In tomorrow’s deficit speech, the President will propose a replacement structure for the alternative minimum tax, which would create what he will call “the Buffett rule.” It will set a minimum tax for individuals earning over $1 million a year.
President Obama on Monday will call for a new minimum tax rate for individuals making more than $1 million a year to ensure that they pay at least the same percentage of their earnings as middle-income taxpayers, according to administration officials [...]
Mr. Obama will not specify a rate or other details, and it is unclear how much revenue his plan would raise. But his idea of a millionaires’ minimum tax will be prominent in the broad plan for long-term deficit reduction that he will outline at the White House on Monday.
Mr. Obama’s proposal is certain to draw opposition from Republicans, who have staunchly opposed raising taxes on the affluent because, they say, it would discourage investment. It could also invite scrutiny from some economists who have disputed Mr. (Warren) Buffett’s assertion that the megarich pay a lower tax rate over all. Mr. Buffett’s critics say many of the rich actually make more from wages than from investments.
I don’t know how much work “many” is doing in that sentence, or whether it means a certain percentage or a majority. The statistics show much more involvement in investment from the upper classes. And they use the itemized deduction schedule as heavily as a farmer uses a tractor. Greg Mankiw aside, the rich aren’t paying anywhere close to their nominal tax rate, and that’s if they reveal their total income to the IRS at all rather than stashing it in some secret overseas account. And Buffett is right that we should correct that inequity.
It’s unclear whether this would raise as much money as the alternative minimum tax, which is habitually patched every year because it would otherwise dip close to affecting the middle class. This millionaire’s minimum tax would only hit about 450,000 tax returns out of the 144 million filed in 2010, or 0.3% of all taxpayers. So would that be revenue-neutral, or would it fail to raise as much money as the AMT? And what baseline are you using? Does this replace the AMT as it would be collected without a patch, or the AMT with the patch that gets attached every year? Apparently Obama will leave that open-ended. But it would be hard to make this revenue neutral unless it raised a lot more money from that top 0.3%.
This millionaire’s minimum tax also seems like a clever way to eliminate the “carried interest” loophole, where income from money managers is taxed at the capital gains rate of 15% rather than the top marginal income rate of 35%.
This is obviously not something Republicans will take kindly to, and we’ll hear familiar charges of class warfare. The truth is that there is a class war on right now, and the rich have been winning it soundly for 30 years. The millionaire’s minimum tax is the least we can do to restore a modicum of balance to the system.
The question that must be raised is what else will come of the President’s speech. Here’s the early read:
Mr. Obama, in his plan, will call for more than $300 billion in 10-year savings from Medicare and Medicaid but not for changes in Social Security.
Representative Chris Van Hollen of Maryland, one of six Democrats on the 12-member joint committee, said Mr. Obama must make it clear that those reductions from entitlement programs “are tied to his proposals to raise revenues by cutting special-interest tax breaks and asking the folks at the top to pay more.”
“Otherwise,” Mr. Van Hollen added, “there’s a risk the Republicans will cherry-pick the pieces they like and leave behind the ones they don’t.”
It doesn’t say whether the Medicare eligibility age is on the table. But Van Hollen is right that Republicans will pick and choose from the menu of options, like they have done on the jobs bill. It’s a strange argument for Van Hollen to make, however. After all, he’s ON the committee. What Barack Obama says about whether or not the tax piece gets attached to the health safety net pieces matters less than whether HE and his Democratic colleagues on the committee demand that attachment. After all, without one of their votes, nothing on the Super Committee can pass.
UPDATE: This seems to be linked to the AMT and not the Bush tax cuts, so I don’t know what Ezra Klein is talking about. But yes, if the MMT (millionaire’s minimum tax) is the substitute for the expiration of the Bush tax cuts, it would probably end up being a giant tax cut relative to current law.




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It say something that we all don’t trust him till we’ve seen the fine print. I just never get the feeling that he’s on anyone’s but his own side.
This is a joke.
The Medicare and Medicaid savings plus the increased taxes would amount to perhaps $50B a year, or about a quarter of the targeted $200B annual deficit reduction which is already anemic. The US currently has a DAILY deficit of $4B so we’re talking a couple weeks of deficit relief out of 52.
Amen brother.
The truth is the plan liberals want won’t pass and the plan that can pass liberals won’t like. So we should just let the Bush tax cuts expire and be done with it. It’s going to suck for some low-income families that lose their EITC/CTC, but it’s pretty easy to lay the blame for that at the feet of Republicans.
David, surely you must be mistaken.
It was only last December that Fierce Advocate promised,
after extending the Bush cuts for two years,
that he would confront the Republicans over any further extension.
I’m sure that Jonathan Alter has a perfectly sensible explanation.
This is what I’ve been saying for a long time; doing nothing is the best policy. This MMT gets at a different issue, however, which is the AMT patch. That’s completely separate from the Bush tax cuts. The options there seem to be: keep exploding the deficit in pieces by forgiving $70-$80B a year with the AMT patch, or come up with a stable fix. Will this pass? Not in this Congress, but I don’t mind playing a long game and having this is reserve as a long-term solution to a persistent AMT problem.
It would behoove the WH to specifically label it the “Millionaires’ Minimum Tax”…!
$10 reward for first person who figures out how this will be used as a massive tax cut for the rich.
Compared with letting the Bush cuts expire, it would be a drop in the bucket.
DING!
I’ve been saying this for years as the deficit started to explode. Just go back to Clinton rates. Doing that would erase 3.7T of deficit over 10 years. The “grand bargain” is 4T. 300B these days is a rounding error. Exclude the first $15K individual/30K family income and you’ve mitigated most of the hit the poor will take. Whatever that costs along with the 300B is what the military will spend on drain cleaner over the next decade. Why is this so difficult for these fools in DC? Oh, wait. Never mind.
The heck with Clinton rates, let’s just go back to Reagan’s. /s
There you go again, always getting to the point.
And ya, I was thinking the same thing.
So what did I come up with?
Keeping it simple, 1. put a MMT that don’t do shite, ie. gut it to the point of uselessness and/or put loopholes throughout to make it useless,
AND
2. keep extending Bush Tax cuts for the rich or make it permanent, all on the rational that we already have a MMT, so why hurt the “job creators” more, …
And it really can be that simple. Use a useless MMT so people drop their guard, and then come in for the one-two with a permanent extension of the tax cuts. Heads they win, Tails they win. We? Well who the heck cares about us.
Not to worry nothing upsetting gonna happen, the details are all in the presidents daily briefing, hand delivered early every day from Bankstersuberalles. Copied already into the teleprompter.
Why not Eisenhower rates?
The obvious way to avoid it ever impacting the middle class is by indexing it to inflation. That would work for the AMT or for this. It would also eliminate a lot of tax-cut showboating by members of Congress as well. (which is why that mechanism is not likely to pass) Or set the minimum at a fixed multiple of the median family income. For $1 million that would be 20 times the median family income.
If this is already in the legislative language of the bill, it is already available at whitehouse.gov . That would be the fine print before the IRS regs are written.
*heh* Ike’s would be even awesomer…! ;-)
Obama must know that this proposal will never be allowed a vote in the current House. That puts it into the category of campaign posturing and win or lose, come the day after the election I will bet we never hear about it again.
Sadly, I actually like this proposal but not as an alternative to allowing the Obama/Bush tax cuts to expire.
Ronnie couldn’ta said it better.
Who is Eisenhower…
Ike who.
Another Obama proposal designed to go nowhere.
He thinks he is being very clever. Propose this, let the GOP reject it and then he’ll look wonderful by comparison.
No.
The election results this week give the GOP a pass to ignore Obama. Who cares what he says anymore?
A big push for his jobs bill, a big push for higher taxes, a big push for a millionaire’s tax, lots of time spent and running around the country stressing it, stressing it and stressing it. Then, it goes nowhere.
At the end, Obama will only make himself look even more weak than he is.
Make himself look like he can’t get anything done.
So, the big campaign issue will be HIM, not the one he hoped for.
There would have been MUCH better ways to go about accomplishing his intended purpose than the way he chose.
So far, he has only proven that when the going is easy–control of the House and a super majority in the Senate–he has trouble getting something done (public option), and when the going is semi-difficult, he is completely lost.
It seems I owe ya a quaff, tambershall…! ;-)
“Another Obama proposal designed to go nowhere.
He thinks he is being very clever. Propose this, let the GOP reject it and then he’ll look wonderful by comparison.”
Nailed it. Concisely said. Everyone’s doing the new dance craze, the kabuki.
You hit the nail on the head. And, like the “speech to Congress on the same day as the GOP debate maneuver, this will also blow up in his face.
tambershall & Ctut,
Zinn points out that while marginal USG tax rates have come down over the years, as well as cap gains tax rates, all the regressive taxes, like SS/MC (I would add “user fees”) have gone up massively. So focusing on marginal income tax rates is just a tee-insy bito the problem.
I haven’t seen a good study yet on how much USG & S&L tax policy has been responsible for the inc after-tax inc disparity.
Great minds …
If I was king, the rich would look at Eisenhower rates with longing. Cause I would drop the hammer on them.
And all that filthy loot, … I would put to education, the poor, peace, the arts, infrastructure, guaranteed jobs with real living wages, … oh ya and a pony for me.
This would have been a great proposal if introduced the week that we found out that AIG, Goldman, Citi, etc., all the companies we bailed out, were paying higher bonus amounts than before the crash, while some of them still owed the taxpayer loans (some still do). And about that same time, Pelosi was running the House. But hey, if we work really hard and donate and make calls for Barry, then he surely will get this written into law if we can deliver him and another Democratic congress in 2012.
You depend on people being suckers. Which I suppose they are.
Good point.
Sometimes I forget about those things.
We need to focus on fees/rates that not only allow the poor to survive, but to demand they be at levels so that the poor have a significant opportunity to become middle class. Education and community is big one here as well.
Of course by doing this for the poor, the middle class are helped directly and indirectly.
Money has to start flowing down.
Huh?
I do not understand exactly what you mean.
“I will not seek, nor will I accept the nomination of my party……”
obama FINALLY started talking about taxes the way I’ve been TELLING him since even before he took office
the wealthy do NOT pay more then the middle class the middle class pays more then the wealthy
obama only scratched the surface, he needs to begin pointing out how inequitable the regressive tax nature is and he needs to make the case to americans that the wealthy are being subsidized by the middle class not the other way around
just yesterday they anounced here in new york a 4 DOLLAR INCREASE in tolls, that tax increase is aimed DIRECTLY at the middle class and the upper class pays fractions of for those types of taxes then the working class
my friend took a job in manhattan because it’s all he can get and he needs to pay his bills
the tunnel tax is 5 bucks each way, ten a day, 50 bucks a week
he makes 500 a week, that tax is a full ten percent of his salary
the same man making 5000 a week is paying one percent
these regressive taxes and fees must be equalized, it’s the very reason a progressive tax code was created in te first place, not to “make the wealthy pay more” but to equalize the tax burden so they pay closer to the same amount
O/T I’ve been trying to catch up to you to post the COG segment I watched on The Real News Network. Here it is:
http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=5580
we have been suckers indeed, allowing the wealth class to steal from middle america, we really need to put an end to their depravity and pronto
but the suckers continue watching fake news stations and listening to impotent drug addicts, man that propaganda really does the trick
Those are the ones that caught my eye recently too. The article centered around the fact that the secys & clerks on Wall St are the ones who are paying to rebuild the white elephant WTC. The tunnel/bridge/commuter rail, bus fares AND the new WTC are all under the auspices of PANYNJ. And the bldg will be unrentable when it is complete (if evah) bc of glut of office bldg in Manhattan. AND (AND AND AND) the graft and corruption will NEVAH be investigated. The whole thing makes me sick.
No doubt, eCAHN, but, we still wouldn’t be squabbling over our ‘massive’ Deficit if those rates had been sustained throughout…! And, it would’ve paid for all our little foreign adventures that he’d warned us about too…! ;-)
At least Obama is starting to make the right noises. But like his Jobs Act (which is better than nothing), the Buffet rule strikes me as analogous to the cop who says he can only recover what the pickpocket has on his person, because he’s already passed your wallet to his accomplice (or to his offshore account).
So many apologists for the wealthy whine that taxing the rich won’t put much of a dent in the deficit, to support their cost cutting agendas (just Social Security and Medicare, don’t you know).
But if that’s true, we’re just not asking the rich to pay enough.
Let me propose the “Cui Bono” act of 2011:
- Start with the last time we had a national surplus (sorta, if you ignore the SS surplus contribution to the General Fund) – 2000 – as our baseline (tho the deficit problem arguably began with the Reagan administration).
- Identify who has benefitted from the tripling of our “Defense” budget since then (if you include off-budget expenditures), and in what proportion
- Identify who has benefitted from the Bush tax cuts since then, and in what proportion
- Identify who has benefitted from the trillions in Fed loans since the 2008 crash, and in what proportion
- Identify who has benefitted from the financial system deregulation started under Clinton (Glass Steagall repeal, CFMA), and in what proportion
- Identify who has realized increased earned income since then, and in what proportion.
- Divide the difference between the deficit in 2000 and 2011 across these corporations and individuals, proportionate to the benefits they enjoyed.
- Make them pay.
Heck, give them reasonable terms, like the ones extended by Countrywide and their ilk to marginal home buyers.
I told a friend about a year ago that I figured Obama would start with his “populist” rhetoric as the election drew nearer. Obama supporters would grasp onto whatever”liberal sounding gimmick” he’s offering as an excuse for keeping their vote. Gee, look what’s happening!
This is a Dem sickness. Mouth off on progressive or progressive sounding ideas that have no hope of passing. On the occasion when there is hope for passage, find some lame ass excuse to vote against it (example: Carl Levin and his Drug Re-importation Bill).
If he had let the Bush tax cuts expire like he promised there would be no need for all this kabuki crap. Most people see this for what it is–a political “Hail Mary.” I think the man is finally realizing he may have screwed his re-election chances.
Yar, I said raid the Treasure Islands of the 1%ers ill-gotten gains.
Thanks. I knew most of that material about it, which I gather is all that is publicly known about COG. They raise some of the impt Qs I have in mind, which is why is it only Rs who are involved (not that it matters anymore), why were Rummy & Cheney still doing the exercises when they were CEOS of private corps, etc. etc. It’s details I want, but details we great unwashed are not to get.
Wait til O starts throwing around crumbs as well as rhetoric. All the eleventy mention sorts will come back out of the woodwork. See, I toja so; his second term will be awesome.
“Mr. Obama will not specify a rate or other details, and it is unclear how much revenue his plan would raise.”
Then it’s bullshit. As ADC14 said, just another “populist,” “liberal sounding gimmick.”
Oh here’s the real biggie. There is NO plan to replace congress should it get wiped out in massive numbers, like if the 4th plane had hit the capitol when both houses were in session. Someone, maybe O’Hanlon from Brookings (hmmm, think it was someone else) was all hot & bothered about this after 9/11.
On edit: It was Ornstein of AEI. http://www.continuityofgovernment.org/
Now I’ll give you 3 guesses (and the first 2 don’t count) why continuity of congress never went anywhere.
There are four kinds of Income:
Earned – This is the discussion
Portfolio (Dividends) Taxed as earned income
Capital Gains: 15%
Passive: 15% (Income for business owned but in which the owner does not matrially participate, aka:Koch Income, and Rental Income for Real Estate)
Passive income -> 0% (or close to that)
You own me $10.00
Yes all manner of things will be proposed to make the Rs” head spin, and the spin the progressives, and if reelected, they’ll get thrown straight under the bus again, and all this rhetoric will be lost & forgotten.
It’s all election kabuki.
Good on you! And still the Rs will refuse to pass it.
“why were Rummy & Cheney still doing the exercises when they were CEOS of private corps”
I believe it has to do with what is known as the “Shadow Government.” Here is a CNN special report, Nov. 17, 1991:
http://www.youtube.com/watch?v=ZgpgJPxenFo
(consider the source – it could well be total propaganda)
Here is a Bill Moyers PBS series on secret government from 1987. I couldn’t get audio on segment # 1, but the rest worked okay.
http://www.youtube.com/watch?v=pKbP1v6JGfQ&feature=related
Here is a timetable beginning in 1979 (FEMA):
http://www.historycommons.org/context.jsp?item=westerman91
Yes, we are not allowed to know the details; yet every time I unearth one of these old articles or news programs, a new piece seems to fill in another gap.
Thanks gigi3. I’ll watch tomorrow. I’m in a food coma and going to Z out in front of Masterpiece theater for now.
“I’m in a food coma”
Me too; just returned home about an hour ago after a dinner celebration for my daughter’s birthday.
Amen!
Report from Iron Mountain, Leonard Lewin 1967:
“From 1963 to 1966 the U.S. government assembled a team of prominent thinkers from all walks of life to determine what would happen if “peace broke out.” The group, surprisingly but with unassailable logic, determined that war was necessary and desirable and that the government should do all it could to maintain the status quo. If peace became inevitable, the report suggested everything from creating an outer-space menace to setting up some new, socially acceptable form of slavery. The report was leaked in 1967 by a conference member harboring a guilty conscience, and it scandalized Washington. Not.”
Over the years far too many people have derided this book as a fantasy, a satire concocted by Lewin. When you read it and apply its conclusions to what has occurred since its publication, it appears the joke is definitely on anyone who believes something like this didn’t really happen.
tomorrow we will likely find that the millionaire’s tax is on wage income only – and that the AMT is to be tossed as the quid pro quo – making it a massive tax cute for the GOP “job producers” and a Obama tax year victory to sell to progressives – and if that happens DU and KOS and TPM will tell us how lucky we are to have the chance to re-nominate Obama – and besides primarying Obama equates to giving the election to the GOP (this last point was on today’s talking heads straight off the WH press handouts).
As to the current real information out there, I do not find anything that actually says this new AMT replaces the old AMT – could be an addition to the current AMT – yeah – right
Indeed while the Obama objective is clearly to never allow the Clinton rates to return (he said, after extending the Bush cuts for two years, that he would confront the Republicans over any further extension – so you know he plans to do the opposite) it is likely this “millionaire’s tax is not only a substitute for the current AMT it is also the end of “confront the Republicans over any further extension” of the Bush tax cuts”. And of course like the payroll tax it will tax wages only because 90% of the “reported” income of the rich (don’t ask about the not reported income) is not wages.
Buffett also referred to the Social Security payroll tax and suggested it apply to all income – investment and wages – with no cap. Seems Obama did not hear that part.
But a rejected by the GOP millionaire’s tax is one great election year issue, isn’t it?
One note Obama fails again
What are you smoking? We’re not that lucky.
None of this is going to happen anyway. This is the part where Obama makes nice to us progressives by “standing his ground” on mm/ss cuts. He proposes tax increases that will never, never, never pass this congress and the trigger kicks in. This cake was baked in August. The real question is, will Obama’s make nice with the base raise his points any?