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So we’re reduced to debating which tax cuts we are for.  “Oh no, I’m not for those bad tax cuts for the rich. I’m for those good tax cuts for the middle class”.

Certainly it is true that Democrats have historically embraced some tax cuts as a form Keynesian stimulus by targeting cuts to those at the bottom of income distribution, as they are most likely to spend it. But for months now we have been treated to endless stream of tax cutting proposals from our own side, very few of which actually target low income Americans.

The President’s “compromise” is a perfect case study of the phenomenon. Almost everyone is for the “middle class” tax cut. But did you know that this portion of the tax cut also disproportionately favors the rich. 60% of the savings in the President’s original proposal (including Estate tax changes – which would have decreased the rich’s share and EITC, Child care and tuition credit which increase the share for lower income groups) would have gone to the top 20% income group.

Under the compromise that rises to 70%.  

Even the payroll tax holiday disproportionately benefits the rich as the maximum benefit goes to everyone who makes $106,000 or more. This is unlike the President's "making work pay" tax cut that was progressive.

As an added poke in the eye there is the giveaway to corporate America in the form of write offs for certain capital expenditures. Corporate America is currently sitting on $1.7 trillion dollars. They aren’t investing in new jobs because there is no demand.  Why would we increase the deficit to fatten corporate profits?

Years of being hammered as the tax and spend party have apparently beaten Democrats into submission.  Now we all seem to have jumped on board the tax cut bandwagon despiteoverwhelming evidence that tax cuts have been bad for everyone but the very rich.

Tax policy is how we re-distribute income in this country. For the last 30 years we have been engaged in a tax cutting orgy with Federal taxes reaching their lowest point in 60 years.  It is not a coincidence
that wealth inequality has now reached its highest levels in 80 years. The top one per cent have increased their share of our wealth from 8% to 34% over the last 30 years.

For the same reason we should target tax cuts to the lower income folks, we should be concerned about income distribution. The rich don’t spend as much. Their massive accumulation of wealth fuels speculative bubbles. They often invest overseas. A fairer income distribution means more demand, which in turn grows our economy that is dependent on consumer spending.

Democrats support taxing and spending because it is a way to direct our resources into more productive investments that spur future growth. We support income supports for the poor and elderly, investments in scientific research and education, all things that mean general prosperity. We shouldn’t be helping the Republicans starve government to aid the super rich.

At the end of the day circumstances may require the acceptance of the President's compromise as the only way to stimulate an economy that clearly needs it. But Kossacks need to stop cheerleading for tax cuts or calling this crap a "good deal".

Originally posted to Lcohen on Thu Dec 09, 2010 at 08:45 AM PST.

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Comment Preferences

  •  Tip Jar (11+ / 0-)

    I am not going to sit here and be an idle spectator to the diminution, the subversion, the destruction, of the Constitution. Barbara Jordan

    by Lcohen on Thu Dec 09, 2010 at 08:45:21 AM PST

    •  Shouldn't this be titled The President is a Rep (0+ / 0-)

      ublican Now?  Looks to me like 80% of kossacks oppose the deal.  heck even many of the wimpy D's in congress may wind up opposing it.  

      •  No because almost everyone (1+ / 0-)
        Recommended by:
        corvo

        supports the so-called "middle class" tax cuts which as I linked in the above diary aren't much better than the compromise proposal.

        I am not going to sit here and be an idle spectator to the diminution, the subversion, the destruction, of the Constitution. Barbara Jordan

        by Lcohen on Thu Dec 09, 2010 at 09:13:30 AM PST

        [ Parent ]

        •  They are better (0+ / 0-)

          because that money will be spent -- it will cycle through the economy over and over and actually have stimulus effect (unlike the 250K bracket rate reductions).    

          •  The bulk of these cuts (1+ / 0-)
            Recommended by:
            corvo

            still go to the people who don't need them and won't spend them. More than 60% of the middle class tax cut goes to the top 20% of income earners. When you get down to the people who will actually spend it it is only a pittance of the overall tax break. See my first link.

            I am not going to sit here and be an idle spectator to the diminution, the subversion, the destruction, of the Constitution. Barbara Jordan

            by Lcohen on Thu Dec 09, 2010 at 09:26:19 AM PST

            [ Parent ]

  •  Many Of Us Are Short Sighted Also! (0+ / 0-)

    The smarter and harder I work, the luckier I get!

    by JimmyP on Thu Dec 09, 2010 at 08:49:24 AM PST

  •  Tipped but (0+ / 0-)

    you say "Tax policy is how we redistribute income in this country"

    I disagree.  That is socialism -- or a republican critique of socialism.

    Tax policy is how we create opportunity for all americans in this country.  It is how those who are profitting from the favorable environment this country offers them repay their due and make their countrymen's success possible.  

    We are not doing a good enough job of it, but that's what I think our tax policy is about.

    •  Consider this (3+ / 0-)
      Recommended by:
      Hillbilly Dem, corvo, John Poet

      We have been using tax policy to redistribute income from everyone to the very rich. Now you can call that socialism perhaps but you can't say that is

      how those who are profitting from the favorable environment this country offers them repay their due and make their countrymen's success possible.  

      I am not going to sit here and be an idle spectator to the diminution, the subversion, the destruction, of the Constitution. Barbara Jordan

      by Lcohen on Thu Dec 09, 2010 at 08:56:07 AM PST

      [ Parent ]

      •  okay tell me how (0+ / 0-)

        we are currently redistributing income TO the very rich.  

        •  In exactly the opposite of what you suggested (1+ / 0-)
          Recommended by:
          corvo

          by not taxing the wealthy for all of the government services that subsidize their wealth accumulation. Check out this chartlinked in my post to see the exact correspondence between tax policy and wealth accumulation.

          I am not going to sit here and be an idle spectator to the diminution, the subversion, the destruction, of the Constitution. Barbara Jordan

          by Lcohen on Thu Dec 09, 2010 at 09:08:57 AM PST

          [ Parent ]

          •  I'm on your side about the result (0+ / 0-)

            its just the words you use are generally viewed as unamerican (and perhaps rightfully so).

            the only people I know who use the words "redistribution of wealth" in this country are right wing talk radio guys who are trying to bring down elected democrats.  I am unabashedly for a progressive tax and for inheritance tax etc.  But I am opposed to a tax policy whith the goal of "redistributing wealth".  I imagine that goal would poll badly even among the most liberal groups in america.  Think about it a while.

            •  I'm not sure how far we get by (3+ / 0-)
              Recommended by:
              Mambo, corvo, One Pissed Off Liberal

              refusing to acknowledge that we need to distribute wealth more fairly. The point I am trying to make is that this debate would be better waged by starting to call out the fact that we are redistributing wealth right now only we redistribute it upward to the wealthy. This is like the "class war" argument. The right accuses the left of waging class war but for instance when they attack unemployment benefits it's pretty clear who is waging class warfare and we should get in the habit of calling them on it. We need to reclaim the discourse not run from it.

              I am not going to sit here and be an idle spectator to the diminution, the subversion, the destruction, of the Constitution. Barbara Jordan

              by Lcohen on Thu Dec 09, 2010 at 09:20:28 AM PST

              [ Parent ]

              •  The language of the american left (1+ / 0-)
                Recommended by:
                Lcohen

                is not the language you are using.  Your language is familiar to me as the language of academia leftists.  The difference is important to me and I suspect many others.  

                I am entirely with you that we must reengage the rhetoric of liberalism which marks the high point of the country and the party, but I honestly think redistribution of weath is an idea that never has been and never will be adopted by many Americans.

                •  You wisely advocate an FDR type approach (1+ / 0-)
                  Recommended by:
                  One Pissed Off Liberal

                  FDR's tax rhetoric was not equalitarian. He endorsed a broader distribution of wealth, but he was careful to avoid any call for wholesale redistribution. Instead he promised to break up "concentrated" wealth, which posed a threat to economic and political freedoms, not to mention social harmony. "Our revenue laws have operated in many ways to the unfair advantage of the few," FDR declared in 1935, "and they have done little to prevent an unjust concentration of wealth and economic power."

                  I am not going to sit here and be an idle spectator to the diminution, the subversion, the destruction, of the Constitution. Barbara Jordan

                  by Lcohen on Thu Dec 09, 2010 at 09:33:26 AM PST

                  [ Parent ]

    •  The ONLY Important Purpose of Prog Taxation (4+ / 0-)
      Recommended by:
      Lcohen, Hillbilly Dem, corvo, Hannibal

      is not to redistribute wealth but to prevent excess speed and amount of accumulation of wealth at the top end.

      This country would be in 20x better shape if we restored the taxes, and just burned the revenue.

      When wealth accumulates at the top faster than in the rest of society, the top end always runs the economy like a casino as it did our entire first 130 years of bubbles, panics and depressions every few years till the great one and then FDR.

      Everything else beneficial about taxation lies to the right of the decimal point.

      This is an urgent matter for all of humanity because when American conservative undertaxation creates a crash, it is a global depression or nearly so. We break the lives of millions and millions around the world every time we cause another crash or depression.

      There is no way to shut down the casino without at minimum making sure nobody can take home the winnings. Other regulation is needed to be sure, but as long as the jackpots can be taken home, there is no way humanity can pre-emptively stop the endless development of new casino games. Especially the American system which needs a crisis about as bad as a depression to get any regulatory response at all.

      We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

      by Gooserock on Thu Dec 09, 2010 at 09:09:37 AM PST

      [ Parent ]

  •  Reaganism is the hegemonic ideology (5+ / 0-)

    that means that no "practical" or "pragmatic" politics can occur, are allowed to occur, that do not accept the ideological assumptions of Reaganism as an accurate description of the way the world works.  Any challenge to Reaganism represents a subversive, even revolutionary, assault on the existing order and will be treated as such by all elements which wish to participate in the ruling of the system as it exists.

    American business is about maximizing shareholder value. You basically don't want workers. ~Allen Sinai

    by ActivistGuy on Thu Dec 09, 2010 at 08:53:26 AM PST

  •  Yes, we sure are (2+ / 0-)
    Recommended by:
    Lcohen, rimstalker

    and my only regret is that we don't have Nixon to kick around errr, vote for, any more.

  •  I Have No Problem with Clinton Era Tax Rates (1+ / 0-)
    Recommended by:
    Hannibal

    And I think, given our deficit, most Americans wouldn't either... in a vaccuum.

    But we're not in a vaccuum.  We're in the economic situation we are currently in.  And I don't think it's a good time to take three trillion over ten years out of the economy, ESPECIALLY when we consider that with a Republican House coming in, they aren't going to spend it to stimulate anything.

    The PCCC: Dumb People spending Dumb People's Money.

    by TooFolkGR on Thu Dec 09, 2010 at 08:56:12 AM PST

    •  Probably right but the benefits of (3+ / 0-)
      Recommended by:
      corvo, Hannibal, TooFolkGR

      redistributing income upward may not equal the long term damage when Republicans demand cuts to offset the deficit.

      I am not going to sit here and be an idle spectator to the diminution, the subversion, the destruction, of the Constitution. Barbara Jordan

      by Lcohen on Thu Dec 09, 2010 at 08:58:20 AM PST

      [ Parent ]

      •  I Think That Question is Academic (0+ / 0-)

        Since Republicans were going to demand cuts to offset the deficit either way.  Not only that, but they PROBABLY would have been bundled into the Republican version of this bill.

        The PCCC: Dumb People spending Dumb People's Money.

        by TooFolkGR on Thu Dec 09, 2010 at 08:59:53 AM PST

        [ Parent ]

        •  Not academic if the harmful effects (1+ / 0-)
          Recommended by:
          corvo

          of increased concentration of wealth at the top further empowers Republicans. You know - rinse and repeat.

          I am not going to sit here and be an idle spectator to the diminution, the subversion, the destruction, of the Constitution. Barbara Jordan

          by Lcohen on Thu Dec 09, 2010 at 09:11:26 AM PST

          [ Parent ]

  •  Agreed with one caveat. (2+ / 0-)
    Recommended by:
    corvo, One Pissed Off Liberal

    At the end of the day circumstances may require the acceptance of the President's compromise as the only way to stimulate an economy that clearly needs it.

    It won't stimulate this economy. The vast majority is already in place. It's not stimulating our economy now nor has it for the past ten years.

    Face it... Obama is just as guilty as the GOP for using the poor to advance the agenda of the rich.

    Period.

    It's a bad deal all the way around. It won't create jobs. He has had every opportunity to use the bully pulpit and demand the that Republicans vote for the UI extension prior to it's expiration. He didn't do it. Not once.

    What he did do was announce a Federal Pay Freeze which will hurt the middle class more than anyone.

    Let's just look at what he is defending... if the all important Bush Tax Cuts expired. This is what people would be loosing.

    $1.33 a weekly paycheck. Will they be pissed?

    $1.33 a week if you make $11,600 a year

    $11.21 / $28,852

    $19.54 / $52,224

    $40.84 / $88,978

    $7,147.16 / $8,367,274

    Get the picture?

    Is it really worth wrecking the entire economy so we can save the rich?

    Source:  Urban-Brookings Tax Policy Center

    It is best if we let ALL the Bush Tax Cuts expire. And start proposing more progressive taxes.

    Now that doesn't even factor in the horrible Estate Tax and the Payroll Tax Holiday that will jeopardize Social Security and additional corporate tax cuts that are thrown in...

    This plan is worse than the Bush Tax Cuts.   Much worse.

    What should be done is let ALL the Bush Tax Cuts expire and revert to the Clinton era rates when he raised taxes. It was the right thing to do for the economy then, and it's thing right to do now.

    "An exact science is one that admits loss" -- Genesis P-Orridge

    by jethrock on Thu Dec 09, 2010 at 09:13:42 AM PST

    •  I go back and forth on this (2+ / 0-)
      Recommended by:
      corvo, jethrock

      I hate the deal particularly for the long term. But i wonder about the effects of taking away hundreds of billions of dollars that low income Americans would spend in an economy that is lacking in demand. It's certainly a trap but I think we're already on the brink contrary to those who keep imagining we are in a recovery.

      I am not going to sit here and be an idle spectator to the diminution, the subversion, the destruction, of the Constitution. Barbara Jordan

      by Lcohen on Thu Dec 09, 2010 at 09:23:55 AM PST

      [ Parent ]

      •  I put this way yesterday (1+ / 0-)
        Recommended by:
        Lcohen

        It's bad economics.

        It's an economic disaster a decade in the making. Now Obama is contributing to it.

        If Obama's Deal goes through... it'll go down in History as worse  than The Bush Tax Cuts.

        Coolidge had tax rates as low as 24% for the top bracket which led to the crash of 1929 and the Great Depression.

        Hoover came into office several months before the crash... most of his policies are notoriously bad economics...

        One thing he did right toward the end of his Presidency was RAISE TAXES... which set-up the prospect and the capability for FDR to enact The  New Deal... it took time. But the higher taxes and increased spending is what pulled us out of the darkest days of the Great Depression.

        The Bush Tax cuts weren't the only culprit but they were a major player for bringing our economy to it's knees.

        Obama has already let that policy continue for two years too long and has added more tax cuts for not just individuals but also corporations on top of that.

        Obama's newest offering is the Bush Tax Cuts on steroids combined with a Federal Pay Freeze... and will only make our problems much worse... both economically and politically.

        The harsh reality is the fact that ALL Bush Tax Cuts should expire... if we are expected to ever recover and reduce unemployment.

        "An exact science is one that admits loss" -- Genesis P-Orridge

        by jethrock on Thu Dec 09, 2010 at 09:32:05 AM PST

        [ Parent ]

  •  Great diary, but it calls for a (1+ / 0-)
    Recommended by:
    Lcohen

    song . . .

  •  the SocSec honey trap (0+ / 0-)

    Have we all forgotten the Republican desire to destroy SocSec? They insist that benefit reductions are necessary because funding is insufficient, and that (for them) eliminating the "cap" is not an option.
    Well, If Dems agree now to reduce SocSec taxes even temporarily, it weakens the SocSec program. And the poison pill: Dems will be facing a big problem in a couple of years. We will face a repeat of the current Republican assault saying that "you can't raise taxes now", and the only pragmatic solution is to cut SocSec benefits. Do you think Obama will do the right thing. We need to short circuit this strategy now.

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