A few comments and observations as to what I think is going on with tax negotiations.
I'd like to hear what other people think.
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This deal struck appears to be that all Bush tax cuts will end, and then Democrats and Republicans will get together and put back in place the middle class tax cuts.
The goal seems to be optics to show that politicians from both sides get to 'come together for the good of the country'. A 'feel good moment'. Effectively, it looks like top tax rates on millionaires and billionaires goes from 35% to 39% or so, on paper.
But little really changes: most of the money 'made' by the wealthy is in long term investments, and a variety of tax protected shelters, it's not reported on W-2s as regular income. The largest corporations not only never pay the 'published tax rates', using all sorts of tax dodges - most of them continue to get subsidies in one form or another from government.
And frankly, an increase of 5% or so on millionaires on up and large corporations is not going to provide enough revenue to properly fund government and pay down the debt, even if this were to apply across the board for all types of income.
We need a total reform of the tax code, but it's very unlikely to happen with the current make up Congress.
The core problem is that taxes on labor should NEVER be as high as they are on investment income, corporate income or on speculation - but America has been driven by speculation for so long it's unlikely we'll ever see the reforms need to establish sustainable long term economic security.
For all the insanity and craziness of the wealthy and corporate world as reflected in extremist right wing rhetoric, the threatening of employees, the threatening to move off-shore to tax havens - we're going to end up seeing most of the wealthy pay a tiny bit more. They'll do so grudgingly, with a vicious rancor that will inflict more revenge and damage on the working classes.
The bottom line I see is that this "change" [which does not come close to restoring even the W-2 based top tax rate of 50% that Ronald Reagan's admin had in 1986, Nixon's top rate of 70% or Eisenhower's top tax rate of 90%] is designed to un-ruffle feathers. We have a $4 trillion [and counting] war debt to pay off, and we've just kicking the can down the road.
Long term planning is truly conservative fiscal policy- and it's something that few politicians even begin to talk about {Bernie Sanders is a notable exception}. Without restoring some balance to the tax code so we can pay down the national debt, it's impossible to see how we can put that economics back on the right track. The coddling of the very wealthy continues, and the continued lack of boldness of American political leadership to restore progressive taxation dooms the working class and poor to more hardship.
