As year-end approaches, the debate over the expiring Bush tax cuts is getting messy and harder to tolerate. Part of the reason is that there are more than just the usual suspects trying to advance clearly terrible proposals.
Sarabeth Guthberg at 1115.org had me squinting at her blistering critique of claims made by political advisor/economist Mark Zandi. (He had it coming.) As a key advisor to House Speaker Pelosi, Zandi is trying to rally support for permanent extension of the Bush tax cuts benefiting the "middle class," and a one-year-but-not-really extension of the tax breaks for those earning more than $250,000 per year (roughly the top 2%). He says it's necessary because the recovery is still too fragile, and that even the richest Americans "may be sensitive." (And, we wouldn't wanna make anyone cry, right?)
Experts from different sides of the board, including Paul Krugman and Alan Greenspan, have sounded off, saying the Republican proposal to permanently extend all of the Bush tax cuts is a bad idea. The tab for such a move would run up to around $3.7 trillion over 10 years.
Guthberg summed up the costs of 10-year extension of the Bush tax cuts benefiting those being defined as "wealthy," and those defined as "middle-class" by the Obama administration:
"For the first 98% of Americans, extending the tax cuts for 10 years will cost $3 trillion. By a rough calculation, that’s $2,500 each year per taxpayer.
For the next 1.9% of Americans, extending the tax cuts for 10 years will cost $320 billion. By a rough calculation, that’s $14,000 each year per taxpayer.
For the last 0.1% of Americans, extending the tax cuts for 10 years will cost $360 billion. By a rough calculation, that’s $300,000 each year per taxpayer."
And, the Washington Post put together a nifty bubble chart to show us what the 10-year per taxpayer costs would look like across income levels.
In spite of the massive price tag on the Obama proposal to extend tax cuts for the first 98% of earners, the overall economic impact would be stimulative, as low- and middle-income people will continue to create demand for goods and services. The $680 billion it would cost to extend the tax cuts for the top 2% would unnecessarily contribute to the GOP's precious deficit and further shift the costs of public services onto said middle class, which would be particularly tough on middle to low-income families.
The passage of President Obama's proposal on the Bush tax cuts would be a small, but positive step. It's not our endgame, but we can still use the momentum of a modest victory to press forward for greater tax fairness.
Looking for a laugh? Watch Stephen Colbert's commentary on the Bush tax cuts.
Chart h/t Washington Post
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