The non-partisan Tax Policy Center published a fairly detailed analysis yesterday of Mitt Romney's new tax plan, and it led to a series of headlines like this one: "Wealthy would cash in under Romney tax plan."
Mitt Romney's new tax plan would mean lower taxes for most Americans. But some would benefit more than others.
According to a new analysis from the Tax Policy Center, wealthy Americans would see their taxes fall precipitously under Mitt Romney's new plan -- which scraps the Alternative Minimum Tax and cuts marginal tax rates by 20%.
Assuming the Bush tax cuts are extended, the Romney plan would give the top 1% of earners an average tax cut of $150,000, a 7.8% reduction in their average federal tax rate, according to the Tax Policy Center.
I put together a chart to help clarify the extent to which Romney's plan benefits the very wealthy more than everyone else. Using the Tax Policy Center analysis, here's the change in effective federal tax rates under the Romney plan.
Note, the Romney campaign insists that the former governor's plan would give everyone a tax break. Putting aside, at least for now, whether everyone really needs yet another tax break in a time of high deficits and considerable public needs, the talking point isn't quite right.
As the TPC analysis shows, those in the lowest quintile -- folks in the bottom 20% of all earners -- would actually see a tax increase under Romney's plan, because the Republican intends to eliminate several Obama-era policies that benefit those struggling most.
Romney would then extend modest breaks to the middle class, while slashing rates on the very wealthy. The top 1% of all earners would get a tax cut worth about $149,997 a year, while those at the bottom would get a tax hike of about $149 a year.
The Tax Policy Center, not surprisingly, also found that Romney's plan would make the deficit much worse -- nearly a half-trillion dollars in 2015 alone -- because the Republican has made no effort to explain how he'd pay for these unnecessary tax breaks.
And in an electoral context, all of this matters, not only because Romney is a fiscal fraud, but because it reinforces one of his central problems: he's a very rich conservative who intends to fight for other rich conservatives.
To help address Romney's difficulties with the working class, some on the right have encouraged the former governor to direct "some of his economic attention to the specific needs of struggling Americans." That's not bad advice, but Romney's tax plan makes clear, in a rather conspicuous way, how the Republican presidential hopeful is going out of his way to go in the opposite direction.
E.J. Dionne Jr. had a terrific column this week, driving the point home: Romney is pushing an "extremist economic agenda, built on "reactionary and regressive ideas."
Romney's plan is simultaneously extreme and very, very boring. It draws on the one and only idea that today's conservatives offer for solving any and every problem that comes along: just throw yet more money at rich people. [...]
Romney promised to enact an "across-the-board, 20 percent rate cut for every American," pledged to "repeal the alternative minimum tax" and said he'd abolish the "death tax" (conservative-speak for the estate tax paid by only the most affluent Americans.) He'd lower the corporate tax rate to 25 percent, "make the R&D tax credit permanent to foster innovation" and "end the repatriation tax to return investment back to our shores."
It's not exactly "Ask not what your country can do for you," but these ideas do appeal to Romney's most faithful constituency in primaries: Republicans earning more than $200,000 a year. In Michigan, they backed him over Santorum by 2 to 1.
Dionne concluded that for all of Santorum's extremism, it's Romney who has "radical views about how wealth and power ought to be distributed in the United States."
For all the talk from the right the last several years about "redistribution of wealth," the likely Republican presidential nominee has put forward an ambitious plan to do exactly that: redistribute wealth, rewarding those at the very top.
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I'd be interested to know how many taxpayers actually fall into each of these income categories. It may be just the bottom 1/5th who would see a tax increase, but how many real people comprise that 20%?
US population: about 300 million (plus change).
20% of 300 million = 60 million (plus change.)
It doesn't exactly work that way. According to U.S. Census Bureau data from 2005, the top quintile (defined by the Census Bureau as those people with annual earnings greater than $100K) is comprised of fewer than 6% of individual earners, whereas the bottom quintile (defined by the Census Bureau as those with annual earnings less than $25K) is where almost 43% of American wage earners reside. That means, based on your approximate population numbers, about 18 million Americans are in the top fifth, but more than 129 million are in the bottom fifth. Remember, we're talking about income quintiles, not population quintiles.
The question is not how many people will see their tax increased, how many will see their tax decrease miniscule-ly, and how many really see the tax cut. The ultimate question is what do we pay for those cuts in the end.
To give you an example, Arnold Schwarzenegger took the governorship of CA running on the campaign of lowering taxes. The recall of Gov. Davis was mainly because people were oppose to have their car registration fee raised. At the time, car registration fee in CA was one of (if not) the lowest in the nation because it was reduced during the internet boom (with the comprehension that it can be raised if and when the state ever need the money).
CA got their wish: car registration didn't go up, and for the most part taxes didn't go up. But with that comes: budget cut on education (that cause tuition fee to hike, the cutting of aid for special need education and support), budget cut in public service (less firefighter, less police, less teachers), budget cut in parks and recreation service (less rangers)
For a regular family, they might have save $100 a year in car registration fee, but how much does it cost them to put their kids in college? How much is it worth to have a full functioning fire/police department in your neighborhood? How much is it worth to have good teacher in your kids school?
Federally, I'd gladly waived the $700 a year I got from Bush to get our economy back to the time before he generously gave us those tax cut.
Excellent comment.
Romney: stupendously stupid.
I really am beginning to think he simply cannot see any other point of view but his own and that of his uber-rich friends. Tone deaf, evil... it doesn't matter which. He is playing this in a spectacularly stupid fashion.
I am wondering what he will cut to be able to give rich people such a large tax break ,as of now we have been cut to the bone, also if the republicans keep the house of reps what excuses they will present to be able to give him what he wants,if they do increase the deficit,they will be cutting their own throats ,because the people have been hurting so bad because they have been holding us all hostage so they can make Obamas adm look bad!
Steve, thanks for posting this.
I'm sure Ms. Maddow, who I read earns $2,000,000 a year, though - laughingly - identifies with the '99%' - will appreciate the tax breaks....
Actually Rachel has publicly stated that she thinks her taxes are too low and that she thinks her tax rate should be around 50%. This is why she advocates that her taxes be raised on a continual basis on her show. Additionally before Maddow worked at MSNBC she worked for Air America making around 250,000/yr and before that she worked odd jobs making minimum wage. Just saying you can identify w/ the 99% even if you aren't currently in the 99%. But beyond this the question is to whom do you want the tax policy to favor? Those who have the most income or those who have the least? She favors the latter and not the former and she's quite vocal about it.
Rather than 'be vocal about her taxes being too low,' Ms. Maddow can certainly cut a much larger check to the government. I have no doubts the feds will accept it....!
She, of course, can certainly work for a lot less at MSNBC.
She also can refuse any honorariums for her public speeches.
The simple truth is that like so many members of the left, Ms. Maddow is sympathetic to the left's demonizations of those who take in a very serious salary - and who are defined as the '1%' by the 'Occupy Movement' - yet, in truth, she is more than willing to be an active participant of that same '1%' in her salary structure.
This explains why the word 'hypocrisy' was created so many, many years ago...
And what exactly, would that change?
Your 'simple truth' is flawed by your simple thought process.
The idea, and I shall spell it out for you as best I can, is that she supports her taxes being raised. Yes? So you are in disbelief because she has not written a check to the government? So you believe that if her taxes were to be raised like she wants, she would dodge her taxes? Your response is simple, shallow, and flawed.
And that would even out the playing field, how? So, let's make it optional for people to pay taxes in a way that benefits the country (which is G-IDK, what taxes are supposed to do) is the best way to go? That's the only way to prove it, right?
By that logic, solely because I believe that there should be more elevators here in NYC for the disabled, I should sick my leg out in front of a speeding cab and struggle my way down to the B train. Silliness.
You cannot call her a hypocrite until those taxes are raised, and she avoids them. Don't go throwing out "hypocrisy" like a party favor. Man. Frustrating. Like, think before you talk. It's embarrassing.
I don't begrudge anyone who makes a lot of money. Rachel has earned it and so has Oprah. I don't understand how anyone who is working class can vote republican. The republicans only help the rich they will not stand up for the working class and continue to make it harder on us. Stop protecting the rich they do not care about you. Rachel and Ed Schultz care and are trying to educate you stupid people. Pay attention and stop dishing on those who happen to be millionaires but are listening and trying to help you. Rachel and Ed are they type of millionaires I approve of. I don't approve of millionaire athletes, entertainers, and greedy corporate leaders who pay there employees crappy wages. We need to get our priorities straight in this country.
Can someone please explain to me, a foreigner, how this now repeated idea that an individual should just write a cheque to the IRS as an extra tax payment (and "shut-up" to quote Christie) would work? Does the IRS have a giant tip jar or something?
If I sent an extra tax payment to Revenue Canada they would HAVE to send it back. They cannot legally collect more tax from me that is my legal obligation to pay according to the Canadian tax code.
Is there some secret US tax code for "tipping" the federal government??
John you cannot write a check to the government per say. When you fill out your taxes you can refuse to take deductions and then you can choose, instead of receiving a rebate (if you're eligible to get one), to give that money back to the federal government to pay down the deficit or debt. You do not know that Maddow doesn't already do this. You are making the presumption that she doesn't do this, but you have no proof. If you say 'well it's obvious that she doesn't do it' then you contradict yourself further by showing the need of having taxation raised because what you are inadvertently arguing is that people can not be relied on to pay their taxes so the government must force them to. So either you are a. being presumptive and speaking about things to which you have no evidence or b. you are advocating in AGREEMENT w/ Maddow that taxes should be raised. Which one is it?
What would this have to do w/ her taxation? This would not fix the problems which Maddow advocates need fixing nor would this change the fact that Maddow advocates for their fixing. This argument is a red herring and makes no sense.
I do not think hypocrisy means what you think it means John. To be hypocritical means that you advocate doing something that you personally do not do. Maddow advocates paying a higher tax rate and is on the record saying that she wants taxation to be at 50% for the upper income bracket. Nothing Maddow does as an individual will change this effect even if she stops taking deductions on her tax return. The only way she can fix this is through public advocacy and through voting- both of which she already does. Secondly Maddow never said please raise everyone else's taxes but don't raise mine. She said raise everyone's taxes including mine. To be hypocritical she would have to say that her taxes should stay the same, but everyone else's taxes should increase. That is not what she's advocating. Additionally the 1% is defined by their income bracket. If you make more than 370,000k/yr you belong to the 1%. No liberal out there that I have ever talked to says that it is wrong to belong to the 1%. No liberal that I have ever met says that you shouldn't be allowed to make that much money. There is a philosophy about that, that exists in the world, but it is not widely popular among any group in the US because we're capitalist. What liberals advocate is that the wealthiest 1% have to pay their fair share of taxes. Since they represent more than 80% of the wealth they need to be paying roughly 80% of the taxes. Since they only pay 50% of the taxes there is a gap. Fix that gap and then you won't hear liberals complain. Remember liberals don't hate wealth, they hate greed.
Mouzer/Southdra et. al.,
This is simple.
The 'Occupy Movement' bemoans the lack of 'equality' in wealth - and wages. This kind of 'equality' motivates the left. They not only believe in ever-higher taxes for the wealthy, they bemoan the fact that the wealthy are wealthy to begin with. The decry the 'top 1%' who are the wealthiest people in the country.
As a die-hard leftist, Rachel Maddow, of course, is sympathetic to this worldview.......
...but as we all know, Ms. Maddow isn't working for minimum wage, isn't earning, say, $100,000, $250,000 - or anything close to that.
The truth is that she's earning $2,000,000 a year (!).
She's part of that 1% that the Occupiers supposely so despise.
...and, like I said, if she believes she's taxed too little, she can inform the federal government of this and write a check that would bring her into line with the rest of us '99%.'
Maybe she can advise the government to apply it towards the national debt that the current administration has added 6 trillion dollars to since they took office in 2009.
Maybe she can inform her employer that this isn't right since she makes a living demonizing the wealthy and those with conservative values. There are a number of things she could do to remedy this situation.
Saying 'I'm not taxed enough' is one thing. Talk is cheap. Doing something about it is something else....
Like every leftist I've ever met, the woman spouts a worldview that she feels all of us should live by - but then exempts herself from having to actually live that worldview. The woman is a hypocrite - plain and simple.
Ah, interesting! Now, if you did that, does the IRS just ignore that you haven't taken deductions and accept that as your tax liability? I mean, if my income was 50,000 and my tax rate brings my taxable income to 37,500 ... for sake of argument ... then if my deductions would further reduce my taxable income to 30,000 but I don't claim them ... the IRS will really let me pay taxes on 37,500 vice 30,000? That seems odd to me. I recall fairly clearly that one year awhile back, my taxes were returned to me by Revenue Canada with a note that said "you missed this particular deduction so we've included it and here you go, more taxes back than you expected."
So, I guess this is still a confusing issue for me.
As for the rest of your post, I agree. The idea that Rachel should earn less just so she doesn't have to pay a higher dollar figure in taxes is incredibly silly. She's earned her wealth and I applaud her for it.
ps. John, you're a toadie who doesn't even bother to think through the responses to your original questions, you just spout the same old right wing talking points BS. Get a grip.
'The top 1% of all income earners in the United States made 23% of all income. Their greed has no end." (Senator Bernie Sanders speaking on the Senate floor, wagging his finger.)
The next time Senator Sanders is on Rachel Maddow's television show - hopefully, he'll wag his finger at Ms. Maddow, scolding her on her $2,000,000 salary and - ahem -'greed'....
Leftist hypocrisy is a bottomless well....
It is beyond comprehension how someone as completely asinine as yourself there john gets through the day without maiming himself.
No one minds anyone making scads of money ... what we mind is them using that money to ensure they get a free ride off the backs of poor people.
Pull your head out of your ass, if you can find it without a map and a flashlight.
John has drunk too much Republican kool-aid at the Tea Party.
It is possible to tell a truth in isolation and give a false impression. Any tax plan is likely to reduce taxes the most on the group that pays the most, the weathy. The question is how does this stimuate the economy. And how does that benefit others. I suspect it does benefit others greatly.
In farming there is a concept known as eating the seed corn. Basically you save some of your crop for planting seeds next year. If you eat the seed corn, there is nothing left to plant. Tax consumption has a point when is becomes equivalent to eating the seed corn.
Don't tell me how the weathy are taxed less. Tell me about the stimulous to the economy.
Tax the rich /close loopholes, reduce oil companies "welfare", increase tax on companies that relocate jobs off-shore, reduce farming "welfare". Pass the various job bills that are held up by by-partisan gridlock.
And again how is this stimuating the economy?
It's about increasing revenue which allows the government to stimulate the economy by using that extra revenue to create jobs through investment in the country's infrastructure, for example.
That creates jobs which allows people to earn more income which allows them to buy stuff which allows the stuff makers to earn more money which allows them to buy other peoples stuff ... and so on.
The only class warfare being waged in America today is by the super-rich and their Republican and Tea Party allies that constantly push policies that grow the wealth of the rich and assault the middle-class and working poor. Real Americans are struggling through a withering recession while the richest in this country are getting even richer off of massive government tax breaks and tax cuts. This needs to end. An overwhelming majority of Americans favor making the rich pay their fair share. http://www.sunstateactivist.org
Much of the attention is directed at the GOP extremism on social issues, but what is often overlooked is the GOP extremism on economic issues.
With the current rate of taxation and loopholes/deductions/exemptions vs. spending results in a significant growing deficit. Now let's remove some revenue as sole magic fix. It's a good thing Romney's companies had good accountants and didn't follow his national plan. He would have quickly found out how foolish his current budget proposals are. If he wasn't swimming in tax-reduced capital, he might have to rely on some of the employee assistance he is trying so hard to cut.
This chart is nice and all, but don't let the facts get in the way of the Republican talking points. It's pretty much all they've got, haha.
I really don't think the Republicans care much about facts.
Of course, the argument that Romney's Tax Plan would allocate more benefit to the wealthy or top 1% of income earners are based on Steve Benson's assumption that Romney would extend the Bush tax cuts/incentives.
The problem is that the entire tax code has become so complicated and convoluted that it needs to be completely revamped so that everyone is taxed equally.
Keep your eye on the red king, keep your eye on the red king...anyone can play, anyone can win...keep your eye on the red king...
You there, son. You look like a smart fella, all decked out in your tri-corner hat and old tyme pantaloons. I don't know about any tea party, but we got a card party right here, put your money up, gotta spend money to make your money son, anyone can play, anyone can win....
Now...watch the red king. This is the Tax Cut King. He's gonna cut your taxes! More money for you, son, I can feel it, you're a winner...Now keep your eye on the red king, here he goes, where'd he go, you know where he went don't you son, you're a winner, show me where he went...
Oh, sorry son, that's the black Deficit King. You ain't got enough money, son! Less money comin' in gets you the Deficit King. But I'm a fair man, son, fair and balanced, anyone can play, anyone can win. I'm gonna give you another chance, so put your money up again. See? Here's the red Tax Cut King. Keep your eye on the red king, follow the red king, the red king is money for you! Now...where's the red king?
......Nice try son, but that's the black Budget Cut King. He's even worse. You ain't got enough money comin in, you can't afford to spend that money goin' out! Gotta cut that spending, son. Can't afford that support, and that's a shame. But you can always play again, son, because anyone can play, anyone ca....
...what do you mean you're out of money? No money means you can't play. This isn't a charity I'm runnin' here, moocher. You got no money, you can't play; you can't play, you're wasting my time. Move along son. You're bad for business. I got winners lining up waiting to play and make money, make money, make money...makers not takers...
Watch the red king, keep your eye on the red Tax Cut King....Anyone can play, anyone can win.....Well...not anyone....
That our Republican Senators and Representatives are opposing a reimplementation of the Clinton tax rates is appalling. Who the hell is Grover Norquist anyway, and how made him king? It is imperative that the tax rates go up. Living in a free country isn't free....
absolutely right Neil,but John is so intent on spending Rachaels money ,will he be willing to pay a little extra for his part of the deficit,I think he will not he is just another republican who wants everyone to think he is important
The question is are voters to the point where the electorate understands proposals which actually are against the interests of those voting?
In the era of Fox News Channel propaganda, and corporation-slanted network news organizations, the "average" thinking person must devote an extraordinary amount of time to wade through the fog of uncertainty covering the truth.
That seems to be one of the biggest problems Bob. People that follow FOX news exclusively seem to swallow everything said on the air as gospel truth and are constantly distracted by these idiotic issues that they espouse. Gas price is the latest distraction being screeched. Most people don't seem to understand that oil and gas prices are driven by world demand and speculation in the stock market. The republicans don't want to regulate anything so it leaves these gamblers in charge of fixing the pricing to maximize profit. The republican's running for the king of the clowns are lying about how easy it would be to get the gas price to $2.00 and the zombie's in that party start screeming about drilling for oil in Yellowstone and deep water Gulf of Mexico, where they still haven't finished cleaning up the last mess and have no idea of how to keep it from happening again. All you have to do is say Obama wants to take your guns, he is a Kenyan Muslim not born here that is making a killing off his association with Saudi oil sheiks and these fools don't look any further than that statement for proof
How does it help stimulate the economy? It can go towards the infrastructure and create jobs. The best thing the rich can do is pay there employees a better salary so we can buy more goods and services. If they want a tax break show the government your payroll and how much of the profits are going to your employees to stimulate the economy. When you have a healthy middle class everyone benefits. The rich have had too many tax breaks with wages for CEO's being over 400 percent more than the average worker. This is why the economy is where it is today. Also do the rich not use our roads, airports, police and fire services? What about the customers that have to get to there business? Do they not use many of the public services the rest of us use? Why should they get all the exemptions?
It's difficult to attribute the original source, but some wise person once observed that "Taxes are the price you pay to live in a civilized society." If the Republicans were to take their "no taxes" policy to it's logical conclusion, there'd be....no taxes! No taxes means no military, no police, no fire dept. The Rich would have to spend their money (Heaven Forbid!) on private security forces to protect them. Private armies to defend them! That's what you call....feudalism, no? You suppose they actually think these things through?
hell no they just depend on fox to do all their thanking
We have two problems: an under-performing economy and an unsustainably growing debt. Trying to solve one exacerbates the other. The charlatans in politics seem to choose the one that suits there purpose, so if tax increases are proposed to address the debt we hear complaints that this will hurt the economy. On the other hands, attempts to increase demand to stimulate the economy are criticized for there impact on the debt. The honest approach would be to take actions whose combined positive effect on the economy and debt increase together is greatest. Not an easy balancing act. But it is one that probably includes both an increase in taxes and a reduction in expenditures such as defense, agricultural subsidies, and gradual changes to Social Security and Medicare. But a rational approach seems to be out of the question when we prefer to just score points off each other.
What's even sadder is that this plan revolves around the federal tax rate. Well, it's well documented how people don't understand how they're being taxed so I bet a dollar (that's my lunch money mind you :P) that when people's state and local taxes are increased to try and make up for the shortfalls that people will complain and attack federal taxes yet again. They don't see that eventually they'd want the Fed tax rate to be zero and that they somehow expect poor people to cough up the money to make up for it.
I was reading the comments on this article. It brought a question to mind. Here is a thought to make everyone even in this country and I wanted to see what folks had to say on this. Lets say you set it up to where people in this country can only take home as much as the poorest of us working. Lets say $15k a year. Now anyone else making over that gets it taken by the government to pay for what ever it deems is needed for the population. Would that be fair?
I just received a credit card offer in the mail that says "limited to only 1% of US residents." The black card from Visa. I am glad that I am now a member of the 1% and I say to my fellow 1% er's, "raise my taxes, I am willing to pay my fair share". By the way, the baseline interest rate is 14.9%. I believe that as a 1%er, I can do better.
Try to think out of the political box on tax reform.
We need to eliminate tax expenditures (a/k/a loopholes) and expand the tax base to enable the lowest tax rates. It would be far better to have real tax reform that taxes the $53 trillion net wealth of everyone at 2% (over a $15,000 exemption) and the $12.5 trillion income of everyone at 8% (bringing in about $2.1 trillion). By eliminating payroll taxes (and paying social security and Medicare from general funds) lower-income workers would keep 17% more income each year. Higher earners would save even more from the low income tax rate but would be paying more in wealth taxes as they become wealthy. Taken together, the wealth and income taxes are progressive. The increase in take home pay creates significant economic mobility. Because the rates are the same for rich and poor it would also be the fairest tax system on the planet.
The increase in consumer power from individual tax reform will boost the economy but business tax reform is needed to shift the economy into high gear and to raise some additional revenue. Every developed country except the United States has a business sales tax in the form of a Value Added Tax (VAT) paid by business. A 4% tax on $10 trillion in sales would yield another $0.4 trillion in revenue. The taxable income from C corporations is about $1.1 trillion (FY 2010) and produces only $191 billion in government revenue. Loopholes and overseas tax deferrals have resulted in some very profitable international companies paying no taxes. A reduction of the corporate rate to 8% would be a fair and politically feasible tradeoff for an elimination of these grossly unfair tax loopholes.
The political icing on the 2-4-8 Tax Blend cake is that taxes on capital gains, estate transfers and gifts would not be necessary - restoring economic freedom to the lifetime planning decisions of the investment class.
Eugene Patrick Devany, JD, MPA
www.TaxNetWealth.com