Debate over: Obama rules out extending Bush tax cuts for richest taxpayers

posted at 10:51 pm on September 7, 2010 by Allahpundit

Message from The One to Peter Orszag: I won.

President Obama will rule out on Wednesday any compromise that would extend the Bush-era tax cuts for the wealthy beyond this year, officials said, adding a populist twist to an election-season economic package that is otherwise designed to entice support from big businesses and their Republican allies.

Mr. Obama’s opposition to allowing the high-end tax cuts to remain in place for even another year or two would be the signal many Congressional Democrats have been awaiting as they prepare for a showdown with Republicans on the issue and ends speculation that the White House might be open to an extension. Democrats say only the president can rally wavering lawmakers who, amid the party’s weakened poll numbers, feel increasingly vulnerable to Republican attacks if they let the top rates lapse at the end of this year as scheduled.

It is not clear that Mr. Obama can prevail given his own diminished popularity, the tepid nature of the economic recovery and the divisions within his party. But by proposing to extend the rates for the 98 percent of households with income below $250,000 for couples and $200,000 for individuals — and insisting that federal income tax rates in 2011 go back to their 2001 levels for income above those cutoffs — he intends to cast the issue as a choice between supporting the middle class or giving breaks to the wealthy.

Right. This is his way of baiting the GOP into opposing him so that Democrats can go back to screaming about how Republicans are the “party of the rich.” It ain’t much, but it’s a little something that might peel off a few populist independents before the midterms. The question is, what do the Blue Dogs do? Stick with the party and spare The One an awkward veto? Or defect in the Orszagian name of temporary tax cuts for everyone to provide a little extra stimulus? If the latter, they’ll spoil the whole partisan “party of the rich” attack. Exit question: Would an Obama veto be that awkward, really? It’d prove he was serious about keeping his campaign promise not to extend the cuts for wealthy taxpayers, but I wonder if the class warfare bonanza will outweigh the horrible optics of vetoing any sort of tax cut right now.

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The Levite was rich.

unclesmrgol on September 8, 2010 at 2:21 PM

Estate tax break also goes out Jan. 1. So could we say, “Children and old folks hardest hit”?

And I’m kind of confused on one point, if the 10% bracket and the $500 child tax credit both get zapped, what happened to that “If you make less than $250,000 a year, your taxes will not go up?”

Seems to me even the Kool-aid drinkers are going to catch on that he lied through his teeth on that one.

UnderstandingisPower on September 7, 2010 at 11:16 PM

The 10% tax bracket applies to $6,000 of income for singles, $12,000 for couples. If it goes back to 15%, that costs 5% of $12,000, or $600 for every middle-class taxpaying couple.

If the child tax-credit is slashed from $1,000 per child to $500 per child, it would cost middle-class taxpayers a net $500 per child.

The Bush tax cuts also reduced the third tax bracket from 28% to 25%. Anyone in that bracket (well below $100K for all filing statuses) would see their taxes go up by 3% of the part of their income in that bracket.

The Bush tax cuts also eliminated the marriage penalty, whose effect varies according to income.

For a family of four, doing nothing NOW (failing to extend the Bush tax cuts, regardless of what is done to incomes over $200K) will increase taxes by AT LEAST $1,600 (plus marriage penalty plus 3% of the 25% bracket) on TENS OF MILLIONS of middle-class (<$100K) taxpayers. Republicans need to shout this from the rooftops, and not worry much about the "soak the rich" meme.

In these days of massive foreclosures, Republicans should try another tax reform: remove the $3,000 cap on writing off capital losses on a principle residence against taxable income. If a family was forced to sell their home at a big loss, if all the losses could be written off against taxable income, it could result in NO income tax liability for the year. A big refund of withheld taxes could help such families save up for a down payment on a new home, and jump-start the housing market…

Steve Z on September 8, 2010 at 2:38 PM

Debate over: Voters rule out extending Obama regime for another term.

Virus-X on September 9, 2010 at 12:38 AM

This just in…

“( – In the first 19 months of the Obama administration, the federal debt held by the public increased by $2.5260 trillion, which is more than the cumulative total of the national debt held by the public that was amassed by all U.S. presidents from George Washington through Ronald Reagan.

Fighton03 on September 9, 2010 at 1:56 AM

Over the years a lot of suspicion has built up across the country about Washington and its population of opportunistic transients coming to see themselves as a special kind of person, somehow above average working Americans who don’t work down in that former swamp.

Well, finally, an end to all those undocumented doubts. Thanks to some diligent digging by the Washington Post, those suspicions can at last be put to rest.

They’re correct. Accurate. Dead-on. Laser-guided. On target. Bingo-bango. As clear as it’s always seemed to those Americans who don’t feel special entitlements and do meet their government obligations.

We now know that federal employees across the nation owe fully $1 billion in back taxes to the Internal Revenue Service.

J_Crater on September 10, 2010 at 7:42 AM