Metro Jacksonville

Middle class would face higher taxes under Republican plan, analysis finds
By Lori Montgomery, Published: June 19

The tax reform plan that House Republicans have advanced would sharply cut taxes for the wealthiest Americans and could leave middle-class households facing much larger tax bills, according to a new analysis set to be released Wednesday.

The report, prepared by Senate Democrats and reviewed by nonpartisan tax experts, marks the first attempt to quantify the trade-offs inherent in the GOP tax package, which would replace the current tax structure with two brackets â€" 25 percent and 10 percent â€" and cut the top rate from 35 percent.

Those changes would benefit virtually every taxpayer, but they also would reduce federal tax collections by about $4.5 trillion over the next decade, according to the nonpartisan Tax Policy Center. To avoid increasing the national debt by that amount, GOP leaders such as House Budget Committee Chairman Paul Ryan (Wis.) have pledged to get rid of all the special-interest loopholes and tax shelters that litter the code.

Republicans have declined to identify their targets. However, some of the biggest “loopholes” on the books are popular tax breaks for employer-provided health insurance, mortgage interest, state and local taxes, and retirement savings, which disproportionately benefit the upper middle class.

So although households earning $100,000 to $200,000 a year would save about $7,000 from the lower tax rates in the GOP plan, those savings would be swamped by eliminating major deductions, according to the report by the Democratically controlled congressional Joint Economic Committee.

The net result: Married couples in that income range would pay an additional $2,700 annually to the Internal Revenue Service, on top of the tax increases that are scheduled to hit every American household when the George W. Bush-era cuts expire at the end of the year.

Households earning more than $1 million a year, meanwhile, could see a net tax cut of about $300,000 annually.

“According to this report, while millionaires will receive a huge tax break, earners making under $200,000 will see their taxes rise significantly,” said Sen. Robert P. Casey Jr. (D-Pa.), who chairs the Joint Economic Committee.

“Ryan seems to want to have his cake and eat it, too, and this report shows that you can’t,” added Sen. Charles E. Schumer (D-N.Y.), who requested the analysis. “If you want to cut taxes on the rich and not raise the deficit, you’re going to have to basically clobber the middle class.”

House Republicans called the report premature and unfair. For example, it assumes that Republicans would maintain lower rates for capital gains and dividends â€" which disproportionately benefit the very wealthy â€" a long-standing part of GOP tax orthodoxy. Republican presidential candidate Mitt Romney has said he would preserve the lower rates for the wealthy and eliminate taxes on investment income for the middle class.

However, the budget blueprint the House passed this spring sets no such conditions on tax reform, and Ryan spokesman Conor Sweeney said Republicans “are open to changes to those rates.”

GOP aides noted that the report assumes that major tax breaks such as the mortgage interest deduction would be eliminated. But some Republicans have argued that similar savings could be achieved by trimming the breaks, perhaps by limiting them for wealthy households, as Ryan suggested in a recent interview with Al Hunt of Bloomberg News.

“There is a saying about why you shouldn’t assume things, but I will just politely suggest that the actual tax writers would probably write a different bill than the staff at JEC,” said Sage Eastman, a senior adviser to House Ways and Means Committee Chairman Dave Camp (Mich.), who is leading the Republican tax-reform effort.

Roberton Williams, a senior fellow at the Tax Policy Center, reviewed the Joint Economic Committee report. Although the numbers are rough, he said, the conclusions are largely accurate.

“Even with eliminating fairly major tax preferences, the Ryan tax plan remains regressive. That’s the bottom line,” he said. “Unless you go after the tax preferences that benefit the wealthy” â€" capital gains, dividends, tax-free interest on municipal bonds â€" “it’s really hard to undo the regressivity of the rate changes. You’ll be shifting the burden of the tax code toward the middle class.”

(http://www.washingtonpost.com/rw/2010-2019/WashingtonPost/2012/06/20/National-Politics/Graphics/w-taxes0620.jpg)

http://www.washingtonpost.com/business/economy/middle-class-would-face-higher-taxes-under-republican-plan/2012/06/19/gJQAD4auoV_story.html

Why don't we just cut to the chase and eliminate all taxes on income, regardless of source, after $200,000.  This should be indexed to inflation, so that as more of the middle class reaches that level, they will not reach the tax free zone. 

Think of how many jobs would be created with all that extra money in the hands of the job creators. 

I have no problem with criticism of the Ryan budget and tax reforms... but... where are the democrat budgets and reforms?  Is there anything concrete to compare and contrast?  Just askin... ???

Quote from: BridgeTroll on June 20, 2012, 11:12:16 AM
I have no problem with criticism of the Ryan budget and tax reforms... but... where are the democrat budgets and reforms?  Is there anything concrete to compare and contrast?  Just askin... ???

http://www.whitehouse.gov/omb/budget

Quote from: finehoe on June 20, 2012, 11:19:40 AM

Quote from: BridgeTroll on June 20, 2012, 11:12:16 AM
I have no problem with criticism of the Ryan budget and tax reforms... but... where are the democrat budgets and reforms?  Is there anything concrete to compare and contrast?  Just askin... ???

http://www.whitehouse.gov/omb/budget

Is that the same budget the democrats in Congress wouldn't even vote for?

Why are we wasting our time discussing tax policy? The disastrous Bush era policies (expensive ill conceived wars in the Middile East combined with tax cuts for the wealthiest individuals, families, and corporations ) almost destroyed the World economy. Incrementally higher taxes on this "protected class" plus reasonable defense budgets (say $400 billion annually) would do a lot to getting us on a more sustainable path without disrupting the lives of these modern day emperors or preventing us from defending ourselves. Incremental adjustments to the major entitlement programs (SS and Medicare) are needed as well. The key term is incremental, but Repubs no longer recognize the art of negotiation.
For 35 years we have squeezed $$ out of the middle class and slipped it into the pockets of a very small and select group of people.  Without a stable and productive middle class we will continue treading water until we sink.

Taxes are rising in the future no matter what...

Along with the sea level.................

(http://sphotos.xx.fbcdn.net/hphotos-ash3/s480x480/547218_3345426996233_286637222_n.jpg)

I didn't think there was a middle class anymore...

Not to throw colder water on the raging Obama economy, but the Federal Reserve just revised the growth of the economy down from 2.7% to 2.2%, and unemployment rising back above 8% by year end. So complain all you want about the past, or the future, the now sucks and is getting progressively worse. Cancel the Bush Tax cuts, and you will kill 1-1.5% of growth, what would less than 1% growth look like for an entire year? Answer, a new Depression.

Quote from: fsquid on June 20, 2012, 01:21:24 PM
Taxes are rising in the future no matter what...

So the issue becomes how best to structure those tax rises.  Seems to me placing the burden on a middle-class that is already struggling instead of on the rich who already have more than they know what to do with isn't exactly the best way to go.

that's why I'd like to see a consumption tax and lower the income tax rate down to 15% across the board (with a prefund for those in poverty).  That way people with "more money then they know what to do with" will have to pay taxes when they consume instead of missing it when they move their money to tax havens.

Would you consider "sales tax" as a consumption tax?
How about gasoline and fuel tax?
Airline taxes ?

Middle class earners (and poor people) already pay FAR MORE of their total income in "consumption taxes" than high wage earners.
So increasing many 'consumption taxes' could hurt them far more.

This is the problem. All these people running around talking about who should pay, but they haven't looked at the numbers. The only way you are really going to be able to raise the level of revenues we need, without making the US totally inhospitable to investment, is going to be a consumption tax, a VAT, and it's going to have to cover a pretty broad base or else the rate is going to be confiscatory (which will discourage consumption, obviously). Europe has learned that. Before we get our butts in a sling even worse than theirs are right now, maybe we should learn from them.

Yeah, consumption taxes are regressive. There's really no getting around it. Europe actually has a more regressive tax system than we do. And they have more equitable income distribution, at least by every measure I've seen, including Gini coefficient (although there is a trick there and US v Europe Gini comparisons aren't exactly apples to apples; I would address that with the negative income tax or Boortz-Linder prefund).

QuoteSo the issue becomes how best to structure those tax rises.  Seems to me placing the burden on a middle-class that is already struggling instead of on the rich who already have more than they know what to do with isn't exactly the best way to go.

There are zillion studies that show that you cannot fix all the revenue issues in the USA with taxing the 1% at a 39% rate instead of 36% rate. I do like the idea of the 15% across the board or consumption tax on everything and anything, so our gas taxes would fall from 18% now to 15%, and capital gains would stay at 15% instead of what the Dems are crying about at 20 or 25%. This would be a true payment by all for anything consumed, rather than trying to penalize those who use the brain matter between their ears to build a better life.

But look at the example, someone who makes 1 million dollars pays $150,000 on their income, someone in middle class who makes $75,000 would pay $11,250 on their income. So with this simple math, where again does the middle class pay far more in tax in the proposed flat tax solution than say the wealthy? Take the number down to the Obama number of $250,000 for a married couple, they still pay $37,500 or more than 300% of that which the middle class earner in this example would pay. There would have to be a flat tax on all income, to coincide with the consumption tax.

Quote from: mtraininjax on June 20, 2012, 10:55:21 PM
There are zillion studies that show that you cannot fix all the revenue issues in the USA with taxing the 1% at a 39% rate instead of 36% rate.

Perhaps you can give us the links to a few of them.

no need for studies, the IRS let's you see the real data.

http://www.irs.gov/taxstats/indtaxstats/article/0,,id=96981,00.html

Quote from: mtraininjax on June 20, 2012, 10:55:21 PM
There are zillion studies that show that you cannot fix all the revenue issues in the USA with taxing the 1% at a 39% rate instead of 36% rate.

Quote from: fsquid on June 21, 2012, 01:56:47 PM
no need for studies, the IRS let's you see the real data.

http://www.irs.gov/taxstats/indtaxstats/article/0,,id=96981,00.html

There's a lot of links there.  I presume you're pointing out the ones that show when the top tax rate was 39% during the 90's the budget was balanced.

I'm just pointing out to you that you can get all the information your heart desires from there.  What you want to do with it is your business.

Quote from: vicupstate on June 20, 2012, 11:03:15 AM
Why don't we just cut to the chase and eliminate all taxes on income, regardless of source, after $200,000.  This should be indexed to inflation, so that as more of the middle class reaches that level, they will not reach the tax free zone. 

Think of how many jobs would be created with all that extra money in the hands of the job creators.

Absolutely none!

The rich might be greedy, but they're definitely NOT lazy! They'll just do all the work themselves. That or just hire some illegals and pay them less than minimum wage.

Quote from: finehoe on June 21, 2012, 02:02:47 PM

Quote from: mtraininjax on June 20, 2012, 10:55:21 PM
There are zillion studies that show that you cannot fix all the revenue issues in the USA with taxing the 1% at a 39% rate instead of 36% rate.

Quote from: fsquid on June 21, 2012, 01:56:47 PM
no need for studies, the IRS let's you see the real data.

http://www.irs.gov/taxstats/indtaxstats/article/0,,id=96981,00.html

There's a lot of links there.  I presume you're pointing out the ones that show when the top tax rate was 39% during the 90's the budget was balanced.

The budget was never balanced in the 90's, the surplus was an accounting gimmick, and the tax rate had little to do with it even if it were balanced.  The dot com industry had just started booming and its bubble had not yet popped.

Carpnter, you are correct about the budget suprlus myth.  Two good articles:

http://www.craigsteiner.us/articles/16
http://mises.org/daily/542

QuoteMakes you wonder what these idiots would do if they were able to replace Obama.

When its the idiots in power now that are providing such phenomenal growth! LOL!!!!

Quote from: jaxnative on June 21, 2012, 09:35:58 PM
Carpnter, you are correct about the budget suprlus myth.  Two good articles:

http://www.craigsteiner.us/articles/16
http://mises.org/daily/542

So you're saying the Bush tax cuts which were justified by saying the surplus demonstrated the government was taking in too much money was just another Republican lie?

Quote from: mtraininjax on June 21, 2012, 10:11:02 PM
When its the idiots in power now that are providing such phenomenal growth! LOL!!!!

You do realize, of course, that slow growth is a global phenomenon: http://www.businessinsider.com/world-bank-world-economy-2012-6#the-euro-crisis-is-crushing-sentiment-1

Who knew Obama was so powerful that he can control the whole world's economy?

QuoteYou do realize, of course, that slow growth is a global phenomenon:

Whoa, I had no idea that other countries were slowing down. Spain is in denial, unemployment is 25% and the banks are loath to write down any bad loans, no wonder their interest rates are through the roof on their own debt, no one believes they believe their own BS.

China is slowing down and they claim that they are propping up the slow down, again, more denial. Yet everything appears rosy here in the United States, again the Obama proponents are again in denial, as usual.

http://www.tradingeconomics.com/united-states/gdp-growth (http://www.tradingeconomics.com/united-states/gdp-growth)

Track the Gross Domestic Production during Obama's tenure as President, please try and stick to our current President, not one we had 25 years ago, who, while amusing, just does not pass the Obama Mustard. As you can see from the simple BAR charts, the very best that Obama has seen in his tenure, so far, was in 2010, when he had  3 good quarters of 3.8%, 3.9% and 3.8% in growth, then we have seen him slide back down to woeful growth in 2011, with numbers of 0.4%, 1.3%, and 1.8%.  His last quarter was revised at 1.9% growth, with the European crisis hitting the papers at full steam. So that was actually one of his better quarters.

All this while the Fed is stating that growth expectations are being revised, downward to between 1.9 and 2.4% for the REST of 2012. Not looking good for a re-election campaign when most of your presidential term has been mired in poor economic activity.

So now, do we all think the Harvard Grad who has a Law Degree is better suited to tackle economic issues than the Harvard grad who actually has a business degree? Those living in denial, no need to answer....

Quote from: mtraininjax on June 23, 2012, 10:41:56 PM
So now, do we all think the Harvard Grad who has a Law Degree is better suited to tackle economic issues than the Harvard grad who actually has a business degree?

If only it was that simple.

Dubbya had a business degree from Harvard. We all see how that turned out.