The President’s meeting with CEOs played out just as expected, as they offered support for any kind of a deal that averted the fiscal slope and a flood of austerity in 2013. Obviously they have a very particular perspective, grounded in cuts to their own corporate tax rates while the elderly and poor bear the costs of debt reduction.
Meanwhile, the White House is already playing a game of inches with the Bush-era tax rates:
Obama flatly rejected Republican calls to let the top rate remain at 35 percent, where it has stood for more than a decade under legislation adopted during the George W. Bush administration. And he shot down a GOP proposal to cap deductions for mortgage interest, charitable giving and other expenses in return for extending the Bush-era tax rates for the wealthy.
But in a break with the position he took on the campaign trail, Obama said he would not insist on drawing “red lines” around 39.6 percent, the rate in effect for top earners during the Clinton administration. Democrats familiar with White House thinking said Obama is willing to set the top rate somewhat lower — around 37 percent or 38 percent — as long as the overall burden grows for families earning more than $250,000 a year.
This actually looks to me a lot like the way banks paid off substantial chunks of the foreclosure fraud settlement with other people’s money. In this case, the wealthy and big corporations got tax cuts for a decade. Now they’ve decided that the bill has come due – it hasn’t, but that’s another story – and they want the middle class, the poor, the elderly and the sick to pay up.
I actually think we will see no deal of consequence in the lame duck session, and the tax rates are very likely to revert back to the Clinton-era baseline. But spare me this fake desire on the part of wealthy CEOs to “fix the debt” for future generations. They want to fix the country’s fiscal policy in their favor, and that’s pretty much it.
There are certainly ways to make the tax code more equitable; converting deductions into nonrefundable credits looks like a promising place to start. But there are a load of limits on deductions at the high end that would come BACK into play if the Bush tax cuts expired, that would raise revenue in a targeted way. Playing footsie with this “lower the rate, broaden the base” game makes little sense.




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Thanks DDay. Tweeted. Recommended. Let’s move the top marginal tax rates back up to 94%, like they were from 1951 – 1964.
Top Marginal Tax rates 1916 – 2011
It turns out that the CEOs do believe in Keynesian economics after all:
In the long run, we’re all dead.
That explains their attitude towards climate change as well.
So, to be clear, is this fiscal cliff were being pushed to coming from this budget/deficit commission?
NYT has a calculator where you enter household income and get the percentile:
http://www.nytimes.com/interactive/2012/01/15/business/one-percent-map.html
A household income of $250,000 is in the top 3%. Guess that’s Obombya’s new definition of “middle class”.
Oh what a surprise that Obama would raid the social safety net for the benefit of his millionaire and billionaire donors.
Back in the good old days.
When the top rate was 3 times what it is today, and the bottom rate was double (20.4%). No wonder there was so little debt.
I actually think we will see no deal of consequence in the lame duck session
I wish I had your optimism!
Link.
~
“This actually looks to me a lot like the way banks paid off substantial chunks of the foreclosure fraud settlement with other people’s money. In this case, the wealthy and big corporations got tax cuts for a decade. Now they’ve decided that the bill has come due – it hasn’t, but that’s another story – and they want the middle class, the poor, the elderly and the sick to pay up.”
The Obama Administration in their 2013 budget refer to socializing the cost of tax breaks for the wealthy as “Everyone Pays Their Fair Share.” http://www.whitehouse.gov/omb/overview
Let’s see. I guess the surprisingly positive message from Obama from Tuesday lasted about all of 48 hours.
So Obama says “we can’t afford” to maintain a top tax rate on wage income of 35 %. But we can then afford to just bump it up to 37 or 38 % instead of 39.6 %? Even with the Obama’s original “middle class” tax cut the rich still come off better than they do if you simply reverted to the Clinton-era rates (because that’s the way that marginal tax rates work).
Worse, Robert Reich is reporting rumors that there will be a “mini-agreement” to keep the Bush era cuts in-place until March so there will be time to craft a grand bargain. He thinks this is a good thing; I think it’s a bad one because any delay removes the incentive for the Republicans to play along. If you let everything hit Jan 1st (especially with the defense industry) there will be a clamor from largely Republican donors to *do something* to get the money train rolling again. Republicans respond only to pressure, it’s no good trying to play nice.
-stewartm
Why does your graphic include only un cojón de McConnell?
Is it because el cojón de la renta is invisible?
Capping mortgage interest deductions makes a lot of sense and will raise more revenue than a 4% bump to a 35% rate. Middle income in this country is $50,000. There are precious few middle income folk with interest payments more than $20,000.
Tell me again why a high income individual with $120,000 in mortgage interest should get a tax reduction of $42,000 at a 35% tax rate or a $46,800 reduction at the 39% rate.
Idiots in Washington, try calling a few up and I assure you they will prove this name accurate, are saying that $250,000 isn’t rich.
Well, idiots, it is, when people who used to make a good middle-class living are unemployed and can’t find any work.
Idiots.
TAX THEIR ASSES!
But people made more money then in real terms (that’s why there was this thing called the ‘single earner household’). And said bottom rate went up to $30k in taxable income.
-stewartm
Obama has spent the last four years demonstrating that he is spineless. Why should he grow one now? Bet he will cave completely.
I’m thinking that this may wind up working out OK despite Obama’s tendency to sell out. The reason is that the nuts in the Republican House will save us. They are so intransigent about no tax increases ever ever ever that only a total, humiliating cave from Obama would satisfy them, and while Obama adores being seen as a post-partisan centrist, he does have an ego (no one who thinks he’s qualified to be president does not) and that would not be acceptable to him.
The result is that the Bush tax cuts will expire, all of them. At that point the dynamic changes: there will be pressure to cut taxes on most people quickly, the Senate already passed a bill, and even if Obama wants to cave, enough Senate Democrats won’t want to that the top tax rate on the wealthy is on the way up.
The real threat is the “grand bargain” and the threat to cut benefits. To the extent that the tax cuts are decoupled from the rest, it improves our bargaining position. Can’t count on Obama, but some Senate Democrats have a clue, especially the new ones.
And the Bowles-Simpson plan screws current SS beneficiaries with a chained CPI and future beneficiaries with reduced benefits between 8 and 15K. I mean flattened. In addition, Bowles Simpson wants to raise eligibility age to 69 with early retirement pushed out to 64.
Check out this worksheet on the Bowles-Simpson cuts:
For a few income tax points more raised on the upper middle and the top incomes, you would trade your childrens’ future Social Security income.
Also, if you raised Medicare eligibility two years, you would really take a bite out of retirement income, either Social Security benefits, savings, just paying for the do-nothing bronze plan of Obamacare’s lowest rung of insurance for two more years.
They also want to engage in cost shifting to beneficiaries in the form of higher co-pays and deductibles.
It will be as important going forward to fight changes to medicare and medicaid as it is important to fight changes to Social Security.
No matter the outcome made by this President consider it better then the alternative.
Obama is no Lincoln!
!Dios mio! WTF? Once again the world’s worst used car salesman is having his buds float the idea that 37% or 38% might be a good enough marginal tax rate. Even before negotiations start in earnest, he’s already sacrified 1.6% to 2.6% of the top tax rates. Can he at least make those punks beg for it and have them sweat a little?
By the time this is over, here’s what is likely to happen. In 2013, the top marginal tax rate will be 36% (or +1 percent year over year). In 2014, 36.5%. In 2015, 37%. Then either hold there. In other areas, they’ll raise the Medicare age at least a year, re-do the CPI calc on Social Security (because Americans are bored with math and will let this slide through), and probably reduce deductions for upper earners at 28%-33% instead of the top rate. Signed, sealed, and delivered.
gee, that didn’t take long did it?
1951 Tax Rates Adjusted for Inflation
Marginal Tax Brackets
Tax Rate……Over…But Not Over
20%….$-…………….$17,259.97
22%….$17,259.97….$34,519.94
27%….$34,519.94….$51,779.91
30%….$51,779.91….$69,039.88
35%….$69,039.88….$86,299.86
39%….$86,299.86….$103,559.83
43%….$103,559.83….$120,819.80
48%….$120,819.80….$138,079.77
51%….$138,079.77….$155,339.74
54%….$155,339.74….$172,599.71
57%….$172,599.71….$189,859.68
Etc. to 91% for $1,725,997.11 and over.
However, I did catch this bit at C&L earlier today
If not, maybe we peons can take some inspiration from Old Europe
How many people have to say it how many times? Obama does not “cave.” Obama is not spineless. He is doing exactly what he has wanted to do all along. When people talk about Obama “caving,” they’re implying he didn’t really want to this or that, but he was somehow forced to do it.
Repeat after me: “Obama doesn’t cave. Obama does exactly what he wants.”
Heh, two can play this game.
1963 data (adjusted for inflation)
20.0% $29,331
22.0% $58,661
26.0% $87,992
Probably from the same source. You do realize that all inflation correction is inherently problematic so it’s best practice to take the most recent year, right? 1963 was the last year of the 91 % top tax bracket.
-stewartm
If you want to get started thinking about the impact of having the Medicare age raised two years, here is a worksheet from the Medicare Rights Center:
It is called Paying More for less, raising the Medicare Age. For what is not spent by the Federal government, the Medicare non eligible person is screwed and pays twice. Seems like a raw deal to me.
And then to think that we are making all of these cuts and giving up the little protections we have for retirement, for healthcare in old age, in order to make these CEOs be able to get away with not having their corporations pay for their “territorial taxes”, just seems like robbery.
I certainly won ‘t consider it better than the alternative. There is no proof for that assertion. I doubt Mitt would have been able to pull this off, especially right out of the gate, like Obama’s doing. Certainly, the Democrats in Congress couldn’t have pretended Mitt was the leader of their party, and they must stand behind their “leader,” as they are doing now. The people would not have meekly accepted this from Mitt, as they apparently are going to do now.
So, no. People can’t justify their votes for Obama that way, because there is no truth in that.
It is practically a mantra. Or perhaps it is the cruel punchline for everyone who voted for him.
Appears to be correct, however you seem to have jumped tracks from Married filing separately, to Married filing jointly.
Still, 20% in 1963 is double what 10% is in 2012 (adjusted for inflation).
Depends on what they mean by “progressives.” If it’s actually Dembots who will do any necessary “caving” on Obama’s behalf, like this, from yesterday:
Richard L. Trumka@RichardTrumka
Very positive mtg w/ the President, we’ll make sure there’s shared sacrifice & the rich pay their fair share so middle class dont get soaked
the outcome is easily predictable. There will be a [largely cosmetic] inconvenience to the 1% “paid for” with drastic and lasting sacrifices for the 99%.
“Even before negotiations start in earnest, he’s already sacrificed 1.6% to 2.6% of the top tax rates. Can he at least make those punks beg for it and have them sweat a little?”
What we see here is the tangible evidence of the “more efficient evil” theory. If the Dems were actually interested in a Grand Bargain against their opponents, what is the reason to sacrifice before resistance is encountered? However, if Obama is trying to accomplish as a Dem what a Rep could not, then this supposed “caving” or “surrender” is just a ruse to set up the faithful party voters to accept what is not in their best interests. What most Dems would not tolerate if the other team’s leader pushed for it, they will agree to if their own tribal king says it is OK. Such is the dynamic of authoritarianism. The fact that folks still use the language of “surrender” indicates that the Obama Good Cop con still works famously.
The Dems and the Reps ultimately work for all the same people, after all.
Disagree that he is spineless, he is doing a great job for the people who are paying him; the spineless ones voted for him last week.
“His response was that the Obama team had learned from the past that the administration was in a far stronger position if they were unified with progressives, that they felt that was when they had gotten things done and had been in stronger political shape than when they had tried to triangulate things.”
Perhaps. I suspect that this is bullshit meant to keep up the con and pacify the “left.” However, if it is true then the Obama Administration is practically daring liberals and progressives to hold the President’s feet to the fire. Let’s hold our breath.
Let’s hope he has those comfortable shoes on when we stick his feet in the fire. :)
Well, that certainly qualifies as the Idiotic O-bot Assertion of the Week! The idea that Obama should be allowed to do anything he wants because “Romney would have been worse” is fundamentally anti-democratic, and an exercise in moral relativism.
Say Obama holds a press conference in which he roasts three Cub Scouts alive over and open flame and chomps on their corpses. Are you then going to say “Well, Romney would have eaten four”? Or are you going to wake up and acknowledge that there are things Obama does that should be opposed on their own merits, not diminished and excused by comparing them to the straw man of the Scary Scary Republicans? Sheesh.
Assuming that the adjustment for inflation also corrects for the standard deduction/personal exemption changes (and it doesn’t say, there was the famed “marriage penalty then), that would be a 20 % but the first $19,500 is exempt. So that 20 % rate applies to $49,000 of total income. That would fall in the 15 % bracket today. This graph shows that the percentage of income taxes as GDP is actually quite stable.
But since 1) the total income tax receipts are about the same, and yet 2) the top rates/contributions have been slashed dramatically, then the only way that condition can be met is that more has had to be taken from everyone else today than back in 1963.
-stewartm
“No matter the outcome made by this President consider it better then the alternative.”
And the tissue of horse shit is made more palatable by always using a definite article instead of an indefinite article in front of “alternative,” which is never spoken of in the plural. It is a framing deliberately structured to justify a poor decision; to get someone out of their responsibility as a citizen by taking away their choice. The strange thing is that in this type of rationalization, it is the citizens themselves who take away their own choice–although such a result indicates effective propaganda.
Interesting graphic, Boo. (Here’s the direct link, btw.) It’s clear that the first screwjob was in 1921, where a separate, much lower tax rate was established for capital gains than for income. (12% vs 75%, by my guesstimate.) And that the Bush drop from 39.6 to 35% wasn’t that much, historically (certain nothing compared to Reagan’s gutting, or even the Kennedy cut), just over long and in the wrong direction.
I personally like the rates of the early ’70s: 70% for top incomes, ~48% for corporations, and ~38% on capital gains. Nothing outright confiscatory, but solid returns on all sources of wealth.
Instead, Obama apparently wants to drop the corporate rate by 10% (down to 25%) and disguise this with a puny 1 or 2% fig leaf of an increase on the highest incomes. Yeah, that’s fair.
What an asshole.
I’m still waiting for anyone to tell me exactly where the fire is and what it is made of.
It is a function of authoritarian tribalism that evil, by its very definition, is only what is committed by those of other tribes. By this formula, defense of and identification with one’s own tribe can always be maintained. Group identity, deference to leaders, and tribal articles of faith frequently trump thought and honest moral action.
“Man is not a rational animal, he is a rationalizing animal.” –Robert Heinlein
“Belief is the death of intelligence.” –Robert Anton Wilson
Those two dipwads are on CNBC right now with Maria Bartiromo doing the “Closing Bell” show. I can’t stand to actually watch them or listen to them. CNBC has forfeited its right to use the public airwaves/cable channels, IMHO. Time to yank its license, if we can. They do nothing that serves the public interest. Their market reporters admit openly that U.S. individuals have abandoned the stock markets, that retail investors have pulled out of stock trading almost completely, and that only “institutional” investors (insurance companies, pension funds) continue to buy stocks, besides the speculators and hedge funds. CNBC exists only to be a bullhorn for plutocrats. Fuck the plutocrats and fuck their media stooges. Get them off my teevee.
very well done comment. I like the full excerpt from your linked source, then your focus on a particular graf from the excerpt. Help us out. Based on what you know about Crooks & Liars, and who their sources are, can you help us figure out who the “His” is in this remark?
Thanks for that, now I’m moving back to Canada where rationalization (wasn’t it great summer fell on a weekend this year)
is rampant and intelligence is relative (to moose). :)
The excerpt and link were from basilbeast @22. What “particular graf”? I have only ever read C&L maybe three times. The author of the article is Mike Lux, who I have never read before either. All Lux tells us is that his source is “a senior White House official”–that guy sure gets around because damn near everybody quotes him. :)
I apologize. mine @41 should have been a reply to you. otto @43 straightened me out. I expanded the text of what otto was responding to @32 but forgot you provided the quote.
What can you tell us about Mike Lux and/or about C&L that might help us figure out who their source was for the graf about what “the Obama team had learned from the past”? I tend to agree with otto that preznit is just blowing smoke up our skirts about wanting to make nice with “progressives.”
No Deal in the Lame Duck!