The holiday season has seen Congress gift-wrap tax cut extensions for millionaires under the guise of a "compromise between the parties." Support for the millionaire's tax cut extension among the middle and working class is puzzling since a taxcut for the wealthy today amounts to a future tax increase for the middle class.
So why would someone making $50 K a year want to see those earning over $250 K pay less in taxes? Here's a few possibilities:
(1) You believe that a slight dip in the marginal tax rate for the top 2% will stimulate the economy. If so, you're being handed a lump of coal. No serious economist argues that lowering the marginal tax rate a few percent for the wealthiest will stimulate the economy. No successful entrepreneur says, "I refuse to try earning more next year if my tax cuts aren't extended."
(2) You honestly believe that the only way to cure large government is to starve the beast by lowering government revenues. If that's the case, then please put your wallet where your mouth is by not accepting Medicare, Medicaid, unemployment benefits, rental subsidies or any other version of socialized support. Of course, you'll also need to make sure your state rejects all the pork-barrelling that Congressmen are so eagerly trying to snatch for your state. You aren't going to do that because you like receiving government support, you just don't like paying for it.
(3) You fantasize that someday soon you'll be rich and, when you become wealthy, you want to protect your future wealth. This fantasy is tightly tied to the American myth of social mobility. A few examples of people who rose from humble beginnings to achieve wealth and fame such as Nixon, Reagan and Obama cloud the truth that the US has one of the lowest levels of social mobility and highest levels of wealth inequality of any developed country...and the balance of power and wealth continues to shift to America's elites.
For those who support this millionaire tax cut, ask yourself, "Do I support this because I know that this will help me save money immediately." If so, then at least you're honest. If you're middle class and believe that this will help the country's economy or help you when your salary jumps you to the millionaire level then I say wake up to America's reality and stop handing bullets to those attacking your children's future.
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I would like to see the right, many of whom are struggling with unemployment as well, take half of their checks and just hand the cash to a billionaire with their children standing in front of them doing without.
It's pure insanity to think this is acceptable!
The richest 5% of the people made 37.4% of America's income. By your logic they would have hid all their money and paid no taxes. Or at best they would have paid 37.4% of the total income taxes collected, right? Wrong. They paid over 60% of America's total taxes collected. I guess that's not enough for you, though.
What about the 50% of Americans below the nations median income? These are the guys that you think are being exploited, right? Well they paid under 3% of the total taxes collected. It's an insult. This group earned 12.3% of America's total income (real job income - not wellfare income). They earned 12.3% of the income and paid 2.9% of the taxes. I really feel sorry for them if they don't get a tax break.
http://www.roshawnwatson.com/2010/05/do-rich-pay-their-fair-share-of-taxes.html
Now we are faced with a crisis. Unfunded liabilities is roughly $50T at the federal level and something north of $3T at the state level and we are running a deficit of $1.4T a year on top of a current deficit of $14.5T current deficit and if we add the SS trust fund deficit of $2.5T we have a current deficit at roughly 100% of GDP. Not quite like Greece, but if something isn't done now in 10 years we will be like Greece. It is time to implement real and material changes in tax and spending policy or face the reality that the global lenders will do it for us.
Bottom line is that tax changes are relative. The Republicans branded their version a tax cut (true when compared to post-expiration levels) and portrayed the Democrats' plan as a tax hike (true when compared to current levels). That's apples vs. oranges. Both plans were a tax cut relative to post-expiration levels. The Democrats' plan provided tax cuts even for millionaires. One can describe the Republicans' plan (before payroll tax cut) as increasing taxes for the "non-millionaires" because they did not renew certain stimulus tax credits.
Given that the do-nothing option led to tax increases due to the Bush Republicans having included an expiration date (a ploy to reduce the impact on the deficit), I'm amazed how the Democrats ended up getting blamed for this possible increase if legislation had not been passed.
As the tax revenue continues to erode for cities, states, and the US, something will have to make up the difference.
Cities and states will raise their taxes, fees and cut services. The result, a regressive tax on the middle and lower wage earners. Some states and cities will have to borrow more to balance their budgets. The result, more defaults on pension plans, fewer services, less support for the poor.
More 'taxes from you" will bring in the new year. While the wealthy bask in the sunny glow of free money.
We are not just screwed, we have been shafted and betrayed by our elected officials who were bought by the wealthy to ensure the continued flow of wealth from us to them.
http://money.cnn.com/2010/12/23/pf/rich_wealth_gap/index.htm?source=cnn_bin&hpt=Sbin
"the average family's net worth plunged 41% -- to just $62,200 -- from 2007 to 2009"
"wealthy households' average net worth tumbled 27% -- to about $14 million -- between 2007 to 2009"