About these tax-day tea parties: It's obviously fine if citizens want to exercise their first amendment rights and hold protests. Admirable, even. And if these protests are underwritten by corporate backers or supported by various media organizations (there seems to be some debate about this), that's OK too. First Amendment rights all round! But what I don't understand is why these rallies are being held to protest, among other things, "higher taxes." (Higher spending is another matter.) There is a widespread perception that Obama is raising taxes willy nilly, so maybe this is worth clearing up. As far as I know, there are five individual tax provisions in the
president's budget that could be described as a tax increase. So yes,
there will be some higher taxes. What's confusing to me is that the
vast majority of these taxes affect only those households with an
annual income of greater than $250,000. And the vast majority of these
increases would have happened anyway if the Bush tax cuts were allowed
to expire on schedule.
But let's go through them one by one. The five tax increases that I see are:
1. Eliminating the Advance Earned Income Tax Credit. This isn't a proposal to eliminate the EITC -- it's just a proposal to eliminate a particular way of claiming the EITC that is extremely complicated, that almost no one uses, and that leads to a high level of tax error. As far as I know, eliminating this is not controversial.
2. Letting the top two income tax rates revert from 33 to 35% and from 36 to 39.6%, respectively. This is obviously a tax increase. But it is also (1) Something that would happen anyway were the Bush tax cuts to expire on schedule; (2) Something that isn't happening till 2011; (3) Something that Obama repeatedly said he would do; and (4) Something that will affect only those households with annual income over $250,000.
3. Eliminating the phaseout of personal exemptions and itemized deductions for high-income taxpayers. (This is complicated because it involves ... a phaseout of a phaseout of a complicated law. Explanation here.) But the end result will affect the exemptions and deductions of only those households that earn more than $250,000 a year.
4. Limiting the top charitable deduction rate to 28%. I've written about this many times elsewhere and I think it's a tempest in a teapot.
5. Increasing the top capital gains and dividends tax rate to 20%. Again, this (1) will start in 2011; (2) would have happened were the Bush tax cuts allowed to expire on schedule; and (3) affects only those families with annual income above $250,000. And for a sense of how this top rate compares historically, consult this chart (particularly the Reagan years):
So are the majority of the protesters worried about taxes that won't affect them? Perhaps when the tax-day protesters worry about higher taxes, they mean to protest anticipated future taxes that will result from higher present debt. (I'm certainly concerned about that!) But I'm not sure a protest in favor of the abstract notion of Ricardian equivalence has the same drama as a protest against higher taxes. Or am I missing something?
It's not that complicated. In fact, you eventually nailed it after a painful journey through balderdash and feigned bafflement. It's obviously and explicitly a protest against "anticipated future taxes that will result from higher present debt." The massive tax burden on my children and grandchildren that the bailouts, alleged stimulus and grossly expanded government will inevitably cause. It's hardly an "abstract notion of Ricardian equivalence," whatever that means. It's a moral failing of the president, Congress and indeed this entire generation of politicians.
You seem to think one should only protest if one's interests are personally at stake. This is Obama's game as well. He says, in effect, nobody should object to anything I want to do, because the only people who will pay for it are those who can easily afford it. But just because he says it doesn't make it so. There is no way the government costs he seeks to impose can be covered with a $250k income tax firewall. The math doesn't add up. The burden on this generation will be heavy. The burden on the next generation will be staggering. We will be borrowing money from the Chinese and Saudis to pay for it all, and frankly I don't care how important education and health care are, we shouldn't leverage ourselves so heavily to powers that are sometimes hostile. We also cannot depend on them to keep loaning to us given Obama's utter heedlessness of inflation.
What I want to know is, are you genuinely confused, or just trying to play the concern troll, acting like you don't get it when in fact you do get it but hope that the contagion of politically incorrect common sense can be marginalized?
I think the nonchalance with which an unfortunate majority dismiss the inevitable tax hikes that will be generated by an historic aggrandizement of the federal budget as "It only affects households making more than $250,000" is alarming.
First, am I the only one that thinks it is morally reprehensible to place the burden of our national expenditures on a small minority of producers? I view this scenario as not much different than the following hypothetical: a group of 4 children are in a school yard, and 3 decide to take the lunch money from 1, and they do so because they outnumber the 1 and can exert their will by force upon him. The highest tax bracket is just as disenfranchised as the 1 child in the schoolyard. We now have a system where a majority of voters can basically steal from a minority, solely because they are in the majority. The Federalist Papers did well to warn of the tyranny of the majority, but it's doubtful most folks that whimsically vote for these catastrophic changes even know what the Federalist Papers are. I think the moral implications of this (let alone the economic implications) are repugnant to a system whereby an individual is free from coercive pressures to forcibly give up what he has worked so hard to earn (and, I do not qualify as living in a household making $250,000, so I do not write this out of self-interest).
Second, I think it is naive to assume that the tax hikes will be confined to only those households making $250,000 or more. The tax increases upon that population will do very little to offset the staggering and balooning amount of spending that is going on. If you've never heard of a slippery slope, you should Wikipedia it.
Finally, with the hyper-inflation that will go on after this economy gets rocked with the trillions of dollars of new currency entering the system due to an unelected Federal Reserve printing money out of thin air, and a spend-thrift administration paying off constituents, $250,000 per year will be a modest income, and these tax brackets will affect far more people than initially suspected.
I respectfully dissent from the flippancy with which this article treats the current spending/taxation concerns plaguing this once great and free nation.
hmmmm...
it seems like the responsible thing to do. if you're going to increase spending you should increase taxes to pay for it, no?
and isn't contradictory to be AGAINST higher taxes and yet also be against deficit spending. if you don't want to increase the deficit you have to increase taxes. and if you don't want to increase taxes, your only option is to put it on the credit card and run up the debt.
and i know, going from a 36% tax rate to a 39% tax rate REALLY DOES AMOUNT to fascism and socialism and all the other -isms the right throws out there to prevent having to defend their no taxes and no deficits contradictions.
history has shown (despite right wing revisionist attempts to portray otherwise) that deficit spending in a time of economic crisis works. the one thing you cant do is not spend money. hoover tried that, and guess what? DEPRESSION. Every time FDR cut spending during the new deal, it led to a shrinking economy and higher unemployment numbers.
the right is on the wrong side of history. and these teabag tantrums are a very poor substitute for their lack of ideas.
Now, obama is doing a lot of things. things that will cost money on the front end but save us money in the longterm. i don't understand why folks have such a hard time understanding that. it's probably willful ignorance. And yes, these things are going to cost a LOT OF MONEY.
But these things need to be done. perhaps if bush had done these things instead of spending TRILLIONS on tax cuts for the rich and an unnecessary war of choice, things would be easier.
But you can't expect obama to abandon his entire agenda (an agenda that won him a huge electoral mandate, btw) just because Bush was irresponsible.
There are lots of things that "need to be done," but unless you've got the money, you just can't do them. That applies to individuals, businesses and state and local goverments, but somehow the federal government exempts itself.
Bush's deficits were bad, but they look modest in comparison to what Obama has proposed.
Like I said up the thread, I think these tea party people aren't so much demanding a tax cut as they expressing fury and frustration over the out of control spending, which will have to be paid for eventually with taxes so high, even liberals will scream.
You just can't wreck the fiscal house this way. Or, okay, you can, but you're destroying something that has been essential to America's prosperity -- our creditworthiness.
To some people, this is intuitive, and those people are represented by the tea party crowds. To you, it's bullshit, now, because you don't understand how money works. But later, you'll be very upset at what happens as a result of this spending orgy.
Ummm...The fiscal house has already been wrecked. Where have you people been?
Have none of you people ever taken out a home loan?
It wasn't a protest against higher taxes. It was a protest against taxes, period, *and* government. Period.
Taxes are also imposed by many subnational entities. Taxes consist of direct tax or indirect tax, and may be paid in money or as its labor equivalent. A tax may be defined as a pecuniary burden laid upon individuals or property to support the government, a payment exacted by legislative authority." And in terms of money matter or budgeting. Credit cards are easily one of the biggest culprits in a cycle of debt, and those same credit cards push people towards debt consolidation. debt consolidation is a good option when you have multiple plastic parasites. It brings all your bills under one roof, so to speak. After debt consolidation, you would want to get smart about budgeting. The more you can dedicate to ridding yourself of debt, the better. And you definitely want to avoid adding any more to it, so stay away from the plastic. It's far better to use payday loans while you're paying down debt consolidation.