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View Diary: Busy day for Republicans: protecting millionaires and screwing over the rest (80 comments)

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  •  TRPC - you don't have to discuss every change (0+ / 0-)

    But TRA86 was transformational and to not even give it a nod is not honest.

    "let's talk about that"

    by VClib on Tue Apr 17, 2012 at 06:01:56 PM PDT

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    •  OK, let's more than nod. Brackets were compressed, (0+ / 0-)

      ... and some deductions died. The 1986 act was billed as ground-breaking simplification. Perhaps it was, relatively. But not in terms of exceptions, conditions, rules and regulations that followed. And it screwed some middle income taxpayers with the alternative minimum tax which now produces so much revenue that Congress cannot afford to kill it ... all in the name of simplification.

      Now, help me understand why we can't compare rates. Perhaps we can agree after all, but to do so, we need more than just a declaration that rates aren't comparable because a lot changed in the tax laws.

      Obama and strong Democratic majorities in 2012!

      by TRPChicago on Tue Apr 17, 2012 at 06:35:01 PM PDT

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      •  TRPC "some deductions died" (1+ / 0-)
        Recommended by:
        nextstep

        An entire industry that structured tax shelter investments was wiped out with the stroke of a pen. Prior to TRA86 you could drop your federal rate as low as you wanted and all top earners participated at some level. At the time I was a top 1% earner and never had an effective federal rate higher than 10%, when the statutory maximum was 70%.  The effective rate for all of  the top 1% was about 35% prior to TRA86 and that dropped to about 25% when the top rate dropped to 28%. My personal effective rate tripled. Effective rates are a combination of what income is subject to tax and what rate that income is taxed. What TRA86 did was subject nearly all earned income to tax which was not the case prior to TRA86.

        So when you compare the top statutory rates prior to TRA86 what the reader doesn't know is that high income earners were sheltering their income from tax so they were not subject to those high rates. After TRA86 nearly all the earned income is subject to the statutory rate which makes comparisons not valid.  

        "let's talk about that"

        by VClib on Tue Apr 17, 2012 at 07:14:09 PM PDT

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        •  I see why you're sensitive about comparisons. (1+ / 0-)
          Recommended by:
          VClib

          I agree that we should be focusing on effective tax rates, particularly those paid by the wealthy since their current tax preferences are things like (1) a much heavier reliance than the rest of us on preferential rates for long term capital gains and interest, (2) alchemy tricks like "carried interest" that magically changes income into investment, and (3) offshoring income in tax havens and untraceable accounts. Mitt Romney's 13.9% sounds pretty small compared to the rate for the top bracket. And it is!

          What you and I won't be agreeing on is that rate comparisons can't be made without emphasizing a lot more detail about the tax code. Those levels of detail certainly can be significant when we talk about tax reform. But ...

          But there's no way Progressives should help the GOP divert attention to raising taxes on the wealthiest by talking about how much lower their rates were in 1985.
          I'll go with subtleties about taxes when the Republicans start using them. Then, I agree, there's at least a chance of having a square-on honest discussion. But the GOP goes the other direction every time it conflates tax increases with discouraging job creation by small businesses. And confabulates about supply side economics and trickle-down tax policy. And puts out proposals to bump off a few deductions as a way to euchre support for lower tax rates on high income brackets. And refuses to split the linkage in the "Bush tax cuts" of tax rate cuts between the high and the middle brackets. Or proposes a regressive tax structure that would, say, replace taxes on income with VAT-type taxes on sales.

          Compared to those GOP positions, I think pointing out what the tax code was before 1986 with what it is 2012 is nostalgia, not good politics or even a good start on policy-making. After all, this is an election year.

          Obama and strong Democratic majorities in 2012!

          by TRPChicago on Wed Apr 18, 2012 at 05:23:18 AM PDT

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