Rolling back tax cut...realistic assessment

Great Debates
1

This is perhaps a GQ question, but since it probably has no precise answer and since it’s politically loaded I figured I’d put it here.

I was watching a speech today by Obama where he says he is going to pay for his health care proposals by rolling back the Bush tax cuts for those making over $250k per year (he also claims that making the system more efficient will also help paying for it but for the sake of this discussion I’m ignoring this part)…and it got me thinking. My question is…realistically how much is the government going to get out of this? What kinds of dollar figures are we actually talking about here?

My GUESS is we are talking about a few billion…maybe a few tens of billion, though I think the real effect will simply be that people making over $250k/year will simply shift their tax picture and investments in ways that most of the money will still be sheltered in some way…meaning the government won’t actually get that much out of it, which would mean this is one of those feel good things that plays to the faithful. However, that’s just my guess…thus the question. So…looking at this from a realistic perspective, what do you think the government will get out of this roll back?

-XT

2

Keep in mind that Obama is lying when he says he is going to spend all the tax increases on health care.

Cite.

He claims he is going to reinstate pay-as-you-go (cite) but he’s fairly obviously lying about that too - he didn’t vote on the recent economic stimulus package (cite), - the first indication of how much political courage he actually has.

He’s a liberal, and therefore almost by definition a moron on economic matters. He’s going to tax somebody else, raise spending on everything, and eliminate the deficit.

Suuuuure he is.

Regards,
Shodan

3

As opposed to the economic geniuses we have running the country now?

Republicans have lost any right they to claim that they are the fiscally responsible, good for the economy party.

4

I suspect this is as much economic analysis as one can expect from the SDMB. When Obama tells a whopper, quick! change the subject!

Regards,
Shodan

5

Allowing Bush’s estate tax cuts to expire would raise a healthy chunk all by itself. (And that is a tax that affects estates only to the extent they exceed $2 million in value. So it is a tax on the wealthy.)

From the Center on Budget and Policy Priorities:

6

So, if I can produce votes in which Obama supported PAYGO, will you retract your ludicrous statement?

7

Well, it isn’t ludicrous, so unless you can show that he really did vote against the recent stimulus package, you are more or less SOL.

The problem with Obama’s economic “thinking” is that he is trying the usual pandering - all the tax increases he suggests are on somebody else, and he keeps spending the same theoretical revenues on all his pet projects. He’s promising $80 billion in middle-class tax cuts (gee, where have we heard that one before?) as well as huge increases in health care spending, tripling the EITC, $150 billion on green energy, $60 billion on new infrastructure spending, etc., etc. (cite). All of which he claims he can pay for by ending the war in Iraq, raising corporate taxes, and repealing the tax cuts before 2010. (Actually, he is also going to raise Social Security taxes, the most regressive of the federal taxes, but he is going to spend all that on Social Security, so that can’t be counted against his totals for other spending.) *

Ending the war in Iraq? Obama has refused to commit to removing all troops from Iraq for at least the next five years. The CBO has projected that 75,000 troops in Iraq and Afghanistan thru 2017 will cost in excess of $1 trillion. So whatever spending Obama proposes will have to be cut back by at least that amount. (Unless Obama is lying about that, too.)

So, whatever revenues are raised by rescinding the tax cuts, and assuming that this will have no effect on the economy and that the recent deficit stimulus package that Obama either did or didn’t support will assist in recovery from the current recession. minus a trillion or so that we will likely be spending on Afghanistan and Iraq, minus another $300-400 billion that he has already spent on middle class tax cuts and so forth, minus whatever he will also spend on college tuition tax credits, minus matching funds from the federal government for employee retirement accounts (cite) - all that we can apply to reducing the deficit!

Regards,
Shodan

*Strictly speaking, this isn’t true - excess Social Security revenues are spent, so in effect Obama is raising the regressive Social Security tax in order to increase spending overall, but for the purposes of simplicity, let’s pretend Algore’s lockbox really exists.

8

I’ll forgive your failure to understand PAYGO, because it is very complicated. PAYGO doesn’t prohibit tax cuts or spending increases that aren’t paid for. PAYGO requires that a supermajority of the Senate or a special rule in the House be approved in order for stand-alone tax reductions or spending increases to go into effect.

Someone can easily think that a particular situation – let’s say, paying for the war, paying for an economic stimulus plan, or cutting taxes – is so important that PAYGO ought to be waived. Every single supporter of PAYGO rules (of all various flavors) has voted for proposals that increase the deficit because they thought the spending or tax cuts were important enough to waive PAYGO, even when it was in full effect. Support of PAYGO does not require someone to mindlessly vote against any increase to the deficit. Support of PAYGO means that it should be difficult to do so. Your implication that support for PAYGO means that someone has to vote against every spending proposal is at best spurious, certainly uninformed, and definitely political hackery.

The fact is that Obama has supported restoration of PAYGO on at least three occasions, two of which he cosponsored proposals that would cover both spending increases and tax cuts. Cite, cite, cite. Republicans have consistently opposed efforts to apply PAYGO to tax cuts.

9

Shodan: When you say Obama wants to raise the regressive Social Security tax, will his planned raise make the tax more or less regressive?

10

Somewhat less - AIUI, he wants to remove the limit on taxing earnings. I believe the current limit is $102,000.

Ravenman - I assume you would agree that Bush is in favor of PAYGO.

Regards,
Shodan

11

The guy that rang up a larger debt than Washington thru Clinton combined? Even if he was in favor of it, what would that mean?

12

Right. So let’s be clear: “raising the regressive Social Security tax” is a misleading characterization of what he wants to do. If he had proposed an increase in the rate, then that would be an accurate description.

13

I don’t recall him promising that anyway, nor should he; but if he did, how do you know he’s lying? Nothing you cite supports that conclusion.

14

Somebody else than who? I think senators and presidents make enough that their tax bill would get bigger.

15

That would actually be a progressive change, not a regressive one.

16

xtisme: A good source of info on this sort of stuff is Citizens for Tax Justice. Sure, they are a liberal advocacy group but I have never seen anyone successfully argue that their numbers are wrong…At best, people argue something else (e.g., that this isn’t the best way to look at it…).

According to them, the top 1% of income earners received 53% of the Bush tax cuts…and the top 1% are those with incomes greater than $462,000 per year, so Obama is targetting a bit beyond them with his $250K number, although the next 4% only get an additional 6.6% of the tax cut pie. So, it seems like a reasonable estimate is that rescinding these tax cuts will reduce the budget impact of the tax cuts by a tad over half.

[Note that the 53% number is reduced to 40% if the AMT relief is extended into future years. So, assuming that this is what Obama chooses to do, then his tax proposal including this would reduce the budgetary cost of the Bush tax cuts by a little under half.]

17

He’s got a good chunk of the Black vote across all socio-economic classes, and his support from Whites tend to be in the higher income groups. So, yeah, this is a bit misleading, too, although the group for whom he wants to raise taxes is the very top income group, probably representing a few % of voters only. In that sense, it is somebody else for most voters.

And note how both he and Clinton talk about rolling back tax cuts instead of the more straightforward “tax increase” on the wealthy. As political spin goes, that’s a pretty minor offense. Nothing on the order of Clinton’s claim to have received more votes than Obama-- that takes some really creative math.

18

Than the voters. Same old same old - “Vote for me - I’ll soak someone else and give you the money!”

He’s a liberal Democrat, and he’s talking about taxes. And his lips are moving.

No, it’s exactly true. Social Security taxes are the most regressive, and he wants to raise them. So what I said is quite correct.

Apparently nothing more than it does for Obama. PAYGO means you will engage in deficit spending if the cause is important enough. OK, then by definition whatever Obama spends is important and his promises about PAYGO don’t mean anything.

McCain voted wrong on the deficit stimulus package, but at least he voted. Obama (and Hilary) chickened out. Either they were really in favor of it, but were afraid of violating the PAYGO pledge nearly right out of the gate, or they were against it, but were afraid of voting against a popular measure. Doesn’t speak well of Obama’s political courage if he dodges these kinds of votes. If and when he makes it to the White House, he won’t be able to.

And then, guess what? He is going to raise taxes, increase spending, and grow the deficit. A trifecta!

Regards,
Shodan

19

You say that as if it were a bad thing. :wink:

:rolleyes: Even for you that’s lame.

SS taxes are regressive, but Obama proposes to, in effect, raise the SS tax burden on the highest income levels. That’s progressive, not regressive.

That would at any rate make more sense than doing just the latter two, as Bush has done.

20

Or maybe if you had good faith you wouldn’t have poisoned the well with a gratuitous ad hominem?

No, of course, you’re a Republican, so by definition you have to blame the other guy. :wink: