Thursday, July 08, 2010

The Obama Tax Cometh

Dana has a great post up discussing what that saved tax money from the Bush tax cuts can buy...and not for the rich.

Using tax years 2000 and 2004 Forms 1040¹ (picked because 2000 was the last year under the pre-tax cut numbers, and 2004, because it had all of the 2003 tax cuts figured in) and an adjusted gross income of $60,000 for a family of four, with two children under 17 at the end of the tax year, and using the standard deduction, that $60,000 AGI in 2000 would have paid $5,214 in federal income taxes, while in 2004, only $2,974 in federal income taxes, for a savings of $2,240. Perhaps that’s just chump change to you, but it works out to $186.66 a month.

Now, what’s $186.66 a month to a family of four? Well, it might be a whole week’s worth of groceries, or perhaps it’s their electric and water bills for the month. Maybe it’s a car payment, so they can get to work. If we assume that the $60,000 is jointly and evenly earned by two people, working full-time jobs, you’re looking at an hourly wage of $14.42 an hour; $2,240 = 155.34 hours of work for them, or just shy of four weeks of full time work! Under the 2000 tax rates, each of those two people would be working two more weeks out of the year for the federal government . . . and two weeks less for themselves.

Sadly, even as liberals argue about "tax cuts for the rich," they are perfectly willing to let tax cuts for everyone expire provided they stick it to the rich in the process. I mean, why should you get $1000 tax credit per kid? You don't need it, right?

Robert Reich argues today that the recession is all the rich people's fault. Why? Because they haven't been paying enough all these years. If they had, there would have been plenty of goodies for all of us!
Government could have given employees more bargaining power to get higher wages, especially in industries sheltered from global competition and requiring personal service: big-box retail stores, restaurants and hotel chains, and child- and eldercare, for instance. Safety nets could have been enlarged to compensate for increasing anxieties about job loss: unemployment insurance covering part-time work, wage insurance if pay drops, transition assistance to move to new jobs in new locations, insurance for communities that lose a major employer so they can lure other employers. With the gains from economic growth the nation could have provided Medicare for all, better schools, early childhood education, more affordable public universities, more extensive public transportation. And if more money was needed, taxes could have been raised on the rich.

Big, profitable companies could have been barred from laying off a large number of workers all at once, and could have been required to pay severance—say, a year of wages—to anyone they let go. Corporations whose research was subsidized by taxpayers could have been required to create jobs in the United States. The minimum wage could have been linked to inflation. And America's trading partners could have been pushed to establish minimum wages pegged to half their countries' median wages—thereby ensuring that all citizens shared in gains from trade and creating a new global middle class that would buy more of our exports.

I always love liberal economics. In the liberal economic world, everybody works real hard and doesn't care how much they make. Entrepreneurs and big business guys are delighted to have 90% of their money taken in taxes and they still want to make more money so the government can take it!

Of course, in the real world, such policies provide little incentive to produce more than the minimum. And on top of that, these tax policies don't just hurt "the rich." They hurt everyone.