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Thursday, March 12, 2009

Class Warfare?

John Berry:

If Tax-Cut Lapsing Is Class Warfare, Let’s Fight, by John M. Berry, Commentary, Bloomberg: If letting top income-tax rates go back to where they were in 2000 is class warfare against the rich, I’m ready to snap to attention with my old M1 rifle on my shoulder.

What a ridiculous label, class warfare. It’s hardly aggression against any class to have a progressive income-tax system in which fairness and ability to pay are important considerations in setting rates for different income groups.

As far as the top tax rates are concerned,... The law already calls for today’s 33 percent rate to go to 36 percent and the 35 percent rate to rise to 39.6 percent, in 2011.

Why did a Republican Congress and President George W. Bush countenance the 2011 expiration dates in the 2001 tax-cut bill? It was one of several deceitful provisions that made rate reductions temporary to hold down estimates of revenue loss. Of course, the GOP intended all along to make the rate cuts permanent.

Obama would let the Bush rate cuts expire only for couples with incomes above $250,000 ... and raise the rates for them on capital gains and dividends to 20 percent from 15 percent.

Unfair? I don’t think so, given these earners’ relatively greater ability to bear the added burden. There’s no doubt that a larger share of the nation’s income has become concentrated at the very top of the distribution.

The extra revenue would be used to help finance the government’s necessary role in dealing with the dangers of climate change and improving access to health care and control of its costs. ...

The Obama plan would give most taxpayers small reductions in tax liabilities...

When Clinton proposed raising the top rates to 36 percent and 39.6 percent in 1993, there were plenty of predictions that the higher marginal rates would hurt Americans’ willingness to work and invest. Some economists argued that so many people would opt for leisure instead of work that the higher rates would raise no additional revenue.

Instead, a boom ensued in the latter 1990s... What did Bush’s lower rates produce? Mediocre growth, very large deficits and financial-market manipulation.

The reality is that tax rates aren’t nearly as powerful a force as some people think they are. ...

    Posted by on Thursday, March 12, 2009 at 03:33 AM in Economics, Taxes | Permalink  TrackBack (0)  Comments (73)

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