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$28 billion. That’s the difference, in 2013, between the Democratic and Republican tax plans on the Bush tax cuts, which shows the narrowness of the debate.
Republicans want to extend all the Bush tax cuts permanently. Democrats have countered with a bill, which will get a vote in the Senate next week, that would extend the tax cuts only on the first $250,000 of income for one year. Since only the 2013 tax year would be affected, the Joint Committee on Taxation ran the one-year costs. It would cost the country $300 billion in revenue to extend all the Bush tax cuts. It would cost $272 billion to extend up on the first $250,000 in income. The difference of $28 reflects the difference between the two plans.
That’s just a one-year cost. Over ten years, the difference between extending all the tax cuts and just the first $250,000 of income is around $800 billion, as Chuck Schumer was sure to point out in a statement. That’s significant, but it does not cover more than one year of the current annual deficit.
Republicans have used the relatively paltry savings to criticize Democratic strong-arm tactics on the tax cuts:
Democrats have threatened to let all the Bush tax cuts expire on schedule in December unless Republicans abandon their push to preserve the cuts for taxpayers in the top brackets. With the release of the new cost estimates, Sen. Orrin Hatch (R-Utah) questioned the wisdom of that position.
“The American people deserve better than to have the President and his allies threaten to melt down our economy for what amounts to less than three days of federal spending,” said Hatch, the senior Republican on the Senate Finance Committee. “With 41 consecutive months of unemployment over 8 percent, it just makes sense to extend this tax policy for a year so we can enact meaningful, pro-growth tax reform.”
But what this actually shows is the narrowness of the tax debate in Washington. Democrats are willing to meet Republicans far more than halfway on taxes. They agree that nobody making up to $250,000 a year, a princely sum that’s five times the median wage, should see a tax cut. That means that Democrats and Republicans agree on the proper tax rates for 98% of the country.
Senate Democrats also included a series of other one-year tax changes in their package. They would extend the college tuition tax credit, and expansions of the child tax credit and the Earned Income Tax Credit. They would also increase the top rate on capital gains and dividends to 20%, up from 15%, and they would return the estate tax to its 2009 level, which is far lower than the Clinton years but higher than today (a 45% tax rate on every dollar above $3.5 million on estates). In addition, the bill would patch the alternative minimum tax for 2012, an annual ritual, and continue an investment tax for small businesses. So the increases to the dividend and estate taxes pay for a lot of these new tax breaks. And these changes do represent a break with Republicans, as they would make the tax code more progressive and value the middle class over the wealthy. But the overwhelming majority of the revenue in the tax code is lost from these Bush tax cuts, and on that front, Democrats and Republicans have fairly substantial agreement, even if both sides don’t want you to think that.
Senate Majority Leader Harry Reid plans a vote on this tax package next week. A five-page summary of the full plan is here.
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The last time $28 billion was a lot of money was in Sen Everett Dirksen’s day. Even $800 billion over 10 years doesn’t sound like a lot. It feels like running just to stand still.
Rinse and repeat.
It would cost the country $300 billion in revenue to extend all the Bush tax cuts.
It may come as a shock, but the Federal Government is not “the country”.
Overall, “the country” remains unaffected.
The Christmas gift they plan for us may turn out to be the proverbial lump of coal in our stocking.
Not in the face! – Dom Deluise
Just remember what the final act of this kabuki is: Taxes get raised, Social Security, Medicare and Medicaid get cut. Bipartisanshi*!
http://www.washingtonpost.com/business/economy/democrats-threaten-gop-with-fiscal-cliff-as-tax-fight-rages-on/2012/07/15/gJQAvybLnW_story_1.html
Some quotes:
“Murray, who served as the panel’s Democratic chair, argues that her party was willing to tackle entitlement costs.”
“That’s good strategy, said Erskine Bowles, the Democratic chairman of Obama’s deficit-
reduction commission, who is still trying to build support for a framework to raise taxes, overhaul entitlement programs and rein in the national debt.”
Right you are. Dems are offering to gut Social Security and Medicare in exchange for a pittance when they shouldn’t be willing (much less offering) to gut these programs at all. It is indeed kabuki. And masses of Dems will fall for it and shriek loudly at those of us who try to explain that they are being played for fools.
The differences between these two corporate parties is at the margins, or even illusory. Distract, divide and conquer is the game they play.
Who in their right mind who has watched the Dems over the last six years doesn’t believe the Dems will C-A-V-E ?
It is fun, however, to watch how balsy they all sound.
…. bbbbbbut this time is different!
Never have so few given so little and bought so many. The politics of buying votes and Congress,the federal gov’t in its’ entirety, is really quite cheap these days. Maybe we should just sell each Congressional seat on EBay and do away with districts and states, altogether? We’d let Saudi princes, organized crime, other nations, etc in on the auction, of course, so the MIC had some real competition. And, instead of paying taxes and voting, we’d receive the proceeds in the form of a rebate for living here. That’s the way to end deficit spending and run a surplus in my book. Let the 1%ers, etc. buy our nuclear stockpiles, our highways and all the rest of it. And, the 99% of us can just sit around waiting for our rebate and not have to hassle at all with voting or anything that boring, ever again.