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Majority Supports Increasing Taxes On High Income Earners

A new poll finds widespread support for the President’s position on raising tax rates for high income earners as part of the ongoing negotiations over a deal to avert the s0-called fiscal cliff:

With the fiscal cliff drawing closer, raising taxes on wealthy Americans remains a popular option. And while the public divides closely on reducing federal income tax deductions, two-thirds oppose another possibility, raising the age for Medicare eligibility.

Sixty percent in this ABC News/Washington Post poll support raising taxes on incomes more than $250,000 a year, long a popular option overall, but also a divisive one: While 73 percent of Democrats and 63 percent of independents are in favor, far fewer Republicans, 39 percent, agree.

Notably, “strong” support for raising taxes on the well-off is nearly double strong opposition, 42 vs. 23 percent. That’s because 57 percent of Democrats are strongly in favor, as are 42 percent of independents, vs. just 22 percent of Republicans.

While well short of a majority, support for a tax increase among four in 10 Republicans may provide some wiggle room to Republican leaders seeking compromise. Some, notably, have indicated a willingness to back off from the no-tax pledge many have taken.

This isn’t really all that surprising, of course.  Two years ago when President Obama and a lame duck Congress were faced with the expiration of the Bush Tax Cuts.  there were several polls showing that the public supported the President’s position to hold the line on extending the tax cuts for those earning more than $250,000 a year (see here,here, and here.) More recently, polling during the Presidential election gave us the same results, and the the Election Day Exit Polling showed the same thing. Politically, the President has one this issue and, unlike two years ago, he’s in a far stronger position than he was two years ago. This is the political reality that the GOP faces.

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About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May, 2010 and also writes at Below The Beltway. Follow Doug on Twitter | Facebook

Comments

  1. Ben Wolf says:

    Amazing how much time we waste on propositions that won’t improve our economic conditions.

    Like or Dislike: Thumb up 6 Thumb down 1

  2. Mikey says:

    Not surprising, really. Of course most people are going to support raising taxes on “the other guy.” And because America already has among the most progressive federal tax collections in the world (due in no small part to our lack of a VAT), I doubt it would do the harm many Republicans say it would to raise taxes on the highest earners.

    Still, we can look to Great Britain’s very recent (i. e. the last couple years) experience with jacking up their top marginal rate to 50%–two-thirds of British millionaires either left the country or shuffled their finances around to drop their incomes below the threshold. The effect on revenues was so bad, the Brits are scrapping the 50% rate and dropping back to 45%.

    Like or Dislike: Thumb up 1 Thumb down 13

  3. Tsar Nicholas says:

    Majority Supports Increasing Taxes On High Income Earners

    In related news, a majority of people want other people to do their work for them, and other people to clean their laundry for them, and other people to solve their problems for them, and other people to wipe their asses for them after they crap.

    Speaking of which, somewhere out there, in the astral plane, Alexis de Tocqueville is snickering at us. And in the here and now China and India are laughing at us too, all the way to the bank.

    Like or Dislike: Thumb up 5 Thumb down 13

  4. Rafer Janders says:

    More recently, polling during the Presidential election gave us the same results, and the the Election Day Exit Polling showed the same thing.

    As did the actual election day voting.

    Like or Dislike: Thumb up 10 Thumb down 1

  5. Rick DeMent says:

    Raising taxes on those above 250K will do nothing, zero, zip, nada to harm the economy. I mean really … that’s what scares the pants off of them. Seriously how good did Bush’s tax cuts do to “grow” the economy? In comparison the recession of 2001 was a pretty weak one, yes it was exacerbated by 9\11 but god it was barely a blip compared to 2008. We had all those tax cuts and what did it buy us? That right there should be enough evidence to tell Grover Norquest to go away and never come back forever.

    Highly-rated. Helpful or Unhelpful: Thumb up 19 Thumb down 1

  6. Rafer Janders says:

    @Mikey:

    ll, we can look to Great Britain’s very recent (i. e. the last couple years) experience with jacking up their top marginal rate to 50%–two-thirds of British millionaires either left the country

    That’s not an option for American millionaires. You only pay British income tax if you are resident in Britain. The US, by contrast, taxes you worldwide, no matter where you live, so even if a disaffected American millionaire decides to move to tax-free Somalia he will still owe income tax.

    or shuffled their finances around to drop their incomes below the threshold.

    In a marginal tax rate world, you can only pay less taxes by earning less money overall. This should not be hard to understand.

    Like or Dislike: Thumb up 12 Thumb down 1

  7. Mikey says:

    @Rafer Janders:

    That’s not an option for American millionaires. You only pay British income tax if you are resident in Britain. The US, by contrast, taxes you worldwide, no matter where you live, so even if a disaffected American millionaire decides to move to tax-free Somalia he will still owe income tax.

    A good and relevant point, and one I’d forgotten.

    Like or Dislike: Thumb up 4 Thumb down 1

  8. Ben Wolf says:

    @Rick DeMent: A small tax increase on high-incomes won’t harm the economy, it just won’t help it either.

    The “Bush” tax cuts (and I put Bush in quotes because they weren’t even his idea) were in principle good policy, but their effectiveness was diminished because they were targeted at the wrong people. Too much of the benefit went to those who spend a much smaller proportion of their income, and the smaller the proportion, the more benefit you got.

    Like or Dislike: Thumb up 1 Thumb down 1

  9. Rick DeMent says:

    @Ben Wolf:

    The “Bush” tax cuts (and I put Bush in quotes because they weren’t even his idea) were in principle good policy,

    I disagree, you don’t cut taxes when things are good (relatively speaking), the economy would have limped along with the Clinton rates and we would be in much better shape fiscally right now. Taxes weren’t too high then, they are way lower now, you can’t tax cut your way to solvency. Set the rates, and leave them alone, tax cuts are the worst way to try and juice the economy.

    Like or Dislike: Thumb up 4 Thumb down 1

  10. gVOR08 says:

    @Ben Wolf: Right. Raising taxes on the top whatever % won’t help. But our Very Serious People keep insisting the deficit is our worstest problem ever in the history of the earth. Worse than Pearl Harbor, worse than commies, worse even than Benghazi. Eventually we’ll be forced to do something. Might as well do it in the least harmful way, which as you and Rick point out, is on the backs of rich people. Very broad backs I might add.

    Like or Dislike: Thumb up 6 Thumb down 1

  11. Merit Man says:

    Since we all agree that raising taxes on families making over $250,000 a year we must also agree that there will be no benefit either. So why do it? Class warfare. Or like Warren Buffet said today, it will increase the moral of the Republican haters (he said middle class but the middle class could care less).

    Like or Dislike: Thumb up 0 Thumb down 12

  12. rudderpedals says:

    @Merit Man:

    Since we all agree that raising taxes on families making over $250,000 a year we must also agree that there will be no benefit either.

    No, that doesn’t follow. Taxes are the lifeblood of government. Those whose taxes will go up at most by 3% can feel more patriotic than the rest of us who aren’t paying a higher rate on high income.

    Like or Dislike: Thumb up 8 Thumb down 0

  13. OzarkHillbilly says:

    @Tsar Nicholas:

    In related news, a majority of people want other people to do their work for them, and other people to clean their laundry for them, and other people to solve their problems for them, and other people to wipe their asses for them after they crap.

    And just exactly who are these people? I wiped my mothers ass. They aren’t talking about me.

    FU Tsar.

    Like or Dislike: Thumb up 5 Thumb down 2

  14. Ben Wolf says:

    @Rick DeMent: Surpluses are bad for an economy. When we run surpluses it means government is acting as a net drain on the private sector’s financial wealth, and the private sector is forced to take on debt in response. The goal of the individual who convinced Andy Card to cut taxes was to push the government back into deficit so firms and households could begin saving again, but as I wrote before:

    A) the cuts were far too heavily weighted toward people who didn’t need them.

    B) the combination of wage suppression over the last three decades and a large external (trade) deficit effectively neutralized the hoped-for savings. Even with the the cuts households were still sinking in terms of their balance sheets.

    Like or Dislike: Thumb up 1 Thumb down 0

  15. Ben Wolf says:

    @Merit Man:

    Since we all agree that raising taxes on families making over $250,000 a year we must also agree that there will be no benefit either. So why do it? Class warfare.

    The only legitimate reason for a tax increase on the wealthy is for equity purposes, rebalancing power which is now too heavily weighted toward the wealthy class.

    Like or Dislike: Thumb up 4 Thumb down 0

  16. john personna says:

    @Mikey, @Tsar Nicholas:

    A significant number of high earners support taxes on themselves. In the most recent California election affluent sections of Marin and Silicon Valley supported Prop 30, for instance.

    Those are always waved away though, as class traitors or something.

    Like or Dislike: Thumb up 7 Thumb down 0

  17. john personna says:

    @Ben Wolf:

    Rick did not say “surpluses” and we are not in the danger of “surpluses.”

    We are in the range of managing our debt to GDP ratio, that is all. Now I understand that you are not worried by the ratio, but I also understand that is a minority position.

    Like or Dislike: Thumb up 1 Thumb down 0

  18. john personna says:

    @Merit Man:

    Since we all agree that raising taxes on families making over $250,000 a year we must also agree that there will be no benefit either.

    This is the only “if we only do one thing” fallacy.

    If I only skip desert tonight, I’ll never get in shape! So I should always eat desert!

    Like or Dislike: Thumb up 8 Thumb down 0

  19. grumpy realist says:

    One of the reasons Greece ended up in the lousy mess it did was the high amount of tax evasion by the upper crust. Here we have a similar situation; it’s just that our upper crust evades taxes legally.

    Taxing capital gains the same as income would solve most of the problems, and most tax authorities want this–the oft-stated rule of tax indifference. If you want to have taxes disturb the economy as little as possible, you don’t want to privilege one form of income over another.

    Same allowing deduction of interest on debt payments for corporations. Get rid of that deduction and there’d be less incentive for companies to load up so much on debt.

    Like or Dislike: Thumb up 8 Thumb down 0

  20. john personna says:

    @grumpy realist:

    A capital gains tax, without inflation adjustment, matching regular income tax would be extremely punishing. You know, you own a house for 30 years, break even after inflation, and then give a bunch to uncle Sam.

    I’d propose something like this: Inflation adjust and then tax at the payer’s median-dollar tax rate. Retirees would not pay so much, but that’s fine.

    Like or Dislike: Thumb up 1 Thumb down 0

  21. Ben Wolf says:

    @john personna: We’re conversing about the Bush cuts and the Clinton-era tax rates. Surpluses were the key factor and the reason for the cuts in the first place. That’s why the cuts were good in principle.

    Like or Dislike: Thumb up 0 Thumb down 0

  22. john personna says:

    @Ben Wolf:

    Well then you need to distinguish which round of cuts. I think the early Bush cuts, with a starting surplus, were fine for the reasons you say.

    I think the later ones, in times of both war and slow recovery, were not.

    Like or Dislike: Thumb up 2 Thumb down 0

  23. Mikey says:

    @john personna: I wasn’t coming out against the proposed hikes–note the part of my comment in which I state I don’t believe they would be hurtful. I’m not sure they’d raise as much revenue as predicted, but also I don’t think they would be the economic death blow many Republicans claim they would.

    The second part, re: Great Britain, I wrote while forgetting Americans can’t just up and leave and not pay taxes (unless they renounce citizenship, which I’d wager very few would actually want to do).

    Like or Dislike: Thumb up 1 Thumb down 0

  24. bill says:

    in other news, most people like free stuff. this ruse that raising taxes on 2% of the taxpayers and generating vast amounts of revenues to drive down our debt is almost comical.

    Like or Dislike: Thumb up 1 Thumb down 7

  25. john personna says:

    @bill:

    So wait a minute, the grand bargain stuff is canceled? All the agreed spending reductions are now off the table?

    No. You’ve just conveniently lost your mind in the standard GOP fantasy. Epistemic closure. Forget the real world and pretend. Pretend that massive tax increases are financing massing spending increases.

    Like or Dislike: Thumb up 5 Thumb down 0

  26. JKB says:

    Well, the Republicans can’t give in yet. Not until we get all those “take from the rich” videos Obama ordered up from his minions. We can’t miss out on such drivel, can we.

    Like or Dislike: Thumb up 0 Thumb down 7

  27. Rick DeMent says:

    @Ben Wolf:

    Surpluses are bad for an economy. When we run surpluses it means government is acting as a net drain on the private sector’s financial wealth, and the private sector is forced to take on debt in response.

    And if we ever run a real surplus I’m pretty sure I would have other ideas about what to do.

    Look the big problem is that the politics around taxes suck, they always have, too easy to demagog, they are easy to cut, hard to raise and it typically boils down to a pissing match. The is only one real question how much do we need and what will it take to get that revenue. The other problem is we can’t decide what we want, so we can’t figure out what we need.

    The debate gets bogged down to the point were a 3% increase in the top marginal rate is the difference between freedom and slavery which is BS. Look we are paying historic lows in terms of taxes, if low taxes were the magic dust the economy should be on crack. It’s not, so anyone who is crapping themselves over this tiny marginal rate issue is delusional. Long term sure we have to address spending but god just go back (gradually) to Clinton era rates and bam 50% of the problem is solved.

    The other problems are large and complex. We are neither in danger of crowding out investment cash, inflation or any of the other things people say in this moronic debate over marginal rates. Fact is if we cut spending in the near term the economy goes south, and the only thing you can do right now on is raise taxes slightly on those who have been hoovering it up for the last 15 years. that will be a baby step to getting to where we need to be, anything else is foolish. These breathless pronouncements of “small” businesses being hurt is a load of crap. Spending needs to be addressed but any cuts you make now will have an adverse will have a ripple effect somewhere. So if that’s what you want, fine cut spending, and if the economy tanks again don’t complain about it.

    Like or Dislike: Thumb up 3 Thumb down 0

  28. jukeboxgrad says:

    mikey:

    two-thirds of British millionaires either left the country or shuffled their finances around

    Some interesting analysis of the UK matter is here (link):

    researchers haven’t found much evidence that millionaires flee in the face of high taxes

    Like or Dislike: Thumb up 7 Thumb down 0

  29. Jenos Idanian #13 says:

    @john personna: A significant number of high earners support taxes on themselves. In the most recent California election affluent sections of Marin and Silicon Valley supported Prop 30, for instance.

    Those are always waved away though, as class traitors or something.

    No, they’re waved away as hypocrites. Because there’s nothing stopping them from paying more in taxes right now. What they’re arguing for is not to pay higher taxes, but to be forced to pay higher taxes.

    Massachusetts has, by law, two income tax levels. If people feel undertaxed, they can choose to pay the higher rate and “contribute” more to the state. Almost no one does. Certainly not John Kerry or Elizabeth Warren.

    It’s like the Hostess bakers’ union. They didn’t like the job offer. They didn’t choose to reject it and quit to find another job, they chose to kill their own jobs and every other employees’ jobs. They wouldn’t make the decision just for themselves, they made damned sure everyone else was bound by their decision, whether they agreed or not.

    The rich calling for higher taxes would have more moral standing (as in, some) if they were already voluntarily paying more than their legal obligation. “This is morally necessary, but I won’t do it until I’m forced to” is an empty argument.

    Poorly-rated. Helpful or Unhelpful: Thumb up 0 Thumb down 15

  30. David M says:

    @Jenos Idanian #13:

    There’s no hypocrisy in thinking tax rates should be higher while paying what the law currently requires.

    It’s not really worth it for any single person to be the only person in the country paying $200 more to properly fund a program they care about. But if everyone has to pay more, then the cumulative amount makes a difference.

    Like or Dislike: Thumb up 8 Thumb down 0

  31. anjin-san says:

    in other news, most people like free stuff

    It’s certainly true in most red states, which are subsidized by welfare from blue states.

    Like or Dislike: Thumb up 8 Thumb down 0

  32. anjin-san says:

    It’s like the Hostess bakers’ union.

    Jenos never tires of whining about this. Oddly enough, senior executives giving themselves huge raises while the company was going broke bothered him not a bit.

    Serious question Jenos – do you even pay federal income taxes?

    Like or Dislike: Thumb up 7 Thumb down 0

  33. Ben Wolf says:

    @Rick DeMent: I don’t support cuts, nor do I support tax increases. What I want is a $700 billion stimulus per year for at least three years, in addition to our current deficits, targeted at the middle class and the poor. All I’m saying is that a marginal tax hike on the wealthy will not produce a net economic benefit for the country or improve the country’s “fiscal heealth” (a phrase which has no meaning in context of our government anyway).

    We’re allowing ourselves to be distracted by the ridiculous shared sacrifice meme whereby the wealthy pay a few more dollars in exchange for gutting Social Security and Medicare. The whole thing is a smokescreen by the President to weaken opposition to the entitlement cuts he wants to implement,

    Like or Dislike: Thumb up 0 Thumb down 0

  34. Jenos Idanian #13 says:

    @anjin-san: Jenos never tires of whining about this. Oddly enough, senior executives giving themselves huge raises while the company was going broke bothered him not a bit.

    So, because the top execs did some selfish things, the bakers were right to kill everyone’s job? I’ve seen people here talk about Republicans in Congress as “political suicide bombers,” but that term fits the Bakers’ Union far better…

    Serious question Jenos – do you even pay federal income taxes?

    Serious answer, anjin — none of your goddamned business. This is probably beyond your comprehension, but not everyone judges matters based solely on personal self-interest.

    It’s simple, jackwagon.

    “The rich like me should pay higher taxes!”

    “Fine — you first.”

    And did you ever see that analysis of how the proposed “Buffett Rule” would actually affect Warren Buffett? Short version — not much at all.

    Like or Dislike: Thumb up 0 Thumb down 13

  35. superdestroyer says:

    @gVOR08:

    Tax increases on the rich only help the deficit as long as the spending is used to reduce the deficit and no new programs are started. Congress has a long history of raising taxes and then spending the money on new programs (See the 1980’s).

    My guess is that taxes will go up and Congress will immeidately find something new to spend the money on. Thus, President Obama will probably have a trillion dollar deficit in each fiscal year of his administration. the Democrats know that ever dollar of government spending makes them more powerful and they will not give up the spending because they will not give up the power.

    Like or Dislike: Thumb up 0 Thumb down 6

  36. jukeboxgrad says:

    jenos:

    “The rich like me should pay higher taxes!”

    “Fine — you first.”

    “We should attack Iraq.”

    “Fine — you first.”

    Is that the proper logic in that situation? Just curious.

    You might want to learn about what’s known as a collective action problem.

    Like or Dislike: Thumb up 8 Thumb down 0

  37. Jenos Idanian #13 says:

    @jukeboxgrad: That’s been the core of the “chickenhawk” argument your side’s been using from day one.

    The difference is, there is a mechanism in place for people who believe in higher taxes to pay that without being forced to do so. Please, make the moral argument why Senator-Elect Elizabeth Warren is right to support higher taxes on the rich while she CHOOSES to not pay the optional higher rate in her home state.

    Like or Dislike: Thumb up 0 Thumb down 11

  38. jukeboxgrad says:

    That’s been the core of the “chickenhawk” argument your side’s been using from day one.

    Not exactly. That depends on whether the argument is directed at politicians or individuals. But let’s put that aside, because either way you are now confirming that you support that argument.

    The difference is, there is a mechanism in place for people who believe in higher taxes to pay that without being forced to do so.

    And “there is a mechanism in place for people who believe in” war: volunteer.

    Like or Dislike: Thumb up 6 Thumb down 0

  39. Ben Wolf says:

    @superdestroyer:

    Tax increases on the rich only help the deficit as long as the spending is used to reduce the deficit and no new programs are started.

    Budget deficits are largely outside the government’s control.

    Like or Dislike: Thumb up 0 Thumb down 0

  40. Jenos Idanian #13 says:

    @jukeboxgrad: A lot of people did volunteer. A hell of a lot more volunteered for Iraq than volunteer to pay higher taxes.

    Like Glenn Reynolds likes to say: “I’ll believe there’s a crisis when the people who say there’s a crisis start acting like there’s a crisis.”

    So, you’re rejecting the chickenhawk/Warren Buffett argument yourself?

    Like or Dislike: Thumb up 0 Thumb down 10

  41. jukeboxgrad says:

    A lot of people did volunteer.

    We’re not talking about the people who volunteered. We’re talking about the people who promoted the war and didn’t volunteer. You’ve now endorsed the argument that was used against them.

    Like or Dislike: Thumb up 9 Thumb down 0

  42. Jenos Idanian #13 says:

    @jukeboxgrad: I’m not challenging you to pay higher taxes, I’m asking why those who support it and are in a position to pay it don’t do so. To take the most famous example, do you really think the Army would have accepted Dick Cheney as an enlistee back in 2003?

    Like or Dislike: Thumb up 0 Thumb down 10

  43. jukeboxgrad says:

    do you really think the Army would have accepted Dick Cheney as an enlistee back in 2003?

    During an earlier war, he dodged the draft. You have now endorsed the argument that was used against him. That’s adorable.

    Like or Dislike: Thumb up 9 Thumb down 0

  44. Scott says:

    @Jenos Idanian #13:

    No, they’re waved away as hypocrites. Because there’s nothing stopping them from paying more in taxes right now.

    Of course, there is no reason for people not to take less goods and services from the Government. They don’t have to fly in FAA managed airspace, drive on US highways, consume FDA approved drugs, collect Social Security and Medicare, etc.

    That argument on volunteering to pay taxes is silly.

    And, of course, it is not class warfare to insist that the poorest of the poort pays something so that they have “skin in the game”.

    Like or Dislike: Thumb up 8 Thumb down 0

  45. Herb says:

    This is the political reality that the GOP faces.

    Yes, and I continue to hear complaints that raising taxes on the rich won’t fix the budget, which is true as far as that goes, but at this point, it’s not about the budget.

    It’s about freeing up some space for the middle and lower classes, who’ve been doing the hard work but not getting the reward.

    I mean, I’m sure Papa John Whatshisface can make a really good pizza….but even he can only make one at a time. And the guy who owns 50 Denny’s restaurants but wants to cut hours because of Obamacare?

    I’m sure he’s earned every penny he’s ever made, but he ain’t making the Grand Slams.

    Like or Dislike: Thumb up 4 Thumb down 0

  46. Ben Wolf says:

    @Herb: If we cared about the middle class we’d pursue policies which nurture it, not fiddling with insignificant marginal rate changes. The non-wealthy are not considered worthy of such an effort, either by the Republicans or the Democrats.

    Like or Dislike: Thumb up 1 Thumb down 0

  47. Mikey says:

    @jukeboxgrad: I remember what happened with Maryland, since I live right next door, and I do agree the decrease in millionaires there was pretty much entirely due to the 2007 recession.

    But Britain looks a lot more like millionaires either leaving or choosing to defer some capital earnings rather than pay the additional tax. The drop there came well into the recovery and was steeper than any of the fluctuations shown in the graph.

    (It’s kind of irritating that graph stops in 2007–I’d like to see some recent data, because it may be the recent drop is actually the continuation of a trend that started in the recession. But Her Majesty’s Revenue and Customs website is not particularly friendly in that regard…)

    Like or Dislike: Thumb up 0 Thumb down 1

  48. Rick DeMent says:

    @Ben Wolf:

    Well then I think we are largely in agreement, I would up the marginal rate because while it won’t help much now, taxes have to go back up sooner or later to be part of an overall plan and taxing the 250K + crowd won’t hurt anything and frankly it’s the principal of the thing. I mean id the GOP is going to dig in their heels, whine, cry, and act like 4 year olds over a 3% hike then I guess those on my side of the divide have to dig in too or else we become victims of the hecklers veto.

    Like or Dislike: Thumb up 0 Thumb down 0

  49. Herb says:

    @Jenos Idanian #13:

    “And did you ever see that analysis of how the proposed “Buffett Rule” would actually affect Warren Buffett? Short version — not much at all.”

    I keep hearing this kind of thing too. Joe Scarborough did a piece on it in Politico, saying basically the same thing.

    “Taxing the super-rich won’t really affect them.”

    Only problem is that actually supports raising taxes on the rich.

    FWIW, that this keeps being brought up just exposes the punitive mindset on the right. They seem to think we lefties want to tax the rich as a punishment rather than as a “what would be best for all” approach.

    It’s not about punishing success. It’s about acknowledging that success is often a team effort. “You didn’t build that” and all that jazz.

    Like or Dislike: Thumb up 6 Thumb down 0

  50. C. Clavin says:

    I’ve got $20 that says Indiana Jones is part of the 47%.

    Like or Dislike: Thumb up 6 Thumb down 0

  51. john personna says:

    It’s kind of a classic moment, every time the mouth breathers on the right say that poor people can’t ask for higher taxes, because it’s not on them, and rich people can’t ask for higher taxes, because it is on them.

    Ta-da, no one can ask!

    Like or Dislike: Thumb up 7 Thumb down 0

  52. stonetools says:

    Why isn’t the question framed to reflect the actual action to be taken:

    ” Do you support raising the marginal tax rates for those earning over $250,000 back to where it was in 2000?”

    The reason, of course, is that if phrased like that, it makes perfect sense and there are very few rhetorical points to be made against it .
    Nobody thought, or now thinks that the 39.5 % top marginal rate in 2000 was “strangling the economy” or “driving millionaires to flight”. What it was doing was helping to balance the budget.

    Like or Dislike: Thumb up 5 Thumb down 0

  53. john personna says:

    @stonetools:

    The reason, of course, is that if phrased like that, it makes perfect sense and there are very few rhetorical points to be made against it.

    I believe that some of our esteemed hosts have argued that if you don’t roll back all of the tax cuts at once it is “class warfare.”

    BS in my opinion. It is simply a minor shift in progressivity.

    Like or Dislike: Thumb up 4 Thumb down 0

  54. Mikey says:

    @stonetools: The other thing that was helping to balance the budget was the federal government spending about half what it does now.

    I have no problem whatsoever with returning to the tax rates of the latter part of the Clinton administration. Do you feel equally comfortable returning to the spending levels of that time (adjusted for inflation, of course)?

    Like or Dislike: Thumb up 0 Thumb down 0

  55. john personna says:

    @Mikey:

    Do you feel equally comfortable returning to the spending levels of that time (adjusted for inflation, of course)?

    Maybe, but that’s the wrong way to approach it. Some GOP candidates said things like “let’s roll back food stamps to 200x levels.” That doesn’t tell me who needs them and who would go to bed without dinner. (Note that food stamp benefits are only about $130 per month. No one is buying a Cadillac with them.)

    So sure, if you can break out reasonable changes I’d be happy to go back to Clinton spending levels.

    Like or Dislike: Thumb up 2 Thumb down 0

  56. jukeboxgrad says:

    mikey:

    Do you feel equally comfortable returning to the spending levels of that time

    If you want to know why spending is now higher, you’ll find some answers here: “Economic Downturn, Financial Rescues, and Bush-Era Policies Drive the Numbers.”

    Like or Dislike: Thumb up 4 Thumb down 0

  57. jukeboxgrad says:

    jenos:

    there’s nothing stopping them from paying more in taxes right now.

    There’s more to be said about this.

    There are quite a few people who think our defense budget should be higher. Are you aware of anyone who is voluntarily “paying more in taxes right now” for that purpose? If someone thinks the defense budget should be higher, and isn’t voluntarily “paying more” for that purpose, does it make sense to criticize them? Because the criticism you’re attempting makes roughly as much sense.

    By the way, money is a positional good. Being rich is relative. To a great extent it’s about comparative status, not about the actual utility of a certain extra sum. Therefore it’s actually quite rational, and not at all hypocritical, to advocate a policy where everyone in my group pays more taxes, while also not wanting to be the only one to do so. I can believe that the higher tax will create a healthier society for everyone, while also not wanting to impose a comparative disadvantage on myself by being the only one who pays it.

    What if I’m a business owner, and I think the minimum wage should be higher? Telling me I should just pay my own employees more is pretty dumb. My business won’t last if I impose that competitive disadvantage on myself. But even though I don’t want to be the only one who does it (because that’s not sustainable), it’s perfectly valid for me to want everyone to be required to do it (for example, if I believe it will lead to a stronger economy overall).

    As I said, you might want to learn about what’s known as a collective action problem.

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  58. stonetools says:

    @Mikey:

    The other thing that was helping to balance the budget was the federal government spending about half what it does now.

    I’d like to see the figures on that. Link please.

    Of course, in a few years, we will be moving to a lot less WAR spending.
    Right now, as John points out, we’re also doing a lot of “ameliorating the Second Great Depression” spending.
    My original point is that if you phrase the question as “going back to Clinton era tax rates for top earners” , we wouldn’t be subject to nonsense rhetoric about ” punishing success”, “victimizing the job creators”, “tanking the economy”, etc.

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  59. Herb says:

    @Ben Wolf:

    “If we cared about the middle class we’d pursue policies which nurture it, not fiddling with insignificant marginal rate changes.”

    Like Obamacare? I mean, I don’t think the policy is perfect by any means, but I do think it’s a clear attempt to help the poor and nurture the middle class.

    Curious to hear more about these entitlement cuts the president wants to implement. The president wants to cut entitlements?

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  60. Mikey says:

    @stonetools:

    I’d like to see the figures on that. Link please.

    Here you go. Government Spending Chart: United States 2000-2011

    Of course, in a few years, we will be moving to a lot less WAR spending.

    And thank goodness for that.

    My original point is that if you phrase the question as “going back to Clinton era tax rates for top earners” , we wouldn’t be subject to nonsense rhetoric about ” punishing success”, “victimizing the job creators”, “tanking the economy”, etc.

    Well, I think we’d still be subject to those, unfortunately, but I actually agree with you–that’s the correct way to state it. I just like to remind people there are two sides to the budget coin and we need to consider both.

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  61. Ben Wolf says:

    @Mikey:

    The other thing that was helping to balance the budget was the federal government spending about half what it does now.

    It’s folly to attempt to balance budgets when balances are largely outside the government’s control.

    . . . a budget balance is the difference between total revenue and total outlays. If total revenue is greater than outlays, the budget is in surplus and vice versa. It is a simple matter of accounting with no theory involved.

    If the budget is in surplus then the fiscal impact of government is contractionary (withdrawing net spending) and if the budget is in deficit the fiscal impact expansionary (adding net spending).

    But the complication is that we cannot then conclude that changes in the fiscal impact reflect discretionary policy changes. To see this, the most simple model of the budget balance we might think of can be written as:

    Budget Balance = Revenue – Spending

    Budget Balance = (Tax Revenue + Other Revenue) – (Welfare Payments + Other Spending)

    Tax Revenue and Welfare Payments move inversely with respect to each other, with the latter rising when GDP growth falls and the former rises with GDP growth. These components of the Budget Balance are the automatic stabilisers.

    Therefore, without any discretionary policy changes, the Budget Balance will vary over the course of the economic cycle. When the economy is weak – tax revenue falls and welfare payments rise and so the Budget Balance moves towards deficit (or an increasing deficit). When the economy is stronger – tax revenue rises and welfare payments fall and the Budget Balance becomes increasingly positive. Automatic stabilisers attenuate the amplitude in the business cycle by expanding the budget in a recession and contracting it in a boom.

    http://bilbo.economicoutlook.net/blog/?p=21847#more-21847

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  62. Mikey says:

    @jukeboxgrad: Not only those things, but also the increases in Social Security and Medicare outlays, would make it impossible to actually return to those earlier spending levels. And while war spending will go away in the next few years, those things won’t.

    But my question wasn’t meant to be a strict advocacy of chopping federal spending in half. I have noticed many who advocate raising tax rates back to Clinton’s levels, the justification being “tax rates were that high but we still ran a surplus,” aren’t aware of how much less the federal government was spending at that time.

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  63. john personna says:

    @Ben Wolf:

    There is an interesting article here, whose title doesn’t exactly match its content, IMO.

    In focus though:

    There is, however, a real debate that is not occurring but should be. While it is true that a large deficit in any particular year is not a problem, longer term trends do matter. If national debt is relatively low – less than 50% of annual GDP, say – there’s plenty of room to spend in the short run and then balance the budget later. This is basically what happened over the course of the combined Reagan and Clinton administrations. The result was an economic boom that lasted more than 20 years.

    But as debt rises beyond that level, a country’s core growth rate begins to slow. Indeed, the National Bureau of Economic Research calculates that when debt passes 90% of GDP, average annual growth slows by one percentage point. Basically government borrowing competes with businesses that want to borrow to invest and raises their interest costs, while interest payments on government debt eat up money that could either go for infrastructure investments or tax cuts.

    Getting back to those Bush years … they F’d us up because they moved that ratio in slow growth years, limiting the new President’s ability to maneuver in a genuine crisis.

    We are again in slow growth years, and should be positioning ourselves on that basis.

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  64. john personna says:

    @Mikey:

    The main concern about Social Security and Medicare is for farther futures. We are pretty much at neutral cash flow this year. Look at the big deal here made of $45 billion:

    The only money that Social Security has is its annual revenue. That revenue became insufficient to pay full benefits, beginning in 2010. The government had to borrow $49 billion that year, in order to pay full Social Security benefits. In 2011, $45 billion had to be borrowed to cover the gap between revenue and the cost of paying full benefits. The gap between revenue, and the cost of paying benefits, will get larger and larger, as time passes, and the Social Security trustees estimate that the gap will be a whopping $318.7 billion in 2030.

    $45 billion is ONE PERCENT of the year’s expenditures ($3.796 trillion)

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  65. john personna says:

    (The right wing meme machine goes on and on about Social Security expenditure, painting in their listeners mind the idea that it must be some huge fraction of outlays. That is a deception.)

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  66. Ben Wolf says:

    @john personna: The article is based on a study by Reinhart and Rogoff which uses data from countries on the gold standard and assumes the same dynamics apply today. The study also dubiously asserts causation without evidence. For example on Japan the authors literally make the argument that Japan has high debt, Japan is growing slowly, therefore high debt results in slow growth. The authors fail to recognize Japan experienced a massive balance-sheet recession and only then began to accumulate large debts. There is no empirical support for the proposition that a specific debt/GDP ratio spells economic calamity, only neo-liberal theology.

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  67. J-Dub says:

    @Tsar Nicholas:

    people want other people to do their work for them, and other people to clean their laundry for them, and other people to solve their problems for them, and other people to wipe their asses for them after they crap

    Yeah, they’re called “rich people”. They like to pay others to do their work for them. I thought you liked job creation?

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  68. john personna says:

    @Ben Wolf:

    I understand that you have a dissent, but I believe that article represents mainstream thought … hence its position at Time.inc

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  69. sam says:

    Just as a matter of simple politics, do any of you folks on the right side of the spectrum think it’s possible to reform entitlements and not raise taxes on the top 2%?

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  70. Rob in CT says:

    Yeah, look, Ben, I some of MMT makes sense to me, but this blithe dismissal of any potential consequences for perpetual deficits doesn’t fly with me.

    As we’ve discussed before, the “government spending equals private savings” thing is only true in a closed system. Add in our large and persistent trade deficit and now things get problematic. I know you know that.

    So even a well-designed stimulus (let’s say half in the form of a payroll tax cut and half in the form of direct hiring of Americans to do something at least vaguely useful) would suffer from significant seepage, would it not? So you spend $700B for 3 years – $2.1T total. How much of that leaks out?

    This leads me to the conclusion that stimulus efforts, whether they be tax-side or spending-side, have diminished bang-for-the-buck (as compared to, say, the 1930s) unless and until we somehow address the trade deficit. That doesn’t mean “never do it.” When you’re staring into the abyss (late ’08/early ’09), you do it anyway. But now? I’m less sure.

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  71. john personna says:

    @Rob in CT:

    The thing that’s interesting to me is that we might be in a money rich environment, globally. There is so much money out there that “Corporate bonds, still carrying all the idiosyncratic risks of single companies, are priced as if they were safer than Treasurys.”

    So why would making more money be a better solution than just taxing some back and applying it differently?

    It’s not like the global trillions in the giant pool of money are being stimulative, heating the economy as we speak.

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  72. jukeboxgrad says:

    It’s not like the global trillions in the giant pool of money are being stimulative, heating the economy as we speak.

    Exactly. Link:

    One Percenters used to save less, and invest more. Now they’re “basically stuffing money under the mattress”

    There is a ton of cash that is being hoarded, doing nothing. Link.

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  73. Rob in CT says:

    Well yes, and for that reason and others I’m supportive of higher taxes at the top end (I’d prefer new brackets, taxing inflation-adjusted capital gains at income rates, and a stronger estate tax). Sure.

    I’m raising other issues, though.

    For one, “investing more/saving less” may well mean investing in China or Mexico or somesuch. To make stuff that we buy here, on credit. You know?

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  74. anjin-san says:

    So, because the top execs did some selfish things, the bakers were right to kill everyone’s job?

    You selective outrage is duly noted.

    This is probably beyond your comprehension, but not everyone judges matters based solely on personal self-interest.

    I spend about 12 hours a week taking care of a relative who can’t take care of himself. In the last 10 years, my wife and I have spent north of 200k helping out relatives who are having a hard go of it – we are not rich, that is a hit on our retirement savings. This is not the first time you have disparaged my character. Why don’t you share a few stories about what you do beyond your personal self-interest?

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  75. anjin-san says:

    do you really think the Army would have accepted Dick Cheney as an enlistee back in 2003?

    They would have certainly taken him back when he was avoiding service with five deferments. So many chickenhawks just could not serve because of college.

    My dad dropped out of college to enlist in the middle of a shooting war.

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  76. john personna says:

    Related: New (Free) Book About U.S. Government Debt

    published by the Financial Institutions Center of Wharton

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  77. Jenos Idanian #13 says:

    @anjin-san: I spend about 12 hours a week taking care of a relative who can’t take care of himself. In the last 10 years, my wife and I have spent north of 200k helping out relatives who are having a hard go of it – we are not rich, that is a hit on our retirement savings.

    Why do you do that? Isn’t that the responsibility of the federal government? Isn’t that the point of the whole Democratic social agenda — to take over such duties?

    This is not the first time you have disparaged my character. Why don’t you share a few stories about what you do beyond your personal self-interest?

    You don’t like it when I disparage you back? Noted and logged.

    As far as sharing personal stories… two reasons. For one, in this crowd? Why the hell should I give them any personal information about me? And for another, I try to avoid arguing by anecdote.

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  78. Jenos Idanian #13 says:

    @anjin-san: They would have certainly taken him back when he was avoiding service with five deferments. So many chickenhawks just could not serve because of college.

    Here’s something you might not have learned in college: the Vietnam war had been over for about 30 years when the Iraq War was being debated. And they are far, far apart in a lot of other ways besides time.

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  79. An Interested Party says:

    No, they’re waved away as hypocrites. Because there’s nothing stopping them from paying more in taxes right now.

    That same argument could be used for people who hate Social Security and Medicare, like Ayn Rand

    Here’s something you might not have learned in college: the Vietnam war had been over for about 30 years when the Iraq War was being debated. And they are far, far apart in a lot of other ways besides time.

    Here’s something you might not have learned at all: Cheney’s rank hypocrisy is obvious and was on display when he was in conformation hearings to be Secretary of Defense where he talked about how he “would have obviously been happy to serve had I been called.” This, after we know that he did everything he could to avoid going to Vietnam…

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  80. anjin-san says:

    the Vietnam war had been over for about 30 years when the Iraq War was being debated

    And yet the stench of cowardice coming off of the chickenhawks lingered…

    And they are far, far apart in a lot of other ways besides time.

    They were very close in a significant way. Both were waged against countries that did not threaten us. Both needlessly wasted so many young lives and so much national treasure. Both killed countless innocents. And in both cases, idiots like you got off on it.

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  81. anjin-san says:

    Why do you do that? Isn’t that the responsibility of the federal government? Isn’t that the point of the whole Democratic social agenda

    Sure. In the cartoon world of Fox News – you know, the one where Romney had the momentum and was going to toss Obama out of the White House. The line that you suckers all bought into.

    Here in the real world, I am exactly what Republicans in red states who live in trailers fantasize about being. I pulled myself up by the bootstraps and make a good living working for successful entrepreneurs. I take care of my own.

    But because I live in the real world, I know that there are times when a families resources are simply not enough to get the job done. Thats why we have a safety net. Because we don’t want a country with bodies in the streets and millions living in abject poverty and misery.

    Why the hell should I give them any personal information about me?

    Well, perhaps to gain some credibility. Because you currently have none. Is your life really so empty that you get some kind of satisfaction out of engaging people who think you are utterly full of it?

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  82. John Doe... says:

    Are you people serious…I love how the folks who don’t make 250,000 have a clue on whether it will make an impact or not on the economy….Well I do make well over 250,000, in fact close to double that and it will absolutely impact what I spend and who I hire. I have worked up from 25,000 per year to close to 20 times that now. I pay over 100,000 a year as it is now on federal taxes…so get a clue….I wont go out to support local restaurants nearly as many times. The staff that count on my generous tips will no longer see my family as many times. The local contractors that want to do work on my home wont be called. It will backfire and I’m not singing the blues..I know damn well I am now blessed to be in a different position then I was 15 years ago….but we worked our asses off and sacrifice to get here….Are you kidding me my 100,000 isn’t enough and you need more. I will await the actual impact but on the surface I assure you I will protect my family and home before I spend….I will cut back which will impact many folks and stores that counted on my business. Small business were a target of mine to always support, and they will sadly be the first to cut because I paid more when I went to them in the first place. I didn’t mind paying more if it supported a local small business…Try not pretending to have a clue about another mans walk less your in his shoes…..I’ve walked both walks …worked three jobs for ten years….to get to a place I can provide for my family and support others with business and generosity and this plan is doomed from its inception. The only area I will never stop giving to will be the charities that inudate my life today. I never put in my taxes the amount I give. It would be improbable to calculate. I give when no one is looking weekly. I but swingsets for trailer parks. I pay for food for shelters. I write checks for anyone who is in need or sometimes just to make sure a charity can continue to complete a service project they have started. I did that when I was poor…I did that when I was a single parent with no support….and I will always find a way to help those folks….its the middle class and small businesses that will feel my withdraw if I have to start cutting corners…A lower income family has already cut corners and the economy isnt counting on what they contribute because of that fact…your about to see what impact the economy has when those of us in higher income brackets start to cut corners…Most of us have done it in the past to get to where we are…and believe me we know how to do it again,,,but this time the markets will have been counting on our money and it wont be there…. God bless all…

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