Wednesday, May 10, 2006

Tax Cut for the 0.02%

Here is what Americans can expect from the tax cut plan that's being pushed through Congress this week:

Middle-Income Americans: $20 extra per year

Richest 0.02% of Americans: $42,000 extra per year

Sounds fair, right?

UPDATE: Here's a handy chart from the Washington Post that breaks down the savings per income level:

5 Comments:

Blogger James Wigderson said...

Yes, yes it does. If you pay more in taxes, it follows that a tax cut would benefit you more.

May 10, 2006  
Blogger Seth Zlotocha said...

So you're saying that $20 to a middle class family is the same thing as $45,000 to a wealthy family?

Even some Republicans are admitting that this cut helps the wealthy significantly more than the middle class. What else could be expected when the main cuts are going to investment taxes, which predominantly affect the rich who have the luxury of investing?

May 10, 2006  
Blogger James Wigderson said...

Well Seth, if you want to look at comparable worth and relative impact to someone's pocketbook, it's not far off.

But you ignore the point that when you pay a disproportionate amount of taxes, any tax cut is going to benefit you disproportionately.

For example, if someone pays $0 in taxes then tax cuts are pretty much meaningless, no? But if someone pays what Dick Cheney paid last year (a number every liberal blogger is familiar with, I'm sure) then any tax cut is going to yield a high number.

As for the whining about the cutting of the taxes on investment, how many times do you want to tax the same dollar? Corporate tax, capital gains tax, income tax, at some point the taxes become too much for the investor. Tax the dollar earned once as part of a broader flat tax on the individual rather than penalize investment and the resulting boom will continue prosperity for decades.

May 10, 2006  
Blogger Seth Zlotocha said...

Well Seth, if you want to look at comparable worth and relative impact to someone's pocketbook, it's not far off.

Not far off? Are you kidding?

I'll be generous in my numbers and not even consider the top bracket of income earners, for whom these figures would be even more divergent.

If a family with an income of $750,000 per year gets a $5,562 tax cut, that cut is equal to 0.7% of the family's total income.

If a family making $35,000 per year gets a $16 cut in taxes, that cut is only equal to 0.04% of the family's total income.

In order to get a 0.7% cut like the wealthy family, the middle class family would need to get a tax cut of $245 -- that's over 15 times what they're actually getting under this plan.

The numbers get even broader when you put the middle class family in contention with the super wealthy families that will be raking in an extra Lexus each year.

And in terms of investment, it's not like investments have been lagging over the past decade and a half -- it's ridiculous to claim tax cuts are needed to convince the rich to start throwing their money at Wall Street.

Besides, we already have record deficit numbers coming out of the Bush White House and Republican-controlled Congress. Cutting revenues even more is just going to pile up the debt even more for us to deal with in the future.

May 10, 2006  
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