President Obama may hand Republicans their first victory on tax cuts for the rich without a fight
From the looks of things in Washington, President Obama is well on his way to literally hand over an extension of the Bush tax cuts for the millionaires and billionaires of America. Meanwhile, our economy is teetering by with sky-high debt and a large deficit. These people must really be suffering for them to be complaining this much about a 3% increase in taxes.
Income inequality is by far the biggest threat to our democracy, and our nation’s wealth. A June CBO study indicated that the income gap between the top 1% and lower-to-middle wage earners more than tripled in the last 30 years. While on paper our tax structure is considered to be progressive, we have what most will agree is an extremely regressive tax structure, which seeks to reward those with the most money. The Bush tax cuts have only contributed to this ailment.
As stated in “Debunking Misleading Republican Ideas,” the average change in net income from 2006-07 for the bottom 20% of wage earners was a measly $800 dollars compared to $88,800 for the top 1%. During the inaptly named “economic expansion” under the Bush administration, two-thirds or 66% of income growth went to the top 1%. Instead of rewarding hardworking Americans, our system funneled millions and billions of dollars into the pockets of the wealthiest Americans—the real elites.
Billionaire investor Warren Buffett has repeatedly called for more lower and middle class tax cuts, while also advocating for tax increases on the top 2%. Buffett famously pointed out a major discrepancy in his effective tax rate when compared with the rate his secretary pays. Warren Buffett says much of this has taken place within the past ten years, severely tilting the many new benefits to the richest Americans.
Average Tax Rates
- Warren Buffett: 17.7%
- Average for his Office: 32.9%
- Personal Note: As a percentage of my income, I pay more in taxes than Warren Buffett, who agrees is problematic and unfair.
The way in which social security taxes are applied also provides a huge tax incentive to the rich. For example, if you earn $50,000 a year, you pay 6.2% of your wages toward social security withholding, and your employer matches that amount. If you earn $2 million dollars, you only pay 6.2% on the first $106,800 dollars, leaving $1,893,200 dollars which is not subject to the 6.2% social security tax.
Extending all of the Bush tax cuts will cost roughly $3.9 trillion dollars over the next decade. The tax cuts for the rich will cost roughly $700 billion dollars over that same period. A Washington Post article said the Republican plan to extend tax cuts for the rich will add $36 billion to the deficit next year alone.
The burden can’t fall on the middle class, but instead must fall on the people who can afford it. It must fall on those who have been benefiting from bankrolling the congressmen who implement regressive tax policies that solely benefit the rich. Can any Republican really look at us with straight face and claim to be a deficit hawk?