Video: Gregg schools Mitchell on “paying for” tax cuts
posted at 11:36 am on December 8, 2010 by Ed Morrissey
Via Radio Vice Online,outgoing Senator Judd Gregg gently schools Andrea Mitchell on the concept of “paying for” tax cuts. That construct, Gregg explains, assumes that all income belongs to the government, and that there is a cost in allowing people to keep their own money. Why hasn’t anyone started demanding an explanation of “paying for” the increase in government spending, Gregg wonders, that has risen from 20% of GDP to 24%, on its way to 28%? The only thing with explicit cost is government spending, not tax rates, and it’s high time people remembered that:
For a bonus in schooling on taxes, we turn to Suitably Flip, who does more math than the New York Times’ David Kocieniewski. The Times reporter warned that the deal cut by Obama yesterday will benefit the wealthiest 1% the most:
The deal to extend the Bush-era tax cuts for two years includes a bevy of additional credits and deductions that will reduce the burden on nearly all households.
But the tax benefits will flow most heavily to the highest earners, just as the original cuts did when they were passed in 2001 and 2003. At least a quarter of the tax savings will go to the wealthiest 1 percent of the population.
Sounds bad — unless one remembers that the wealthiest 1% currently pay more than 25% of all income taxes:
What the Times left out was the fact that the top-earning 1% currently pays more than 38% of all income taxes.
Had the tax cuts expired, the seethingly evil top 1% would’ve pitched in just $0.25 of every new tax dollar (per the Times‘ analysis), ratcheting down their 38% share. While taxes would’ve gone up for everyone, the relative burden on the wealthiest would’ve eased.
The “savings,” then (a creative choice of words, given that we’re talking about maintaining the status quo), are indeed disproportionately shared by the highest earners. But not nearly as disproportionately as they share in the existing tax burden.
In other words, the deal keeps the current system a little more progressive while lowering everyone’s tax burden. If you’re a New York Times reader, you never would have gotten that additional context, which is one reason to keep Suitably Flip handy while reading that paper.