Green Room

Changing the definition of middle-class AKA Republicans are winning the tax debate

posted at 8:28 am on May 24, 2012 by

In a letter to House Speaker Boehner sent yesterday, House Minority Leader Nancy Pelosi (D-CA) called for the following:

Without further delay, the Majority Leadership should schedule a vote on extension of the middle-income tax cuts, as early as next week, to increase certainty for millions of American taxpayers and for the economy.  We should not delay passing this legislation that will help afford all Americans the opportunity to reach their goals and realize the promise of the American Dream.

We must ask the very wealthiest Americans to pay their fair share.  Democrats believe that tax cuts for those earning over a million dollars a year should expire and that we should use the resulting revenues to pay down the deficit.

There are a myriad of ways for conservatives to respond to this letter (it goes on for much longer than what I posted above), but here are three:

1. In 2010 House Democrats – then the Majority Party – pushed voting on the Bush tax cuts until after the November elections for political strategy reasons. Tell me again why Pelosi has any moral authority on timeliness of tax policy extensions.

2. As noted at the liberal blog Fire Dog Lake yesterday, Pelosi has changed the goalposts on what is “middle-class.” It used to be those making less than $250,000 annually. Now it’s someone who makes less than $1 million.

3. The Congressional Budget Office’s (CBO) static analyses of the Bush tax policies said extension of the policies for those making over $250,000 would “cost” the federal government somewhere around $700 to $800 billion over ten years. While I don’t know how much “deficit reduction” would come from raising the marginal rates for millionaires, it can’t be much – in 2008 Fact Check found 1 in 50 taxpayers made $250,000 or more, but recent IRS data shows only 1 in 1,000 taxpayers makes one million dollars or more per year.

To put #3 another way, the Politico article summarizing the aforementioned IRS data notes millionaires made a combined $726.9 billion in 2009. Taking every single dollar from millionaires, never mind merely a few percentage points on the top income bracket of their annual income, would cut last year’s deficit by a bit more than half. Raising taxes by a small fraction of that amount for the explicit goal of paying down the deficit is therefore a laughable concept, especially when by Democratic logic (and CBO analysis) taxes extending the Bush policies for non-millionaires would “cost” over $300 billion per year.

I can only guess as to what Pelosi’s goal was in releasing this letter (if Fire Dog Lake is already hammering her, this means she may not be able to get support for the idea from her left flank for higher taxes, never mind centrists and conservatives in her party), but I have to think it was to put media pressure on Boehner to raise taxes on higher earners. Given her willingness to shift the goalposts on who is “wealthy” and who is “middle-class,” however, I say Boehner ought to stick to his press secretary’s one-line response: “Speaker Boehner has already announced that the House will act to stop the tax hike on every American taxpayer.”

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And what is always left out of this discussion is WHERE a person earns their particular level of income. The cost of living wherever they are makes a bi difference.
Someone making $250K / year in western Kansas (for example), is very well-off; whereas $250K / year in LA or Manhatten don’t have nearly the same standard of living.
For me to move from Colorado (not Denver/Boulder) to LA, NY, Boston, or many other cities, and keep the same size house and overall standard of living, I would need easily double or triple my current salary.

dentarthurdent on May 24, 2012 at 12:48 PM

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Ed Morrissey on May 24, 2012 at 5:42 PM

Until we get a definition of “Fair” it has no value.

It becomes really at what income level do you quit working because the government is taking too large a slice.

And/or how do you shelter income from taxes.

The “rich” will find ways. And as always, “taxing the rich” will result in less tax to the Feds.

/sigh Class warfare is classless warfare. But then, we already knew that about Proggies/Libbies .

ProfShadow on May 24, 2012 at 9:14 PM