuts than everyone else, just not as much as the Republicans want to give them.

That is not how the parties explain their differences, but it is a fact. Under the Obama plan, every American who earns up to $200,000 for individuals and $250,000 for couples would keep the full amount of the tax cuts next year and many of them would get additional tax benefits. Those earning above those thresholds, the richest 2 percent nationally and 1.5 percent in Arkansas, would get the same tax breaks as everyone else but for most of them it would amount on average to much more in dollar terms. That is because the rich would get the same middle-class tax cut as everyone else, just not the extra helping they got in the 2001 and 2003 tax cuts.

An example or two: Households that earn more than $1 million next year would get an average tax cut of $6,349. That is under the Obama plan, mind you, not Mitch McConnell's. McConnell's plan, which is backed by every Republican in Arkansas and Washington, would give them an average bonus of $104,000 next year. These are the taxpayers who already are the most pampered by the U. S. tax system. They pay an effective tax rate of under 18 percent, which is much less than average working families and less than all but the very poorest Americans.

What ought to be encouraging to Democrats is that the vast majority of Americans get it. Polls show that 70 to 75 percent favor extending the full tax cuts except for the richest and least needy families. The figures may not be that good in Arkansas, where every policy initiative by Obama is filtered through a conservative lens. That is, Obama and the Democrats want to raise taxes and the budget deficit, Republicans want to cut taxes and the deficit.

There may never have been a major debate where theory and facts were all on one side as they are on the extension of the Bush tax cuts, which are scheduled by law — Bush's law — to end Dec. 31.

What about the deficit, the horror that is driving voter rage this year? The Republican plan to extend all the tax cuts forever would add $4 trillion to the national debt over the next decade. The Obama plan would cut the deficits by more than $700 billion over that period — not nearly enough but the first step in reversing the slide from balanced budgets as far as the eye could see to deepwater deficits that began with the Bush tax and spending policies in 2001.

McConnell & Co. and the Republican candidates who parrot them everywhere, including Arkansas, offer two arguments: Restoring something close to the 2001 tax rates for the richest people will hurt struggling small businesses and force them to reduce workers, and taking more taxes from anyone, even multimillionaires, when the economy is growing so slowly is terrible strategy.

The Obama tax plan would have virtually no negative effect on small businesses. Only 3 percent of small business owners would have their taxes increased and nearly all of those are people in the $250,000 to $500,000 tax bracket, as Rep. John Boehner, the House Republican leader, acknowledged Sunday. Those people would pay an average of $400 a year in extra taxes, hardly enough to make them start laying off people. And businesses pay income taxes not on gross incomes but on profits, what is left after payroll and expenses. It would have no effect on hiring or firing.

What history can they cite that modest taxes on the richest Americans hurt the economy? President Clinton raised tax rates on the wealthy slightly in 1993 when the country was struggling out of a recession. Republicans predicted the next depression. It produced the first string of balanced budgets in modern times and the longest and most robust period of economic growth and the best jobs record in history. And what happened when Bush cut taxes on the rich, not once but three times? It led to the worst jobs and general economic record for any eight years since the Great Depression.

You can take the same analogies as far back as the enactment of the income tax nearly a century ago. Unless they are confiscatory, taxes on people of great wealth do not stunt demand like they do for the middle class, which spends, not saves, when taxes are cut. And remember, even when the top marginal tax rate of 2001 is restored it will still be close to the lowest since the 1920s.

Don't get me started on the restoration of a small estate tax, another part of the Obama plan. A grand total of 82 estates in Arkansas in 2007 and 83 in 2008, the richest three-tenths of one percent of the thousands of estates left by deaths, owed even a dime of taxes on the largely untaxed inherited wealth. That is the infamous "death tax."

If you were Blanche Lincoln, Chad Causey, Joyce Elliott, David Whitaker or Mike Ross, wouldn't you love to take the field against those dour Republican candidates on exactly this issue and maybe nothing else?

Favorite

From the ArkTimes store

Comments

Showing 1-1 of 1

Add a comment

 
Subscribe to this thread:
Showing 1-1 of 1

Add a comment

More by Ernest Dumas

  • Trusting

    It is a Fourth of July ritual to appraise where we are in meeting the Declaration of Independence's promise to institute a government that would, unlike King George, secure human rights equally for everyone who sets foot on American soil.
    • Jul 6, 2017
  • Obamascare

    Republicans at long last may be about to see their most fervent wishes and wildest predictions materialize — millions of people losing their medical and hospital coverage, unaffordable insurance, lost jobs, a Medicare financial crisis, mushrooming federal budget deficits and fiscal crises across state governments.
    • Jun 22, 2017
  • Ethics upended

    Every week, Donald Trump finds another way to upend conventional ethics in government and politics. Here's one that has been in the making since the campaign but is reaching maturity in the Russian investigation: He is turning the heroes of government scandals into the villains.
    • Jun 15, 2017
  • More »

Readers also liked…

  • AEC dumps ALEC

    No matter which side of the battle over global warming you're on, that was blockbuster news last week. No, not the signing of the climate-change treaty that commits all of Earth's 195 nations to lowering their greenhouse-gas emissions and slowing the heating of the planet, but American Electric Power's announcement that it would no longer underwrite efforts to block renewable energy or federal smokestack controls in the United States.
    • Dec 17, 2015
  • No tax help for Trump

    The big conundrum is supposed to be why Donald Trump does so well among white working-class people, particularly men, who do not have a college education.
    • Aug 11, 2016
  • Dollars and degrees

    Governor Hutchinson says a high graduation rate (ours is about the lowest) and a larger quotient of college graduates in the population are critical to economic development. Every few months there is another, but old, key to unlocking growth.
    • Aug 25, 2016

Most Shared

  • So much for a school settlement in Pulaski County

    The Arkansas Democrat-Gazette's Cynthia Howell got the scoop on what appears to be coming upheaval in the Pulaski County School District along with the likely end of any chance of a speedy resolution of school desegregation issues in Pulaski County.
  • Riverfest calls it quits

    The board of directors of Riverfest, Arkansas's largest and longest running music festival, announced today that the festival will no longer be held. Riverfest celebrated itsĀ 40th anniversary in June. A press release blamed competition from other festivals and the rising cost of performers fees for the decision.
  • Football for UA Little Rock

    Andrew Rogerson, the new chancellor at UA Little Rock, has decided to study the cost of starting a major college football team on campus (plus a marching band). Technically, it would be a revival of football, dropped more than 60 years ago when the school was a junior college.
  • Turn to baseball

    When the world threatens to get you down, there is always baseball — an absorbing refuge, an alternate reality entirely unto itself.

Latest in Ernest Dumas

  • The ACA can be fixed

    Majority Leader Mitch McConnell threatened his 51 disciples in the Senate and his party with the gravest injury imaginable.
    • Jul 13, 2017
  • Trusting

    It is a Fourth of July ritual to appraise where we are in meeting the Declaration of Independence's promise to institute a government that would, unlike King George, secure human rights equally for everyone who sets foot on American soil.
    • Jul 6, 2017
  • Obamascare

    Republicans at long last may be about to see their most fervent wishes and wildest predictions materialize — millions of people losing their medical and hospital coverage, unaffordable insurance, lost jobs, a Medicare financial crisis, mushrooming federal budget deficits and fiscal crises across state governments.
    • Jun 22, 2017
  • More »

Event Calendar

« »

July

S M T W T F S
  1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31  

Most Viewed

  • Another Jesus

    If you follow the logic of Jason Rapert and his supporters, God is very pleased so many have donated money to rebuild a giant stone slab with some rules on it. A few minutes on Rapert's Facebook page (if he hasn't blocked you yet) also shows his supporters believe that Jesus wants us to lock up more people in prison, close our borders to those in need and let poor Americans fend for themselves for food and health care.
  • Pay attention

    If anyone thinks that a crisis with the Power Ultra Lounge shooting, then he hasn't been paying attention to Little Rock.
  • Turn to baseball

    When the world threatens to get you down, there is always baseball — an absorbing refuge, an alternate reality entirely unto itself.

Most Recent Comments

  • Re: Turn to baseball

    • leave the rules the way they are. teach players how to hit, don't legislate no…

    • on July 20, 2017
  • Re: Pay attention

    • The beautiful new 12th St. Precinct is full of empty rooms: Why not create a…

    • on July 20, 2017
  • Re: Another Jesus

    • Religious charlatans have been around for centuries. They prey on the weak, sick, poorly educated…

    • on July 20, 2017
 

© 2017 Arkansas Times | 201 East Markham, Suite 200, Little Rock, AR 72201
Powered by Foundation