tax cuts for rich people

[hfojvt]

I often see it quoted, (and probably sometimes do it myself) that the Bush tax cuts for the rich are $700 billion over the next ten years.

However, that number is actually way too low. So I propose replacing it with a new number. A more accurate number of $1.9 trillion. Which I will calculate below.

First, to compare 3 proposals. Using the rates from here http://journals.democraticunderground.com/hfojvt/103

Proposal O - reverse Bush tax cuts for incomes over $200,000 which is what Obama campaigned on

Proposal C - reverse Bush tax cuts for incomes over $100,000 which would be a compromise position

Proposal I - reverse Bush tax cuts for incomes over $78,500 which would be more ideal if only upper middle class voters were not so selfish

Under proposal O, people making over $200,000 a year still get tax cuts on their first $200,000 in income. As such, they still get $24 billion in tax cuts every year, because there were 3.57 million filers with income over $200,000 in 2005 (and there are probably more now). Call them group R.

There were 10.8 million filers making between $100,000 and $200,000 and their average income was $132,000. They get about $40 billion a year in tax cuts. Call them group r

There were 10.4 million filers making between $75,000 and $100,000 and their average income was $86,000. They get about $20 billion a year in tax cuts. Call them group UM.

Together those three groups are only 18.4% of all taxpayers, but they got 60% of the income in 2005.

That's $84 billion per year in tax cuts going to those groups. Or $900 billion in revenue over ten years from those groups if the Bush tax cuts had been allowed to expire. But doing that would also increase taxes for the working class. So instead I would compare it to the other proposals, like so (numbers in billions)

Group * Prop C * Prop I
R **** 12.75 *** 1.9
r **** 8.7 **** 5.7
UM **** 0 **** 1.86
total ** 21.4 *** 9.4

So with a rather modest tax increase of $179 on the upper middle class and $1,339 on the little rich brings in another $30 billion a year. Never mind that it is crazy to ask people making $130,000 to pay another $1200 in taxes. Apparently Democrats now would rather increase taxes on people making less than $20,000 a year and to cut funding from LIHEAP and VAWA, which Obama has done and proposes to do.

However, that is only a small drop in the bucket. The big deal comes from the preferential treatment of dividends and capital gains which are only taxed at 15%. As I wrote here http://journals.democraticunderground.com/hfojvt/81 that tax break cost $91 billion in 2005 and all but $5 billion of that money went to people with incomes over $100,000, including $26 billion a year in tax breaks for people with incomes over $10,000,000.

Think of that!! $26 billion going to people with incomes over $10,000,000. But our Democratic President, the man from hope and change, does not propose to balance the budget by ending those tax breaks. Instead he proposes to cut $2.5 billion from aid to some of the poorest in this country. Sacrifices are required to balance the budget and people who cannot afford heat are being asked to sacrifice instead of asking multi-millionaires to sacrifice.

So again, a modest tax increase of $349 for the upper middle class would bring in revenue of $90 billion per year, with over 50% of that money coming from people making over $500,000 a year.

So call the total another $100 billion per year in tax cuts to the rich and then add 3% interest for the next ten years and I get $1.2 trillion over ten years. So the real number should be $1.9 trillion in tax cuts going to the rich.

Before one dime is cut from the budget in the name of the national debt, before one minute is added to the retirement age, those trillions in tax cuts should be taken back. Mr. President, it is long past time to put the people ahead of the millionaires.

[mike_c]

1. trillions for the rich, cold and dark for the poor and elderly....

Thanks, Obama. Not.

[hfojvt]

7. I forgot about that $26 billion until I started writing this post

It would be nice if some other Democratic leaders would bring it up, or if Bernie would.

Then too, there is the equivalent of $18.3 billion that goes to the richest 400 in America, but some of that comes from Clinton tax cuts too. http://journals.democraticunderground.com/hfojvt/123

[cutlassmama]

2. K&R

[Hannah Bell]

3. kr

[truedelphi]

4. I think the seven hundred billion figure was for the first few years.

Keith Olberman used to quote two trillion for the next nine or ten years.

And so you are only one tenth of a trillion bucks off. (One Hundred Billion bucks off)

[hfojvt]

6. Hey now, I did the math

But I wanted to make sure I was underestimating.

CBPP and CTJ may have more accurate numbers that Keith was using because they have more detailed modelling programs.

But the $700 billion that is widely used is for ten years. But I think the recent compromise for two years also cost about $700 billion.

And if you assume that that steaming pile of dreck goes for another ten years then that will create different numbers. If the payroll tax cut gets extended that would be another $1.3 trillion over ten years, but "only" half of that amount would goto the rich and upper middle class.

[soryang]

5. Cutting taxes on the rich reduces business investment and....

employment and increases hoarding and speculation, hornbook tax law 101.

[hfojvt]

8. CTJ has it as $147 billion for one year

http://www.ctj.org/pdf/taxcompromise2010.pdf

According to the table on page 4, 47.1% of the income tax and estate tax cuts goto the top 5%, and that the cost for one year is $312 billion. That would make the ten year cost $1.7 trillion.

However, I considered that the money going to those with incomes from $88,000 - $177,000 as rich as well, being part of the upper middle class. CTJ says that their tax cut is another $71 billion each year. That would make the total $218 billion per year.

But there is no proposal that would reverse all of that. The lowest tax rate was cut from 15% to 10% and we all want to keep that cut, even though rich people save $400 with that cut too.

Bottom line is that I think CTJ confirms my own calculations.

[hfojvt]

9. as long as I am kicking the Kucinich thread

might as well run my own up the flagpole one more time.

At the very least, I might get the Italian salute.