New Taxes — "It's Like Romney Won!"

"It's like Romney won!" — that's a direct quote from Henry Blodget, commenting on the tax deal in Fiscal Cliff Deal Redefines What It Means to Be “Rich” (Daily Ticker, January 2, 2013). CNN Money provides the details in Fiscal cliff's new definition of rich.

Being "rich" just got a whole lot tougher. Under the fiscal cliff deal, taxes will rise only on couples making more than $450,000.

[My note: the threshold for individuals is $400,000.]

That's a lot higher than the $250,000 threshold that policy makers had long marked as the dividing line between the middle class and the rich. Just under 2% of filers, or 2.85 million, have adjusted gross incomes above $250,000.

By contrast, only 0.6% of joint filers, or 965,000 households, have incomes above $500,000, according to the closest estimate the Tax Policy Center has done to the fiscal cliff deal.

Raising the bar cuts out about 28% of the income that would have been subject to higher tax rates, bringing in less revenue overall.

The center did not determine how increasing the threshold would affect overall tax revenue, but President Obama in a speech Monday said "The agreement being worked on right now would further reduce the deficit by asking the wealthiest 2% of Americans to pay higher taxes for the first time in two decades.

Yes, only approximately 0.6% of income tax filers had their taxes raised, the rate reverting to the Clinton era 39.6% from the current 35%. Capital gains and dividend taxes for the 0.6% of households earning $450,000 or more will rise from 15% to 20%. The rich of course have many clever ways to avoid paying taxes.

By contrast, the payroll tax cut was repealed, which will affect all working families. These people have no easy way to avoid paying taxes.

The Daily Ticker notes that the Republican strategy regarding the Federal Government, called "Starve The Beast," is working.

To listen to the moaning of some Republicans in the House of Representatives, you could be forgiven for thinking that the Republicans are losing the fiscal battle in Washington.

Actually, they're winning.

To see this, you just need to step back and look at the tax deal and the country's fiscal trends from a broader perspective.

Yesterday, the government voted to extend almost all of the Bush Tax Cuts permanently.

Not temporarily, as a stimulus measure.

Permanently.

[My note: as a result, expected future deficits of 7.6 trillion dollars over the next 10 years (based on some bogus estimate of GDP growth) have been reduced to 6.9 trillion dollars because of the Fiscal Cliff deal. Good news!]

Ever since the Bush Tax Cuts were first enacted in 2001, one goal of the Republican party has been to "make the Bush Tax Cuts permanent"...

One of the broad strategies of those who want to reduce the size of the federal government is a plan called "Starve the beast."

The goal of that plan is to continue to reduce federal government revenue to the point where the government simply has no choice but to cut spending, because deficits have just gotten too large and unsustainable to ignore.

Our deficits are not yet (quite) too large and unsustainable to ignore, but if we continue on the current path for a few more years, they'll get there.

So what the chart [below] is telling you is that the Republicans are doing an excellent job of bringing about Phase 1 of "Starving the beast."

So ignore what you're hearing out of Washington.

Federal tax revenue as a percent of GDP

I would ignore what I hear out of Washington, but I've chosen to write this blog, so I don't have that luxury. But that is generally excellent advice because what our politicians and their lackeys say, and what our politicians and their lackeys do, are almost completely unrelated.

And in this particular case, the rich basically got everything they wanted, and so did the Republicans who so ably represent them, so it is entirely legitimate to exclaim "it's like Romney won!"

Yet, a majority of Americans voted for Barack Obama under the mistaken impression that he and the Democrats generally are the party of the working man. Therefore, their duplicity has once again been demonstrated even before Obama's new term and the new Congress begin.

Please, somebody—anybody!—remind me again why voting is so important. Tell me about our great Democracy.

Personally, I don't have much stake in the outcome. Big Government, if it is not Good Government, is not a good thing as far as I'm concerned. A Big Government which is entirely corrupt can only do more damage, as this latest deal demonstrated.

On the other hand, the alternative to Big Corrupt Government is Social Darwinism, which is the law of the jungle. That's the Republican position. That's obviously not good either, so I have to conclude that we're fucked either way.

Here's the video — Whoops! It looks like the Daily Ticker no longer offers an embed option on their videos. To quote Neil Armstrong, that's another small step for [a] man, one more giant leap for mankind.

So enjoy this video instead. We're doing the best we can! Jesus Fucking Christ! Give us a break!

 

Comments

[James]

Saw this one coming a mile away. Keep the breaks for the rich, increase the real tax burden for everyone else, talk about how you are raising taxes on the wealthy and won't stand for a tax increase on the middle class.

How so called progressives and liberals can support Obama is beyond me. The guy loves the super wealthy and just got a federal judge to clear his secret assassinations. Maybe because he pretends to care instead of shedding all illusion?