Top Republican Tax Writer Chooses A Bigger Deficit Over Tax Increases For The Rich

[one...two...tree 2,762]

Congressional Republicans last week, as we’ve been documenting, blew up negotiations meant to produce a deal to raise the nation’s debt ceiling due to their insistence that no taxes be increased anywhere, even on those making more than half a million dollars annually. Summing up the attitude that the GOP has taken toward the obvious need to raise new revenues, House Ways and Means Committee Chairman Dave Camp (R-MI) said in an interview with the Wall Street Journal that, if given a choice, he would rather have a bigger deficit than see taxes go up on anyone, even the richest Americans:

MR. WESSEL:

Would you rather reach [a deficit of] 3% [of GDP] even if it required some revenue increases, or hold the line on revenue and settle for a higher deficit?

MR. CAMP:

What we want to do is not have higher revenues.

Because the issue is who’s going to pay them. Their idea is always, quote unquote, “rich people over $250,000.” Half of that, as we know, is small business, which is the very sector we need to see some growth in.

For starters, Camp is simply wrong that half of those making more than $250,000 are people running small businesses. This is a common Republican claim that has no basis in reality.

But its Camp’s clear pronouncement that a bigger deficit is preferable to raising taxes even on the richest two percent of Americans that makes his priorities clear. When asked “if you had to raise revenues, where would be the least damaging place to look?” Camp literally refused to name anything. “I can’t think of a least damaging place,” he said.

However, Camp, unlike many of his Republican colleagues, did say that the debt ceiling needs to be raised before the August 2 deadline identified by the Treasury Department. “We need to because we can’t default,” he said. “The concern is, if you get close to that date without a deal, what the markets may do.” Several other Republicans have floated the possibility of forcing the U.S. over the cliff and into defaulting on some obligations for a short period while a deal is brokered.

http://thinkprogress.org/economy/2011/06/27/255242/camp-chooses-deficit-over-taxes/

[mawilson 2,133]

In Denmark, the poor and middle class are taxed at 45 percent of their income. The rich are taxed at 63 percent. Denmark has the world's highest level of income equality, as shown by the Gini coefficient.

In the US, nearly half of the population pays no income tax at all (although they do pay FICA and other taxes). The rich pay 35 percent (plus FICA and other taxes).

[Gary and Alla 3,694]

Cut more expenses

[Mr. Big Dog 10,747]

In the US, ...The rich pay 35 percent (plus FICA and other taxes).

No they don't. That's merely the marginal tax rate applied to adjusted income after a certain threshold. Their effective tax rate is far below 35%.

[B_J 2,752]

In the US, nearly half of the population pays no income tax at all (although they do pay FICA and other taxes). The rich pay 35 percent (plus FICA and other taxes).

No they don't. That's merely the marginal tax rate applied to adjusted income after a certain threshold. Their effective tax rate is far below 35%.

Is it true that nearly half of the population pay no income tax at all?

If so, then I don't think it's "fair" to raise taxes on anybody when others are paying nothing.

[^_^ 5,021]

Is it true that nearly half of the population pay no income tax at all?

If so, then I don't think it's "fair" to raise taxes on anybody when others are paying nothing.

It is true and I agree. It is my opinion that no one should have a net federal income tax liability of less than $1.

[mawilson 2,133]

No they don't. That's merely the marginal tax rate applied to adjusted income after a certain threshold. Their effective tax rate is far below 35%.

As their income approaches infinity, their effective tax rate converges to 35%

[Mr. Big Dog 10,747]

As their income approaches infinity, their effective tax rate converges to 35%

Well, we can argue hypotheticals. The fact remains, though, that large swaths of income on the upper end comes from sources that aren't subject to the 35% marginal rate. This is why Warren Buffet, for example, pays taxes at an effective rate of 17% rather than near 35% despite taking home tens of millions of dollars in income annually. Don't pretend you don't know that.

[Obama 2012 1,714]

Well, we can argue hypotheticals. The fact remains, though, that large swaths of income on the upper end comes from sources that aren't subject to the 35% marginal rate. This is why Warren Buffet, for example, pays taxes at an effective rate of 17% rather than near 35% despite taking home tens of millions of dollars in income annually. Don't pretend you don't know that.

and don't pretend that the government doesn't make more money on capital gains taxes when that tax rate is lowered, not raised. So you can play the warren buffet game all you want, but at the end of the day he and you are free to send an extra check to the IRS each year if you wish to help pay down the debt.

[Ban Hammer 13,352]

It is true and I agree. It is my opinion that no one should have a net federal income tax liability of less than $1.

agreed - even if just a token $1, that would stop the windfall some i know get every year they file taxes.

[dalegg 143]

In Denmark, the poor and middle class are taxed at 45 percent of their income. The rich are taxed at 63 percent. Denmark has the world's highest level of income equality, as shown by the Gini coefficient.

In the US, nearly half of the population pays no income tax at all (although they do pay FICA and other taxes). The rich pay 35 percent (plus FICA and other taxes).

45%!! Good lord is their automobile insurance covered by the Government as well as their health insurance?

[Mr. Big Dog 10,747]

and don't pretend that the government doesn't make more money on capital gains taxes when that tax rate is lowered, not raised.

Let us not pretend that any tax rate cut results in higher tax recipts or vice versa. If either was true, we'd maxime recipts with either a 0% rate or a 100% rate. Obviously, neither is the case. There is a rate at which tax receipts are maximized - that's the equilibrium. If you're north of that equilibrium, then lowering the rate towards the equilibrium will raise tax receipts. If you're south of it, then lowering the rate will result in lower receipts while raising it will result in higher receipts. It's not a horribly hard concept to grasp. The question is where the current tax rates are. I'd argue that 15% is likely on the south side of the equilibrium. Consider that capital gains tax receipts in 2007 (the all time peak of the stock market) were lower than they were in 2000 (a previous peak of the stock market. The difference? The capital gains tax rate which was at 20% in 2000 but at only 15% in 2007. Odd, ain't it?

Edited June 28, 2011 by Mr. Big Dog

[^_^ 5,021]

45%!! Good lord is their automobile insurance covered by the Government as well as their health insurance?

They can't afford cars, so they putz around in ghey little bicycles all day.

[skylane 6]

Saying the rich should pay more taxes is sooo lame, its like a kid wanting his parents to buy everything. If anything we should be withholding MORE from the people on the public dole, since they are the burden.

Personally, I want to see Governments demonstrate discipline in cutting budgets first before I agree to tax hikes.

[Mr. Big Dog 10,747]

45%!! Good lord is their automobile insurance covered by the Government as well as their health insurance?

Suppose you have a family of 4 and make 50K/year. You pay no income taxes, for sure. But you pay FICA = 4K. Property taxes: 2K. Health insurance: 15K. So, there you pay 21K or 42% of your income for just these three items. Add 7% sales tax on your remaining 29K to the mix (another 2K) and all of a sudden, 45% is a good deal. And that says nothing about other fees and co-pays you still owe.