Obama partial extension of Bush tax cuts gives a tax cut to 95% of the top 1%, GOP cries “socialism!”
The types of people that Paul Krugman derides (rightly) as the Very Serious People are always bringing in ideas for deficit reduction and for “solving” the problem of the “fiscal cliff” that have one thing in common: they talk a big game about imposing shared sacrifice in the name of deficit reduction, but in fact call upon the wealthy for very little of the cuts. The LA Times’ Michael Hiltzik describes:
“Yet there’s still reason for most Americans to fear the deal-making aimed at avoiding the fiscal cliff. For one thing, the debate seems increasingly to be driven by the wealthy, who can be trusted to protect their own prerogatives while declaring everyone else’s to be wasteful. “
Hiltzik digs up the statistics I didn’t have time to find from the Tax Policy Center (run by the Urban Institute and the Brookings Institution) about the extension of the Bush tax cuts excluding the points which only affect the very wealthy. As I expected, even the “middle class” tax cut extensions primarily benefit those with the highest incomes because these tax cuts don’t apply only to those earning less than $250,000, they also benefit the wealthy’s first $250,000 in income. Here’s how the numbers break down (taken straight from the Tax Policy Center report):
The key numbers is that, even though Obama’s proposal is supposed to amount to a tax increase on the wealthiest Americans, it doesn’t do even that very well and amounts to a huge tax cut for the wealthiest. Only 4.3% of the top 1% face a tax cut that averages just above $11,000 while the rest of the 1% who get a tax cut see their average tax cut of over $16,000).
Moving up to the richest of the rich, the 0.1% (i.e. those people with more income than 99.9% of all Americans), more of them face a tax rise, but still only 1 in 8. The 7 out of the 8 highest one-tenth of one percent income earners get a massive tax cut, averaging nearly $68,000 per year.
This compares with a tax cut on the middle quintile (people around the middle of the income distribution, between the 40th and 60th percentile), who all get tax cuts, but only see $1,100 per year.
And yet even Obama’s proposal which is overwhelmingly tilted towards the wealthy is derided by Republicans as “Socialism!” as they cry out to protect the “job creators” (who apparently aren’t protected when 95% of the wealthiest 1% of Americans see a tax cut under Obama’s proposal, which gives you an idea of who the GOP sees as their natural base).