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Posted at 8:30 AM ET, 12/15/2010

Are you in favor of raising taxes?

By Jennifer Rubin

That is what Americans for Tax Reform, the toughest of the fiscal conservative groups, is in effect asking members of the Senate and Congress. Although ATR head Grover Norquist made clear that a two-year (rather than a permanent) extension of the Bush tax cuts was not ideal, he was, contrary to some trying to score points with the base, not willing to join liberal Democrats in opposing the tax deal. In a statement released last night, Norquist was unequivocal:

Americans for Tax Reform is supporting the tax hike prevention legislation on the floor of the House and Senate this week. While not ideal legislation, it accomplishes the primary objective: namely, prevent tax hikes on anyone earning income. Without passage of this bill, everyone who pays income taxes will see their take home pay decline in their first January 2011 paycheck. The good outweighs the bad.


The Republican opponents of the deal, including five senators, Rep. Mike Pence (R-Ind.) and several other presidential aspirants, might have a second thought or two as to whether they are guilty of making the perfect the enemy of the good. ATR's arguments are noteworthy:

"Prevention of personal tax hikes in 2011 and 2012. Without action, a personal tax rate schedule that currently ranges from 10 to 35 percent would be hiked to a range of 15 to nearly 40 percent. The tax rate at which a majority of small businesses pay tax would rise to nearly 40 percent. The capital gains tax would rise from 15 to 20 percent. The top dividend tax rate would rise from 15 to nearly 40 percent. The marriage penalty would return, and the child tax credit would be cut in half. While we would prefer a permanent solution to these impending tax rate hikes, a two-year tax hike delay is acceptable in this environment.

AMT Patch. Without immediate action, the number of families facing the alternative minimum tax (AMT) would rise from 4 million in 2009 to 28 million in 2010. . . . A one-year solution is acceptable in this environment.

Death Tax. ATR believes that the death tax should be permanently abolished. Second-best would have been an extension of 2010 law (no death tax) on a temporary basis. This deal contains a third-best solution: a death tax at a rate lower than what current law (55 percent top rate in 2011) calls for. While this is among the most disappointing aspects of the deal, it is far preferable to the 55 percent, $1 million exemption death tax scheduled for January.

Full Business Expensing. . . . ATR is very supportive of this measure, and thinks it should be expanded and made permanent. Immediate expensing of capital purchases is one of the bedrock changes needed to move our tax system toward a pro-growth consumption base.

Unemployment Insurance. This is the worst part of the package, and evidence that a deal requires each side to get something. This new spending should be offset with spending cuts elsewhere. Unemployment for 99 weeks is indistinct from welfare, and subsidizes non-work.

Payroll Tax Rate Cut. A two percentage point reduction in the payroll tax rate is a minor improvement over continuing the Making Work Pay credit. This is progress.

Personal and Business "Tax Extenders." ATR does not believe taxes should go up for anyone. Just as we believe the 2001 and 2003 tax provisions should be extended, we also believe that often-passed business and personal tax deductions and credits should also be extended. In many cases, these are horrible tax policy. However, getting rid of them should be done in the context of a comprehensive tax reform bill, not in this tax hike prevention bill . . . "

This will bring a smile to the lips, no doubt, of Sen. John Thune (R-S.D.), who was throwing an elbow earlier in the day, presumably, at Mitt Romney when he said, "It's easy to stand on the sidelines and criticize this proposal. . . . And it's perhaps even politically expedient to stand on the sidelines and criticize this proposal. But let me make one thing very clear Mr. President, advocating against this tax proposal is to advocate for a tax increase."

Score: Dealmakers 1- Purists 0.

By Jennifer Rubin  | December 15, 2010; 8:30 AM ET
Categories:  House GOP, Senate GOP, Taxes  
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Comments

So now we're keeping score? Is that what this is about?

Posted by: cajunkate | December 15, 2010 8:55 AM | Report abuse

@cajunkate:
Do you think we shouldn't keep score, or track who is in favor of what? I'm confused.

Posted by: bzod9999 | December 15, 2010 9:06 AM | Report abuse

But ATR's arguments are lies pure an simple:

"The tax rate at which a majority of small businesses pay tax would rise to nearly 40 percent" 40% is the MARGINAL rate, not the overall rate. The CBO has found that only 3% of "small business owners" have afjusted gross income over $250,000 and most of these are very rich people who only own a small bit of a "small business."

"The marriage penalty would return" - There never was a marrigae tax penalty. While some married couples did pay more income tax than they would have if they had been allowed to file as single, other paid less--they got a marriage tax bonus. These two cancelled so that the group of ALL married couples paid the same, on average, as they would if they had filed as single. The law changed a fair situation to an unfair one.

"Death Tax" - There is no such thing. The tax is on the estate, not on death. Your heirs pay according to how big the estate is, not on how you died. In 2000, 80% of the funds in estates that paid estate tax were investment income on which on tax had never been paid. The only tax on these funds is estate tax. The percentage is higher today. Why should the very rich get away with billions being tax free while the rest of us must pay taxes?

"Full Business Expensing" - This won't help because businesses are not going to spend money when demand is not there. They are already sitting on $2 TRILLION in cash. There is litttle demand since the rich have taken all the benefits of economic expansion since 1981.

"Unemployment for 99 weeks is indistinct from welfare, and subsidizes non-work." - There is zero evidence to support this. I suggest you try and live on unemployment benefits for a couple of years and see how you like it.

I will return to the general belief that low taxes are good for the econmy in a later comment.

Posted by: lensch | December 15, 2010 9:32 AM | Report abuse

ATR and many others say that letting all the Bush tax cuts expire would negatively impact the economy. Can you give me an example in US economic history when raising taxes did so? I can give you an example in the other direction. When Clinton was inaugurated, unemployment was something like 8.6%, not much different than when Obama took office. (I know, the state of the economy was much worse.) Clinton raised taxes and in spite of the Republican takeover in 1994, taxes remained high during his administration. Over 20 million private sector jobs were created. Bush took office with a much better economic situation, cut taxes over $2 TRILLION and practically no private sector jobs were created.

I know it sounds good to say that increasing taxes will lower demand, but suppose the extra revenue were use to repair infrastructure, boost education, etc. Is it clear, as you seem to believe, that we would not be better off? History seems to come down squarely on the side of higher taxes.

In 1946 the debt was 120% of the GDP, It went straight down to about 32% in 1973. During this period 1946 - 1973 taxes were much higher. Marginal rates were at least 70%; they were 93% under Eisenhower. The economy was better than what we now have. For example, median wages went up 3 times as fast as since 1973. CEO's earned 50 times what their workers earned; it is 500 times today. Staring in 1973, the percent of wealth and income taken by the richest 10%, 1%, and 0.1% has gone up at an ever increasing rate.

Since 1900 the two periods with the most economic inequality were the years leading to 1929 and 2008. These happened to coincide with the two periods of lowest taxes on the Rich and the greatest financial speculation. Here's a theory which fits this data.

The Rich hate to pay taxes. You may have heard of the rich guy who will spend $2 to avoid $1 in taxes. So when marginal rates are high, they will leave their money in their companies and use it to pay their workers more, improve their means of production and perhaps hire more. This works out because when there are more workers with more money, there is more demand. When marginal rates are low, the Rich take their profits out of their businesses. Since they can only buy so many houses in Barbados, they use the money to speculate. They buy Argentinean railroad bond (1920's) and CDO's, CDS's and oil futures (2000's). Notice that both these periods of low marginal rates, high inequality and great speculation led to economic disaster.

Posted by: lensch | December 15, 2010 9:38 AM | Report abuse

lensch,
Semantics does not equal lies. While I'm sure your obvious class warfare envy is eagerly accepted in the echo chambers at Ezra and Greg's places, respectively, I think it likely you will need to bring more game to Right Turn. That said, I eagerly await your reasoned explanations for how stimulative high taxes are later this AM.

Posted by: bzod9999 | December 15, 2010 9:42 AM | Report abuse

Bzod - I notice your comment contains no data, no facts, just a personal attack. This is typical of conservatives who all seemed to have lost contact with reality.

BTW you should look up what "semantics" means.

Posted by: lensch | December 15, 2010 9:58 AM | Report abuse

Lensch,
If you think that what I wrote before is a personal attack, you must not spend much time on the Interwebs, you fre@king class warfare, DailyKos talking point spewing libtard. (An example of a personal attack).

Semantics: the meaning, or an interpretation of the meaning, of a word, sign, sentence, etc.

See "tax rate" vs. "Marginal tax rate" or "Death Tax" vs. "Estate Tax".

Posted by: bzod9999 | December 15, 2010 10:35 AM | Report abuse

It is absurd to blame Republicans for a tax increase if they refuse to go along with this madness. There is simply too much pork in the bill. The country will be far better off if we wait for the new Congress to convene. At the end of the day, the general public will also thank the GOP for holding firm. The temporary jump in the tax rates is a price well worth paying.

Posted by: DavidThomson | December 15, 2010 10:45 AM | Report abuse

Davidthomson wrote:

"At the end of the day, the general public will also thank the GOP for holding firm."

I've noted some of your posts. You write some pretty funny stuff!

Posted by: 54465446 | December 15, 2010 10:51 AM | Report abuse

bzod - Thanks for your instruction on personal attacks; I am a novice.

The difference between tax rate and marginal tax rate is more than semantics. It can be mathmatically huge.

If the difference between death tax and estate tax is mere semantics, why do conservative insist on using death tax? In point of fact, they use death tax to try to get people to believe that everyone will have to pay it since everyone dies.

In any case, I must congratulate you for turning the discussion from natters of substance to trivia.

Posted by: lensch | December 15, 2010 11:13 AM | Report abuse

Paul Ryan should not be taken seriously. The recent "dialogue" with David Brooks indicates that he is too anxious to be perceived as pragmatic and bi-partisan. The latter man is intellectually shallow and rarely has anything worth while to say. He bends with prevailing ideological wind. Ryan must be taken with a huge grain of salt.

Posted by: DavidThomson | December 15, 2010 12:52 PM | Report abuse

Paul Ryan is charismatic. If he can get out of the House and become a Governor or Senator, he will be president someday.

Posted by: 54465446 | December 15, 2010 2:27 PM | Report abuse

54465446 praises Paul Ryan. This should serve as a warning to Republicans. 54465446 is no friend of the Tea Party movement. If this individual is saying nice things concerning Ryan---then it likely this elected official is doing something very wrong!

Posted by: DavidThomson | December 15, 2010 4:05 PM | Report abuse

54465446 praises Paul Ryan. This should serve as a warning to Republicans. 54465446 is no friend of the Tea Party movement. If this individual is saying nice things concerning Ryan---then it likely this elected official is doing something very wrong!

Posted by: DavidThomson | December 15, 2010 4:05 PM | Report abuse

David:

The Tea Party movement ended with the election. If you need proof just take a look at the deficit reducing, er I mean deficit expanding tax cut bill promoted by Reps, or the earmark bill which had no Rep earmarks, er excuse me which was filled with Rep earmarks.

No third party or psuedo third party survives the elction in this country, and this is no different.

Posted by: 54465446 | December 15, 2010 6:26 PM | Report abuse

The comments to this entry are closed.

 
 
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