Politics Behind the Tax Code
http://thedianerehmshow.org/shows/2011-10-17/politics-behind-tax-code
Over the weekend the "Occupy Wall Street" movement went global with protests in Europe, Africa and Asia. One of their main demands was: “tax the rich more”. It’s not just the protesters who think that would be a good idea. So too does billionaire businessman Warren Buffett, and many Democrats, including President Obama. But Herman Cain, the leading Republican presidential candidate, wants lower taxes across the board. His party argues that singling out high income earners is “class warfare”. We discuss the how the tax code debate has become a clash over America’s fundamental values.
Guests
Kevin Hassett
director, economic policy studies, American Enterprise Institute.
Jared Bernstein
senior fellow, Center on Budget and Policy Priorities; former chief economist and economic policy adviser for Vice President Biden.
Roberton Williams
principal research associate, the Tax Policy Center, a joint venture of the Urban Institute and the Brookings Institution.
Sylvia Poggioli
senior European correspondent, NPR
Mike Dorning
White House correspondent, Bloomberg
Comments
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I think it would be a sobering experience to the "middle class" if they knew they were part of the problem and not an answer to the solution.
Tax codes and right offs have become another entitlement. The fact that somewhere near 50% of tax payers pay no federal income tax goes unnoticed by the typical taxpayer. Government in all it's class warfare glory has successfully hidden the fact that all of us are over taxed to achieve the unobtainable. Government with the best intentions cannot reach into every private matter and right the wrongs. At some point personal responsibility must come into play.
Until we collectively understand there will be losers regardless of best intentions, we are crippled to move forward.
Regarding the 50% non-federally-income-taxed "figure":
In a typical year, the figure is 35-40%. It was 51% in 2009, due to the increase in low-level incomes, tax credits like Making Work Pay, and nontaxed unemployment, which have expired. And those figures ignore the payroll tax many pay.
Brookings showed only about 14% paid neither federal nor payroll tax even in '09. And latest CBO data shows the poorest 1/5 paid 4% of their incomes to federal tax in 2007. That is hardly an insignificant amount to that group.
An analysis of the tax systems in all 50 states finds that nearly every state and local tax system in the US takes more from middle and low income families. The poorest 20% paid (at 11%) more than double that of the top 1% (who paid 5%), so they derive little or no benefit from the federal offset. Source: Institute on Taxation and Economic Policy (a non-partisan think tank)
http://www.itepnet.org/whopays3.pdf
In our extreme form of capitalism, the very wealthy are already the main beneficiaries - both of our democracy, and of our tax loopholes and breaks - not the least being their historic 15% rate on capital gains. While reporting only about a third of income..
But this is fairly elementary to the nations with happier people, better education, better economic outlooks, and far more progressive tax systems.
It's clear who are making the sacrifices; the rapidly growing inequity speaks for itself.
I'm really of the misinformation thrown out by the '50% of US citizens do not pay any income tax' group because they fail to add the following:
1. At least 9% of these individuals are currently unemployed and there's probably another 5% who have given up trying to find employed; some of that 5% elected to retire early & felt pushed into receiving early Social Security benefits.
2. 14.3% of Americans, a family of four earning less then $21, 954.
3. All of those employed, among the employed in the lower 50%, pay a 20% payroll TAX.
4. All of these individuals, even the unemployed, pay sales taxes, state income taxes, transportation taxes, fees, among other taxes.
I have an idea for those of you who are so envious of the lower 50%. Why don't you trade places with them for a year and come back and write your 'it's not fair that the working poor, unemployed, elderly, and pensioners aren't paying 'federal income tax'. I'm sure that you would stop your cold, heartless, and selfish behavior. When my husband lost his job and our income went down to $55,000 a year in a high income tax, I still paid federal & state income tax, sales taxes and the 20% payroll tax while I listened to employed & affluent friends/family complain about their 'high taxes' while buying new cars, houses, vacations, and paying cash for their child's college costs. Get a heart.
The median income has dropped by 7% over the last 10 years. Better way to say it.
Thereis a myth being formed that the justice and accountability marches and protest around the world started on Wall Street. Such a myth. The protest moved from Tunisia, Egypt, Greece, Italy etc to the US.
Europe and the middle east protesters led...Occupy Wall Street folks followed.
The other myth I heard repeated in Dayton Ohio at the Occupy Wall Street gathering that these were the largest protest around the world. Even though the majority of the US MSM press basically ignored the anti invasion of Iraq marches were the largest in recorded history. Millions marched before the invasion....30 million world wide.
At least the OCW protest are being covered by the MSM around the world
Would your guest please discuss that during Clintons administration taxes on capital gains and dividends dropped from 28% to 20%. And then during Bush's (43) administration taxes on capital gains and dividends from 20% to 15%. Is this is correct.... Can they explain why working class incomes are taxed at 30% and money making money is taxed at 15%?
Please explain
Please ask Mr. Hassett when the Dow will reach 36,000 as he forecast it would in 1999. Given this shockingly poor piece of economic analysis, how seriously can we really take anything else he says? Why doesn't this show and others remind listeners how these alleged "experts" have done with their past forecasts?
Millionaire tax? 999, ha... What a Joke!
They got BAILED OUT...We got SOLD OUT...
It's about inequality you stooges....Our Country has become a kleptocratic nightmare and until we can give the power back to the People, all talk about taxing the rich and 999 is beside the point...
but NPR is Main Stream Media, who are controlled by the people we are against.
Whether or not the gov increases the taxes or not is just a tax on success. Be sure to suceed just not too much...
The real issue I have though is calling this their "fair share".
If something is not fair to everyone it is not fair to anyone. It is as simple as that. If it is not fair for someone making 20k a year to pay 30% why woudl it be fair for others to pay that?
Herman Cain's plan could result in some professionals such as lawyers and owners of consulting companies paying tax rates in excess of 100% since wages are not deductible.
On Saturday I attended the Occupy Wall Street movement in Dayton Ohio. I stopped counting the crowd at 300 people. Yet there was nothing about this gathering made up of union members, retired teachers, students, unemployed some by choice and some by circumstance. I spoke with incredibly articulate participants and some not so much. Clearly the common thread was Justice and accountability for those who brought the US economy to the brink of bankruptcy as well as a demand for fair paying jobs, access to health care etc.
But in Sunday's Dayton Daily News not a mention about the largest crowd that has turned up yet. No interviews with the protesters there.
I talked with a retired Cargill worker who was 61 and talked about why his son is making an hourly wage that he made 20 years ago. He talked about how during the 90's the new Cargill executives moving in demanded larger incomes, struck out the automatic cost of living increases in Cargill workers ipaychecks and raised their incomes by 10%.
I talked with a laid off teacher who was working two minimum wage jobs to supplement her income.
I talked with one fellow who had been laid off from a GM plant in Dayton who had applied for a job at Wal Mart.
There were also young people who had chosen not to work and those who could not find work after entering deep debt for college.
All kinds of folks some incredibly articulate and others not so much.
But not one person was asking for a free ride. Not one. People demanding a level playing field. Is that too much to ask?
The overwhelming theme was justice and accountability. But guess what the largest protest in Dayton and the Dayton Daily News was not there.
The Conservatives with corporate financial support have waged class warfare on the poor and the middle class for the last two decades! Why don't the media or progressives pick up on this?
kathleen: And yet the mainstream media insists that OWS has no coherent message. They had no trouble presenting the T-party message as : "We don't want to pay taxes, but we do want to continue our government perks."
Right now the courageous campers have one implicit communication they wish to send out, "Hey, you people watching at home. You are being deceived and cheated, and we can't understand why you are so complacent about it."
In a nutshell, what they mean to show us is that democracy and extreme individualism are incompatible. Everyone has to make small sacrifices (according to their means and ability) for society to work.
I am sick of the "Oligarch's Mic" being amplified on this site.
It says,"I got mine, or maybe Big Daddy gonna give me it soon, and to Hell with the rest of you." (Big Daddy is a tease.) Like Elizabeth Warren observed, "No one ever becomes wealthy on his own effort alone. The rich are more dependent on the conventions of civilization and the taxpayer provided infrastructure than the poor or working class. Their hubris is pushing us all toward disaster."
The income figure of $250,000 is actually taxable income, not gross income. Taxable income is Gross Income less deductions to arrive at taxable income. Therefore we are really talking about income earners of 350,000 or more before this higher tax rate kicks in.
For a detailed analysi of the Cain 9-9-9 plan go to http://ssrn.com/abstract=1941800.
The analysis was prepared by Edward Kleinbard of the University of Southern California Center in Law, Economics and organization
The OECD figures, and others, consistently and unambiguously disclose an America with a normative distribution of income (GINI Index 45, international average 45, China 49, Switzerland 39), but with a quite progressive tax system (the OECD average is around 25%)
I have no problem with increasing taxes, on regular income of top earners, because we need the money. I have a huge problem with calling that "fairer". The top 10% now shoulder 45% of the burden. That may be necessary, and it may be necessary to ask for more, but it certainly can't be called fair.
You just watch. The Bush tax cuts will run out and suddenly people will be saying , revenue crisis! What crisis?
When we talk about 'fairness' in how much various people in our society should pay in taxes, why don't we look at real dollars as opposed to tax rate? Don't we all get approximately the same benefit from the things government provides -- infrastructure, defense, etc -- in which case, couldn't one argue conceptually that we all owe an equal dollar amount? In this case, a lower tax rate applied to the wealthy, which may yield a per person real dollar contribution that equals a multiple of what a higher rate paid by a lower income person contributes the operation of our government, seems to be reasonable.
Aren't we empowering the rich and large companies by buying their goods and services ? As I see it, Americans have contributed to the current economic problem by for years buying cheap goods that are made overseas - our money is going to Asia as well as our jobs - seems that Americans need to consider "just saying no" to these products to reach big business and our politicians. The founding mothers boycotted British goods. Kathy in Carlise
My Government/Civics students pointed out this: in the tri-state region where we live, sales taxes range from 6-7%. Many people in the area already struggle with this, as our cost of living is extremely low (which is great, but it does mean that incomes are also lower than average). There is no way that, if a Herman Cain-style 999 plan is enacted, the state and local governments will drop their income or sales taxes. We would have more than doubled the sales tax on people who already can't afford what we have.
So, why are none of the candidates talking about the possibility of a basic sales tax instead of a national income tax? Corporations, individuals, everyone pays a national sales tax and income tax is eliminated on the national level.
If lowering taxes were responsible for creating jobs, then why is it that employment rates were higher in past years when tax rates were more progressive--exactly the point of your current speaker. We've lost jobs since the Bush tax cuts were past. Also, middle class people spend more of their income and thus contribute more to economic demand. Without a strong middle class, the economy cannot recover.
I've been to quite a few protests, I have never seen any violence i.e. breaking windows,
torching cars etc, that wasn't the work of agents provocateurs in order to justify
violent repression of the protest. Most demonstrators know that the police will
gladly exercise undue force. I think this can be adequately shown by the recent
example of the NYPD officer pepper spraying a couple of women who were not
breaking the law, simply talking among themselves. There are plenty of other
examples.
I always love listening to your show, and today I am motivated to send in my comment in regards to taxation and the plans to amend tax codes.
I believe that we should take a giant step back from the plans presented and evaluate the percentage of citizens living in the United States that are actually paying taxes, and the percentage of citizens that are paying NO taxes, or not their fair share. I know of, and I assume that many people would agree that they also know of many people that are "under the radar" so to speak. There are people that are working and earning very good incomes, mostly based on cash for labor, and not disclosing this income or paying taxes on the income. This is not something that is discussed, and I believe it is time that we find a method of requiring those that are beating the system to pay their fair share. Thank you again for a very interesting show.
While there may be claims of "class warfare" we are not close to true class warfare and I doubt that the upper class or super rich would have the stomach for it. Look to the French or Russian revolutions and what happened to the rich then.
The top one precent need to at least show that they are making an effort to be more fair. Once the field appears more level and less of an insurmountable cliff, an honnest discussion of taxes can begin.
I'd like to hear the guests comment on the viability of the "Ben and Jerry's" economic plan: those at the top can earn as much as they want as long as it isn't more than 7 times that paid those at the bottom. I'd be willing to go to 10 times. Wouldn't that take care of all poverty and hunger? And it would certainly be fair. It's the obscene amounts paid those at the top, who seem to think they deserve it, that throws everything out of balance.
The rich are complaining that they already pay 30% of their income in taxes.
BUT - after their taxes are all paid they STILL HAVE MILLIONS LEFT for their use. We pay our taxes and have only $40,000 left.
Using a percentage to claim that they (the wealthy) are already paying enough taxes does not give a clear picture. The bottom line should be HOW MUCH MONEY DOES A PERSON HAVE LEFT AFTER THEIR TAXES ARE PAID.
Most of our congress members are millionaires. What I want to know is how much each of them makes off of capital gains and dividends being taxed at 15%? How many of them voted for the reduction of taxes on capital gains during the Clinton administration from 28% to 20%. And then voted again to reduce these taxes on capital gains and dividends from 20% to 15% during the Bush administration?
Let's examine our congressional members profits off of these reduced taxes on money making money. Talk about corruption at close to the top of the follow the money chain.
Spending is the problem!
The federal government is spending more per household than ever before. Since 1965, spending per household has grown by nearly 162 percent, from $11,431 in 1965 to $29,401 in 2010. From 2010 to 2021, it is projected to rise to $35,773, a 22 percent increase.
INFLATION-ADJUSTED DOLLARS (2010)
http://www.heritage.org/budgetchartbook/federal-spending-per-household
Hip.
How many actually pay the 30% Not many.
Not one person that I talked with at the Occupy Wall Street gathering in Dayton Ohio on Saturday was asking for a free ride...they were pushing for a fair ride. A seat at the table
The number one thing to do for this country is to break up the big investment banks. There is some indication that Lazard, Evercore and Greenhill would have kept the economy going quite well if Goldman Sachs, JP Morgan Chase and the rest of the big banks that brought the economy in the country to it's knees WERE ALLOWED TO FAIL.
The Occupy people are right. Mr Cain would have a much more difficult time accomplishing what he accomplished in this economy. He was lucky enough to start when the U.S. was king of the world economy. Lots of a growing working middle class people buying pizzas and hamburgers.