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Friday, July 11, 2008

ABC News: Obama's Proposed Tax Hikes Would Hit Blue States Hard

ABC News:  How Politically Risky Are Obama's Proposed Tax Hikes?, by Jake Tapper:

Anne Mathias, an economist of the Stanford Group Company, has an interesting analysis of just who the top wage earners in the U.S. are -- and where they live. Sen. Barack Obama, D-Illinois, has proposed raising a number of taxes. Most notably perhaps he has discussed allowing the Bush income tax cuts (that Sen. John McCain, R-Ariz., voted against but now supports) to expire. He says that Americans earning less than $250,000 per household will see their taxes cut, not raised.

Mathias points out that 95.1% of the American people are in households that earn less than $200,000 -- so overwhelmingly most Americans will not see their income taxes increased, if Obama's math is correct. ...

Abc_map_2There's another component to this -- check out this map, by Mathias, which is interesting: The designated areas are the top 50 major city areas by income, transplanted on an electoral map of the U.S. from 2004 featuring red Bush states and blue Kerry states. ...

As you can see, most of these top 50 major city areas, income-wise are either in blue blue blue states (California, Massachusetts, New Jersey, or New York) or red red red states (Alaska, Texas), with fewer in swing states (with some notable exceptions such as Philadelphia, Penn., or West Palm Beach-Boca Raton, Florida.)

Mathias' conclusion: Obama's proposed income tax increases are not very risky at all, numerically speaking, in terms of number of voters or states he will impact. Overwhelmingly most Americans will not be touched, and the ones who will are largely in electorally decided states already.

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Comments

True. His tax hikes would hit everybody hard. He will not renew the tax cuts from 2003, therefore everybody's income tax will increase.

Posted by: Gary | Jul 11, 2008 1:25:57 PM

How do we really know that people with incomes above $200K will be 'hit' by Senator Obama's proposed taxes? Most of the people in that bracket are fairly adept at tax avoidance, and the ones with incomes well into this bracket hire lawyers, accountants, brokers, etc to help shelter income.

Income sheltering is a time-honored tradition in any society, and the wealthy in America are particularly good at it. Unless Senator Obama plans to strip away a lot of the shelters, I don't see much change occurring. What his tax hikes will do is 1) roll downward to the next lower brackets and 2) encourage more tax avoidance with less emphasis on making income. I don't see either as a good idea.

Posted by: Steve White | Jul 11, 2008 1:44:42 PM

This is kind of silly analysis. For one thing, the number of Americans making over $200k in salary are a tiny percentage, so there is no "political risk" to screwing them over, regardless of the state they are located in. Does ABC News really believe that it would be politically risky if the 3% of the affected population were all in red states? Sheesh.

Opposition to income redistribution is ideological. I don't make anywhere near $200k and I am opposed to raising taxes on that portion of the population who drives the investment that creates jobs.


Posted by: Ursus | Jul 11, 2008 2:04:53 PM

So, if I'm reading this right, most of the people who would be affected by Obama's proposed tax hikes are the ones who are most likely to vote for him.

That seems fair.

Posted by: jblog | Jul 11, 2008 2:08:00 PM

I have never understood the opposition to the Bush tax cuts. When my mother was railing against them, I asked her why she thought her money would be better off in Washington DC instead of in her bank account. She was, momentarily, silenced. Now, she's an Obama supporter- and can't explain why she thinks she should pay more in taxes, again.

Posted by: oldirishpig | Jul 11, 2008 2:18:42 PM

The point has been made numerous times, but this reminds many of us of the Carter years. We, like liberal Dems today, believed that some combination of Christianity, Republicans and the USA were primarily responsible for the world's problems.
I reluctantly voted for Jimmy as he seemed pretty right-wing (after all, he was a former naval officer, had a Southern accent and wore his religion on his sleeve). He duly hobbled the US armed forces and CIA, etc.
Guess what....it turned out there were any number of bad actors on the world stage.
If BMO is elected I think we'll see a lot of BDS sufferers come to grips with reality.

Posted by: Jim,MtnViewCA,USA | Jul 11, 2008 2:23:28 PM

I doubt there are many people naive enough to believe that Obama is going to hold the line at 200 or 250K. Furthermore, 4.9% of American households is a pretty big number, and vote in proportionally higher numbers as well. Also, even in this group, it is the households making from 250K to, say, 750K, that will suffer the most. I live in a very red state. A household making 300K is left with, after taxes (we've got a million of 'em), maybe 210K. After mortgages, insurance, expenses, 529's, 401(K)'s, etc, there's not a whole lot left. And people work very, very hard. To promise to take, from the 300K family, another 2.5K in income tax, plus another 3.5K from the SS increase, is going to lose Obama a lot of votes.

Posted by: Joe Y | Jul 11, 2008 2:37:13 PM

95.1% of people are in households that earn less than $200,000? 4.9% of 300,000,000 is 14,700,000. Knock 1/3 out as children (WAG on my part): 9,800,000. How much money can you possibly drag out of 9 million people?

I'm also surprised liberals' heads do not explode from cognitive dissonance. How on earth is making 9 million people pay for the benefits of 300 million others remotely "fair"?

This is not a good time to be raising taxes, but, if you're going to raise them, raise them on everyone (and hide it by sticking the employer with it - win/win).

Posted by: mrsizer | Jul 11, 2008 2:59:59 PM

Those "Blue" states will be even more blue inasmuch as they already pay stiff state taxes with federal income as a baseline. These states will bear the worst of BHO's tax planning because these taxpayers already pay the bulk of taxes. But they can only vote once. The ultra wealthy supporting BHO are not wage earners subject to the worst of the proposed payroll and medicare tax changes and have the ability to structure their investments as to defer cap gains. You are no doubt aware of the funds which are designed to do lock in gains while deferring taxes? They've already started their tax planning and the CPA's and lawyers not raking it in on SARBOX work are making a bundle revising plans.

Somewhere along the way BHO has convinced otherwise intelligent people that they don't deserve to keep their earnings - that he and unspecified others have the right to give it to other unspecified others. Some have convinced themselves that they will receive something in return for it. Not a chance.

Posted by: dsquare | Jul 11, 2008 3:05:51 PM

Everyone: please note what "Gary" posted above. Sen. Obama (D-"Jesse, no! Put that knife down!") has said he will let the Bush tax cuts of 2003 sunset. *Everyone's* taxes will rise.

Posted by: Denny, Alaska | Jul 11, 2008 3:18:00 PM

Very few of these rich folks that Obama wants to skin are community organisers. As a matter of fact most are not athletes or movie stars, either.

The vast majority are small business owners, the very people who provide some 80 percent of new jobs.

So, Obama wins the election and then we get to ask poor people for a job. Let me know how that works out for you.

Posted by: Peter | Jul 11, 2008 3:59:51 PM

Why shouldn't people keep their money instead of pay higher taxes? Because deficits matter. The numbers I've seen are that a third -- yep, a full third -- of our taxes are servicing the debt. Think of that as the taxes you pay for January through April. This is part of why the dollar is so weak. A barrel of oil hasn't risen in Euro's as much as it has in dollars. This is part of the cost of the Bush tax cuts. Aren't you glad you have them?

The other weakness of "it's your money" is that it's also your future tax burden. How good is your return on that money in-pocket when the economy is tanking and inflation is rising? Wouldn't it have been better to have been responsible rather than to have the juice running?

Can people start being sensible about tax and fiscal policy rather than just parroting moronic talking points? And you can talk all you want about spending, but unless you can present a politically feasible way to rein it in, you're just spouting hot air. Someone is going to have to take some political risks on both points, spending and taxes, if we're going to avoid things getting really bad.

Posted by: Deficits Matter | Jul 11, 2008 4:04:04 PM

A tax hike accompanied with Sen. Obama's election is worth the return on investment, not just in our government and community, but also in the countless intangibles that Sen. Obama brings to the table. It's time to think less about our bank accounts and more about a much larger picture.

Posted by: Jeremy | Jul 11, 2008 4:14:52 PM

I make around 200K, and will probably make around 250 K in the next few years. I live in Orange County, California with my wife and kids and can barely afford the mortgage on my fixer-upper 3 bedroom house. We have two old cars and we clip coupons. I don't mean to complain -- I am quite grateful for what I have (and have worked very hard for it) but it would be ridiculous to call me rich. Obama's tax hikes will affect thousands of middle class Californians like me.
I would vote for him if he were not so eager to take my money.

Posted by: leave my money alone | Jul 11, 2008 4:28:29 PM

Bush's tax cuts have brought the government record high tax revenues. If it was only about money, the tax cuts would remain. It's about controlling your life, which is what Obama the Socialist is all about.

You liberals go ahead and vote for him. He's gonna lose anyway, no matter how much the MSM is in the tank for him.

Posted by: Brian G. | Jul 11, 2008 4:33:58 PM

The bottom 50% of taxpayers already carry only 3% of the total tax burden. Over 50% of the tax burden in this country is already covered by the top 5%. I am squarely in the bottom 50%, the army doesn't really pay well, but I know I will not really benefit from raising taxes on the investors and employers in this country.

Why are high paying jobs leaving the US? Because the added taxes and regulations from the government outweigh the benefits of the infrastructure our country has built, and productivity is better in other countries. Tariffs and taxes and regulation all inhibit productivity, and true wealth is based off the goods and services each person can produce per hour. Taking money away from productive people and giving it to old/lazy/unproductive people is a function of government that will be the foundation of Obama's domestic policy. I am sure that will kickstart the economy.

Posted by: Nope | Jul 11, 2008 4:51:00 PM

I know this is a discussion about taxes, but you have to consider the big picture. How is the mortgage crisis, devaluing of the dollar, rising gas prices, the brain drain, and the skyrocketing national debt affecting the small business owners? These issues also affect the welfare of small business owners. I am really not sure how Obama's Republican counterpart will deal with those issues, especially since one of his top ranking economic advisors thinks that all those worries are "whiny." I wouldn't give that statement much credence, except that this has pretty much been the attitude of the current administration, and the Republican presidential candidate has done very little to distance himself from it.

As far as taxes are concerned, I would argue that $250k is a decent cut off because the vast majority, if not all, of the people making that much money are well-established in that bracket - in other words, they are a) not new entrants and b) will earn that money over a long period of time - so they will be able to shoulder the brunt of a tax increase much better than the rest of the population making less money. In the (relatively) short run, the increased revenue should help the country dig itself out of the budgetary hole we are currently in, which will be beneficial in many ways. In the long run, taxes will inevitably return to their current rates - a Republic President or Congress will ensure that - and the same people making 250k will resume pocketing what they do now, relatively unaffected. After all, say what you will, but 250k is still 250k.

Posted by: Axel Molotov | Jul 11, 2008 5:00:44 PM

For those making more that $250,000 a year, cry me a river. Maybe if you didn't live in houses that cost three times that, you'd be able to live a bit more within your means even if you had to pay a few more dollars in taxes. You can afford to put a good chunk of your income into 401ks and 529s? Good for you. Someone making $50,000 probably can't. Maybe if those that are so much more fortunate would pay a little more, our government could afford to pay a little bit of maternity leave to all working mothers, like 99% of every other country in this world does.

Posted by: Jean | Jul 11, 2008 5:43:54 PM

Let me see. I have a state pension. I get a 3% increase every year. I have only the standard deduction. I don't have enough deductions to itemize.I have not itemized since before I retired. In 2001 I got $423 back on my taxes. Every year my income has gone up 3% and my refund this year was $1,684. The only thing that has changed was the tax cuts. If the tax cuts are rolled back, I assume my refund will be about $1,000 less. That is a tax increase......Does the Obamessiah intend to keep the tax cuts and give me another $1,000, I don't think so......

Posted by: wooof | Jul 11, 2008 6:39:46 PM

Jeremy's post above is a great example of why we need to think of the big picture. I work in finance, structured products exactly. The reason you can barely afford your house is because the supply-siders kept the Fed interest rates very low even while the economy was outperforming. There was virtually unlimited free money, and because of that, banks would give you $1M loan for a 1500 sq. ft. fixer-upper, which as we all know, isn't a rational move. I don't say this to knock you personally, just to make the point.

The big picture matters. Fiscal responsibility matters. And the large debt that has been run up on us over the last 8 years is going to have to be paid back. I agree that now isn't the time to do it. But when the economy starts to come back, rates have to increase to moderate the changes. To stimulate the economy you need spending, which means more money in the hands of people that are spending it, giving tax breaks to people who transfer their money to offshore corporations and investments does nothing for the U.S. economy, at least not until we can balance out our trade deficit.

I fear more for tax increases 15 years from now, that ones 2 years from now. If you remember, historically, the top U.S. tax brackets have exceeded 60%. And I for one don't ever want to see that happen.

Posted by: Fiscal Responsibility | Jul 11, 2008 7:54:55 PM

To concur with one of the commenters above, if you thought you had it great in the latter 1970s under Jimmy Carter, you'll love serving an Obama Administration.

Any day now, I expect Obama to announce he will annul the law of gravity.

Posted by: Jake | Jul 11, 2008 8:05:13 PM

This analysis misses a crucial point affecting far more Americans than just those earning 250K or above: If the Bush tax cuts disappear, anyone with an 401(k), IRA, or other pension plan that includes stocks will see their plan's value fall. The underlying stock value will drop as dividend tax rates rise. The Obama campaign isn't going to point this out, of course. But with millions of de facto investors across the country, it's a proposal with widespread negative implications for many Americans' wealth.

Posted by: solidstate | Jul 11, 2008 8:20:42 PM

Actually the interest on the debt is 9.7% of the tax receipts.

http://www.optimist123.com/optimist/a1_national_debt/index.html

Posted by: tonto | Jul 11, 2008 8:59:58 PM

I understand the point of this post and the broader point that those above the Obama-tax-hike threshold represent a small percentage of voters and small businesses. I think the ideological point, however, is that the vast majority of Americans are optimistic about their wages--- they WANT to make above that threshold and $250k is a mid-sized family business and well within people's mental pictures of possibility. If Obama were pegging the tax hike on people making more than $1 million / year I think the fallout would be less, but people see $250k and it still doesn't register as astronomical: the opposition is entirely rational. They hope to enter that wage class and don't like tampering with it.

Posted by: AndyK | Jul 11, 2008 9:47:50 PM

Wouldn't it be nice if the states who vote for Obama are the only ones that Obama could increase taxes on.

If your state opposes him, you get to keep your current rates...until a candidate you support wins.

It would be the wet dream of every states rights advocate in the country.

Posted by: paul | Jul 11, 2008 10:29:53 PM

Well the Bush tax cuts were certainly the way to go in terms of stimulating the economy. It would be a terrible idea to let them expire with all of the good they have done and continue to do...

Posted by: Tyler | Jul 11, 2008 10:33:20 PM

Posted by: oldirishpig | Jul 11, 2008 5:18:42 PM

"I have never understood the opposition to the
Bush tax cuts."

The dems have created a meme that the rich don't pay their fair share of taxes. Obama has said as much. Also, I'm in school now taking a sociology class and this is a meme that is pushed hard. I assume its part of a university indoctrination / education at this point.

Of course, it's not true. The top 1% pay in the 30% range of the income tax paid (they are saying they might hit 40% in the next round of data released by the government)... the bottom 20% pay zero (sometimes below zero because they still get rebates and stimulus money, when available, if they file a return)… but they don't want the truth to get in the way of a good story and or their outrage...

Posted by: Thomass | Jul 11, 2008 11:35:20 PM

Posted by: leave my money alone | Jul 11, 2008 7:28:29 PM

"I make around 200K, and will probably make around 250 K in the next few years. I live in Orange County, California with my wife and kids and can barely afford the mortgage on my fixer-upper 3 bedroom house."

I hear you. My wife and I make about $150 combined but we live in the SF bay area and we are in the same boat. We want to have another child and are wondering how to get by on just my $90k if she stops working... Our house was a fixer upper. She drives a Hyundai we bought for $19k and I have a really old car I bought for $7k that I just drive on weekends.. My brother makes half as much as me but has a new car and a bigger new house… but he lives in Texas…

Posted by: Thomass | Jul 11, 2008 11:40:59 PM

The myths about how people in the top 5% of earners are all living lifestyles of the rich and famous always gives me a chuckle. Excluding perhaps the top 1%, many in that top bracket started out in the job market many years ago with very low level jobs and worked long and diligently over decades to get their incomes to present levels (and when we started at the minimum wage $1.50/hr job, we showed up on time), many struggled during their younger years repaying student loans (yes, youngsters, our generation actually did repay them), many married and had kids (and the thought never crossed our minds that the federal government would be responsible for their welfare), many purchased their first homes back in the Carter stagflation days and struggled for years with mortage rates in the 8-10% area or higher (remember when we all jumped on those 7.5% mortages because they were so attractive?), many put their kids through good (expensive) schools leaving barely a dollar of savings to their names and those many, at the moment, are now just reaching their peak lifetime earnings as they approach their retirement years and are feverishly trying to build up their 401k's with what's left after taxes so that old age doesn't bring poverty to their doorstep. And one more thing, most of these "rich" folks did it all while paying taxes throughout their life and receiving no largesse from the government in return.

Posted by: Gene | Jul 12, 2008 4:52:53 AM

"Why shouldn't people keep their money instead of pay higher taxes? Because deficits matter."

Funny how spending isn't factored in here?
Gee, comrade, I wonder why that is?

You leftists never cease to amaze me...

Posted by: The Ace | Jul 12, 2008 6:21:07 AM

Obama himself admitted in the debates that raising capital gains taxes would not increase government revenue, but that it should be done any out of "fairness." Yet liberals keep crying about the deficit even though Obama himself admits that this has nothing to do with the deficit. It is purely a feel-good "soak-the-rich" policy. The problem is that capital gains taxes are a drag on capital allocation because they force investors to make decisions based on the tax effect rather than what is the best use of their investment capital. Capital should be freely movable without worrying about tax effects so that the free market works to find its best use.

Posted by: Rob | Jul 12, 2008 9:20:55 AM

"When my mother was railing against them, I asked her why she thought her money would be better off in Washington DC instead of in her bank account."

I'm guessing that money in your mother's bank account doesn't typically go towards building roads or schools or paying down the national debt.

I'm also guessing you are in favor of those roads and schools which build themselves.

Posted by: Johnny Yuma | Jul 12, 2008 1:38:45 PM

It's no secret that Obama dislikes the US and prefers the European model of unemployment and socialist benefit programs. If you think the economy is bad now, wait and see what happens when you dissuade people from investing in job-creating businesses, or penalize businesses with higher taxes. A vote for Obama is a vote to destroy the country. McCain, on the otherhand, has a long track record of trying to stop congress's run-away spending. This election should focus on monetary policy, not some stupid concept of "change." The only "change" we'll get with Obama is from Riches to Rags, from US cities to bomb-craters (when we try to negotiate and 'hug' terrorists), from a nation of opportunity to a nation of entitlement, from a nation of capitalism to socialism. . .

Posted by: It's no secret | Jul 13, 2008 1:22:42 AM

The latest IRS figures show that the bottom 45% of wage earners pay NO -- that's Zero, None, Zilch -- income taxes. Now, someone tell me why they aren't paying *their* fair share? Is 10% minimum for everyone too much to pay for the benefits they receive from living and working in the USA?

Posted by: OldBull | Jul 13, 2008 6:19:47 AM

Tell me it ain't impacting mainstream America when the CEO decides to lay 300 people off to increase efficiency because now the gov't is taking 30% more from his salary/bonus.

Posted by: wonkaboo | Jul 13, 2008 8:45:05 AM

But does this account for the fact that many "red" voters are in "blue" states, yet are swallowed up by this map? In other words, is blue state support for initiative more of an attack on red staters in the blue state?

Posted by: Jack M. | Jul 13, 2008 11:28:07 AM

wonkaboo, you don't know what you're talking about. If a tax hike means his bonus will be smaller, then "the CEO" has less incentive to lay off workers and get that bonus--not more.

And if "the CEO" gets a bonus for "efficiency," he isn't going to keep 300 inefficient employees around anyway.

Posted by: Nonymo | Jul 13, 2008 12:07:11 PM

Tuition can build schools and tolls can build roads.

Not to mention, if government is going to be involved it should be at the state level, not federal. Furthermore, the vast majority of government spending isn't on education or infrastructure

Posted by: John Galt | Jul 13, 2008 3:41:46 PM

Thanks to George Bush's lavish spending on absolutely useless things, we now need to increase taxes to service our incredibly large debt. So taxes will need to increase, regardless. It is a price that we will have to pay (in addition to many, many others) for having elected George W. Bush for 8 years.

Posted by: Jim | Jul 14, 2008 4:48:35 AM

If Bush's fiscal policy got us here, why would I want to vote for it again? Why is that something to be preserved? I am not economist, but I can see the writing on the wall. And again, why is it so hard to see that fixing the bigger picture - what some of you mock as "change" - is a step in the right direction, in spite of what a detailed excel file might forecast for your immediate future? For those of you who can't afford your mortgage payments, think less about the property and structures securitizing those obligations, and more about the little ones you seek to protect inside those structures. You can replace the former with smaller houses and smaller plots of land in different locations. The opposite priority likely leaves you less able to protect your family from a world that considers your children evil. Let's patch tho hole in the bottom of the boat, before we decide what type of wood the rudder should be made out of. On second consideration, I'm starting think that Hilary's "elite opinion" argument had some merit to it.

Posted by: Jeremy | Jul 14, 2008 5:57:14 PM

Gary (early poster) you are a freaking idiot. Americans with household income over $200K are adept at tax avoidance? Not likely. Most of us play it straight, get screwed with the AMT and look forward to being called rich by Obama so we can support the likes of you.

Posted by: kyle | Jul 19, 2008 7:16:51 PM

What everyone seems to ignore is that the 4.9% is in any given year. What % of taxpayers are in this bracket over a 5 year period? Or 10 years? Add that to the # who expect to be in that bracket & it starts to be a more significant %.

Posted by: richard10934 | Jul 19, 2008 8:34:52 PM

"Maybe if those that are so much more fortunate would pay a little more, our government could afford to pay a little bit of maternity leave to all working mothers, like 99% of every other country in this world does."

You can help her pay for it if you'd like to. I don't. Nor do I recognize that she has a right to expect me to pay for her leave. I place no value whatsoever on her reception of paid leave. You obviously do, so, like I said, YOU pay for it.

Posted by: bobby b | Jul 19, 2008 8:36:49 PM

Axel writes: "For those making more that $250,000 a year, cry me a river."

Axel, I earned $18K/year trying to keep a business afloat for 5 years. Before that, I started up and sold two businesses but saw both go south after being sold for stock and ended up with the proverbial t-shirt. I don't blame anyone else but myself for those mistakes, and made no claims upon my neighbor's paycheck for my suffering. If you want lessons on living on store brands, cutting cable TV and buying WalMart clothing, I'm definitely qualified.

That said, I kept at it, went back thru school and added finance and econometrics degrees to my information security background and certifications. Now I'm making low six figures because I invested heavily in myself, sacrificing five years of my life to do so. I lived with a crappy car, crappy clothes, and spent every waking hour studying rather than hanging out and having fun.

Don't you think I've earned my six-figure income if that's what businesses are willing to pay for my expertise and education? Do you seriously think people will go through hell and sacrifice so much for a crappy return? If so, you really need to move elsewhere because you fail to understand what makes America great. I didn't take a damn nickel from anyone else through my hardship. I paid for my education when I had little to give, and even took our farm out of CRP as I refused to accept government payments for doing nothing.

I'd be happy with two systems in the USA: Opt into the nanny state and pay 80% taxes on income earned, and get the social security, welfare, prescription drugs, state-paid medical and other "perks." Or opt out, pay nothing and get nothing. Pay toll on roads, and an annual fee for the military, and be left alone otherwise. At retirement, you're on your own. Suffer hardship and you're left begging for help from family and charity. We've taken nothing from our neighbors and wish to give nothing.

Posted by: redherkey | Jul 19, 2008 8:40:40 PM

Neither the Republicans nor the Democrats give a damn about the deficit. All they care about is that their constituencies will re-elect them.

The Republican constituency wants lower marginal tax rates. The Democratic constituency wants more redistribution of income though government programs like universal health care.

The discussion about tax cuts is not a discussion about actual taxes, revenues, or deficits. It's a discussion about whose constituency will be served. Raising tax rates is shorthand for income redistribution. Obama understands this.

The funny thing is that under Bush, both constituencies have been served, but he is not getting any credit for that. (But then, neither did Nixon, who is Bush's real political model.)

If Obama is elected, he might come to realize that the best hope he has of getting his redistributionist ideas made into reality is to keep the tax cuts that generate the revenue which might make it possible.

Posted by: punditius | Jul 19, 2008 9:46:39 PM

For anybody that believes the rich are going to get soaked I have a bridge in Brooklyn. My daddy gave me sound advice when he said "Son, Be Rich or Be Poor but never Middle Class. Accountants and lawyers take care of the rich - government takes care of the poor - The middle class gets to pay for both".

Posted by: Zainuddin | Jul 19, 2008 11:15:40 PM

Historically, lowering the marginal tax rates has increased tax revenues.

This has been the case with the so-called Bush tax cuts. The receipts of the IRS are at a record. high.

And similarly no, raising the marginal rates on the highest earners will not increase the amount the IRS takes in.

And no again, what kind of tax-shelters are there for someone making 200K-400K?

If anyone here knows of them, please post them ASAP.

...

There aren't any of course and anyone whose income is in this range would know such a thing.

As noted above, the bottom 50% of wage earners in this country effectively pay no income tax.

The top 25% or so of wage earners pay the majority of all income tax.

Still, after Barack Hussein Obama, II becomes the POTUS, all will be well.

Change.

Hope.

We are the Ones We have been waiting for.

Just sayin'.

Posted by: MeTooThen | Jul 19, 2008 11:56:03 PM

What would be the effect of a flat tax on all income, no deductions, period? Either that, or weight votes based on the amount of tax payed to support the federal spending jones. Looks like the existing system is designed to perpetuate class distinctions by pitting income groups against each other with the Congress as the referee. If all men are created equal under the law, how can we support a tax structure that legally confiscates a greater percentage from one constituency than another? Where does the Constitution say "From each according to his abilities, to each according to his needs?"

Posted by: Porkov | Jul 20, 2008 4:12:52 AM

Zainuddin: "Historically, lowering the marginal tax rates has increased tax revenues.

This has been the case with the so-called Bush tax cuts. The receipts of the IRS are at a record. high.

And similarly no, raising the marginal rates on the highest earners will not increase the amount the IRS takes in."

----

Lowering marginal tax rates will not always increase revenues. It will do that to a point, but at some point revenues will begin to fall. Else a zero tax rate would yield the highest revenue.

Likewise, at certain points, raising marginal rates might actually increase revenues, though though it might slow the rate of increase.

The main problem with liberal thinking about taxes seems to be that they don't understand that the economy is dynamic, not static.

But conservatives should remember that the economy is complex as well as dynamic, and we should proceed cautiously in attempting to influence it. It might react in an unforseen fashion, even if all that is changed is the marginal tax rates. Even a flat tax could have a negative impact on the economy, and in my view, a consumption tax likely would.

Posted by: punditius | Jul 20, 2008 7:40:05 AM

Hussein O is rich and will not tax the rich. The working class can bend over and use a lot of slick em, it's coming. Two classes will get tax breaks, the rich and the black welfare riders which is over 90% of the black population (more returned than they pay in). Not one working person in this country can say they didn't get a tax break from the Bush tax cuts, we'll they can lie and say it. Along with the tax cuts, income to the treasury has grown by leaps and bounds. Peeeloshi and Reid are doing their best (or worst) to kill that also. The democrats in congress feel for you. Gas prices are out of sight so they propose a 10 cent per gallon tax increase. Yep, that'll help, who?

Posted by: Scrapiron | Jul 21, 2008 10:30:06 AM