In an October report, Adam Looney of The Tax Policy Center helped clarify some of the major debate issues in the fiscal cliff discussion. In contradiction to common perceptions, the Administration’s current proposals would continue to extend certain tax cuts to the top 2% of US taxpayers, but at a rate of about 30% of the cost of extending cuts in their current form. In the top 1% of taxpayers, there are essentially 3 tiers of revised tax cuts in the President’s proposal, and these differ significantly in tax break percentage.
The dollar impact? From the TPC’s analysis, “the heated debate over whether to extend all of the tax cuts or whether to extend merely the vast majority largely concerns whether to extend an extra $310,000 in tax relief to the wealthiest 120,000 taxpayers or whether we should instead make a relatively small down payment toward fiscal sustainability.” That’s right. The math works out like this: $310,000 x 120,000 highest income taxpayers = $37.2 billion dollars a year. That’s an impact to the federal deficit of a whopping 2.3 100ths of 1%. Tough to imagine? Picture 16,250 balls in a pool. Now, remove 4. Ta-dah! But, surely it must impact annual government spending in a profound way. A whopping 1%, and that’s a bit over 3 days’ expenses for Uncle Sam.
Am I a protector of 1 percenters? No. I’m not a single agenda person. I try to share verifiable information that clarifies issues in ways that rhetoric can’t. And, I smell a Hawaiian rat. If the goal is debt and deficit reduction why is the message always “the rich need to pay their fair share”? It turns out the Administration’s idea of that is a pimple on the…well, you get the idea. On the other hand, the President’s political foes reject tax-based proposals and push for tougher spending cuts that have the potential to advance short and long term fiscal responsibility. This round goes to the opposition.