I am not devoting myself full-time to following the iterations of the candidates' tax plans--as you will soon see, that way lies insanity--but I was interested to see the article by Jason Furman and Austan Goolsbee, Obama's top economists, in today's WSJ. It says, among other things, that "the top capital-gains rate for families making more than $250,000 would return to 20%" and that "the tax rate on dividends would also be 20% for families making more than $250,000." (Both rates are currently 15%.)
Good to have that confirmed. Three weeks ago, the nonpartisan Tax Policy Center (which produces the most authoritative independent appraisals of the campaigns' fiscal proposals) used new rates of 25%, not 20%, to calculate the numbers most of us have been using lately. It had inferred those tax rates from the Obama campaign's statements and revenue projections.
The thrust of the Furman/Goolsbee article is that Obama would cut taxes overall relative to current policy, while shifting the burden from people on middle and lower incomes to the rich. Cling to that: it might be true. Unfortunately, although the piece is full of numbers, I don't see an estimate of that net tax change, a figure of some interest. And the campaign still isn't saying how much, or even whether, the payroll tax for families on more than $250,000 a year will rise. The campaign says it is considering options in the 2-4% range, worker and employer combined. I don't know if the effects of that change should be included in the estimate they forget to give of the net tax change. Presumably not, because the article says this bold effort to shore up Social Security would not be activated for a decade or more. That makes two interesting announcements. (Does it also imply a third term for President Obama?)
The article doesn't say much about spending--except to promise that Obama would cut it, to pay for his net tax cut. Do Democrats realize that Obama is promising to cut public spending overall? This was news to me. The big-ticket item on the spending side, of course, is health care. Obama's website explains how the costs of his health reform, estimated at a surprisingly modest $50 billion-65 billion a year, will be met: "The Obama plan will realize tremendous savings within the health care system to help finance the plan. The additional revenue needed to fund the up-front investments in technology and to help people who cannot afford health insurance is more than covered by allowing the Bush tax cuts to expire for people making more than $250,000 per year, as they are scheduled to do." Ah, there you've lost me. The tax plan promises a net tax cut. The revenues from taxing the rich more heavily will be more than spent on cutting everybody else's taxes. There's no surplus left over to set against the cost of health care reform. There's a shortfall.
The article also says: "Overall, in an Obama administration, the top 1% of households -- people with an average income of $1.6 million per year -- would see their average federal income and payroll tax rate increase from 21% today to 24%, less than the 25% these households would have paid under the tax laws of the late 1990s." I need to find the footnotes for that one. The Tax Policy Center, in tables refreshed today, says that the average federal tax rate on the top 1% of tax units (including business income and the estate tax) would rise by 7.2 percentage points to 35.6% by 2012, fully phased in. That is a hefty rise.
The TPC's July 23rd document described Obama's then-proposed tax increases on upper-income earners as "enormous". But obviously that assessment will need to be updated.
I am not sure where you are getting these numbers from. The article on wsj sounded pretty clear to me. The authors do specify the long term impact on families making more than $250G and single making more than $200G.
it is a hefty raise but someone has to pay for all the spending George W Bush did. he cut taxes in a time of war. He gave us a $500 billion + defecit. Are economy sucks? We haven't invested in out infastructure in the past 20 years. We are the only develop nation with out universal health care. We need to invest more money in Energy Independence.
So I think raising taxes to help fix some of this is a prudent choice. Espesially when that is the marginal tax rate for someone who is already rich.
Why do we always talk about health care financing, and point to other countries (which share none of our social issues which the health care system is expected to fix - i mean, we're not Norway) and never talk about the exorbitant cost of higher education is this country (which is grindingly oppressive for many) despite a clear grounds for comparison with other nations, which see fit to invest in the higher education of their poulations at subsidized rates? This may be out of place in this thread, but just wondering.
I agree with Rick, we certainly need something to be done about the price of education and the quality of high school and secondary education. That's so much more important. we are lagging behind on the world stage. I believe in obama's policy toward this and support him. Vote for Obama! Visit WHYOBAMA08.ORG!!
"The big ticket on the spending side" is not health care; it's defense.
In particular, 100s of billions of dollars can be saved by ending this ridiculous "Star Wars" missile defense shield. It neither works nor does it deter potential combatants. Pushing to install missile batteries in Poland just antagonizes Russia - which we saw this week is perfectly willing to roll over their neighboring countries.
Killing that one program will more than provide the funding required to support the health care plan proposed by Obama. An actual realignment of our intelligence gathering divisions would save even more, which could be applied to our national infrastructure.
Just imagine a world in which we spend our tax dollars on items for the people - instead of for defense contractors.
I have to agree with most of the sentiment here. We've spent ourselves into a giant hole which is not only a fiscal problem, but lends to our foreign affair problems.
Obama summed it up nicely last night...if we want good schools, good roads, even relief for small business of health care expenses (that are killing us BTW) then we're going to have to pay for it.
We're a big country with big problems. It might require some initial increase in taxation and definitely a cut in spending combined with a change in priorities to even out the curve.
Imagine for one minute if we took just the federal cost of already existing low income health insurance subsidies run by the states (removes admin costs to the states as well) and the federal costs of the VA and put that money into the beginnings of a single payer Medicare-for-all type system for anyone with an income of 50K a year or less.
Or imagine for one minute if we changed our priorities out of Iraq (responsibly of course) to R & D on renewable energy sources which would in turn neuter the power of the ME should we ever find a real replacement for oil.
So much to imagine, so little time.
I am at a loss as to why anyone thinks that a massive new entitlement program would be run in a cost effective or efficient manner - I don't think anyone could come up with an example of an existing federal program that would be described in that way, so why would this one be any different? In the end national healthcare would just mean more bureaucracy, more capital that would be soaked up by government rather than available for a more nimble and innovative private sector, and yes, higher health costs thanks to a clumsy and massive new federal program.
Derrick Gibson -
RE: ""The big ticket on the spending side" is not health care; it's defense."
In the short run the big ticket on the spending side is Social Security. But federal spending on medical care is comparable to spending on defense.
In the long run the big ticket item is health care, with Social Security being second, and defense not just becoming third, but likely moving to "distant third".
I want universal health coverage for all Americans, a strong national defense poised and ready to project our power worldwide, a solvent Social Secuirty system able to meet the needs of our superanuated citizens now and into the future and free education for our most precious resource - our children. I am not alone. I very much want to hear the candidates' proposals as to how all of this may be acheived and, more specifically, how they can assure that someone other than I will be made to pay for it.
"I very much want to hear the candidates' proposals as to how all of this may be acheived and, more specifically, how they can assure that someone other than I will be made to pay for it."
You'r attitude is what is wrong with our country. I WANT I WANT I WANT.. and, I want the "ambigious, faceless" rich to pay for it.
Disgusting. This is possibly the most hypocritical and flat out ignorant excuse for Americans that I have ever seen.