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Simpson-Bowles first tax reform option hits the poor the hardest

By Ezra Klein

A few moments ago, I interviewed Rep. Jan Schakowsky, who is serving on the deficit commission. I'll post the transcript a little later, but one of her complaints was that the commission has been resistant to producing distributional analyses of the various proposals. If they did, she says, "we would know who benefits and who pays."

The Tax Policy Center just released the first distributional analysis on the commission's first tax option: zeroing out the tax code and restoring only the child-tax credit and the Earned Income Tax Credit -- both of which are thought to be the most progressive of the bunch. The results aren't good for the commission. Under this option, the poor pay more and the rich pay less:

simpbowlesdist.png

This isn't the only option the commission offered, and it's not one they've yoked themselves to. But it was the first on their list, and it seems to fall most heavily on exactly the wrong groups of people. Progressives were already skeptical of the proposal's tax section, and this will make them more so.

By Ezra Klein  | November 16, 2010; 5:26 PM ET
Categories:  Taxes  
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Comments

Everything comes down to: Government of the rich, by the rich, and for the rich. It really does explain everything.
That, and the rich being incredibly short-sighted.

Posted by: AZProgressive | November 16, 2010 6:43 PM | Report abuse

Tax saving laws for low salaried employees might be extended but not unless the boss continues to pay zero in taxes. It is self defeating to make a taxpayer out of the boss, he has made enough of a contribution by providing jobs. Trying to tax the boss will not squeeze a dime out of him, he has a hundred ways to hide his profits. The overtaxed worker has a chance to reduce his taxes by having more children and declaring them as dependents. His children will one day help the nation by becoming taxpayers unless they are fortunate enough to be the boss.

Posted by: morristhewise | November 16, 2010 7:19 PM | Report abuse

Give me some help here. How can the poor pay more when they don't pay taxes now, thanks to EIC? What is your definition of poor?

Posted by: stvcar | November 16, 2010 7:36 PM | Report abuse

Hi Ezra

I really wish you would check out my recent Tax Cut diaries.

Here's today's link:

http://www.dailykos.com/story/2010/11/16/921014/-Tax-Cuts:Brilliant-Analysis!APA-Guy-Says-So!

People want this brought to the White House. That's beyond my ability.

Thanks,
War On Error
DailyKos

Posted by: VoiceofReason | November 16, 2010 7:52 PM | Report abuse

Isn't this the punch line to the old joke about the Washington Post?

"END OF THE WORLD COMING,

ASTEROID EXPECTED TO STRIKE EARTH TODAY

POOR TO BE HIT THE HARDEST"

Posted by: 54465446 | November 16, 2010 8:21 PM | Report abuse

Hey, the top 1% make only about a quarter of the income but pay a whopping 25% of the federal taxes.

We need a flat tax system wherein everyone pays the SAME proportion of their income.

Posted by: DavidinCambridge | November 16, 2010 9:43 PM | Report abuse

"Give me some help here. How can the poor pay more when they don't pay taxes now, thanks to EIC? What is your definition of poor?"

A better place to start is, what is your definition of taxes? Not counting state and local taxation, every wage earner pay taxes to two separate tax regimes, the federal income taxes that's collected by the IRS and also the FICA payroll tax system that's collected by, uh, the IRS.

Only if you argue that the IRS is collecting taxes on the one hand but not collecting taxes on the other can you make the case that the poor don't pay taxes, and its a pretty weak case to make.

Posted by: beowulf_ | November 17, 2010 12:21 AM | Report abuse

David, are you a moron?

"Hey, the top 1% make only about a quarter of the income but pay a whopping 25% of the federal taxes.

We need a flat tax system wherein everyone pays the SAME proportion of their income."

They already are playing the same proportion.
Quarter = 1/4 = .25 = 25%

Posted by: jldarden | November 17, 2010 1:47 PM | Report abuse

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