REGARDING THOSE TAX CUTS FOR ‘95%’ OF WORKING FAMILIES
First, let’s dispense with the notion that Obama has not cut taxes for a very large majority of Americans. In fact, the administration went a step further and “refunded” monies to people who don’t pay any taxes in the first place - a giveaway little noticed at the time.
But most critics are focusing on the payroll tax cut that grants an individual an extra $400 a year in take home, and a married couple filing jointly $800. This is a tax cut - period. Of course, at the end of the year when you do your taxes, your calculated tax includes that extra cash so your refund may be slightly smaller. It’s not like you didn’t earn the money and don’t owe taxes on it. The government just decided to allow you to keep a little more of what you earned each pay period by reducing the amount they withheld from your check in payroll taxes.
Some administration opponents are trying to make the case that because this does nothing to decrease the average American’s tax bill that it is not a tax cut. Technically, they may have a case. But if you ask the average taxpayer if taking home more cash every week is a tax cut, they would almost certainly say yes.
It was a good plan, although fairly modest in its workings. It didn’t help the economy much at all and the reason most Americans think their taxes haven’t been cut is probably due to the fact that the average taxpayer’s take home pay was increased by only around $13 a week.
Also, concentrating solely on the reduction in withholding is disingenuous. There were other tax cuts in the stim bill (they didn’t work either) as well as extensions or enhancements of Bush era tax cuts that the president - being disingenuous himself - is claiming as his own.
Here are a few:
First time home buyer credit: Enacted under Bush, enhanced up to $8000 credit for buying a new home.
Reduction or elimination of sales tax and use taxes paid on qualified new car purchases. (Expired 1/1/10).
American Opportunity Tax Credit on college scholarships. Changed the name from the “HOPE scholarship credit” and enhanced and relaxed rules for broader participation.
Expanded and enhanced energy tax credits already in place.
Then there are “tax cuts” that primarily targeted Americans who don’t pay any taxes at all. Including these measures allows the president to say he has “cut” taxes for 95% of Americans:
Child Tax Credit. The Stim bill enhanced the child tax credit by making a larger portion of the credit refundable for 2009 and 2010. Even if you paid no income tax, you can still receive the money.
The Stim bill increased the Earned Income Tax Credit. This is another refundable credit that allows taxpayers that pay no income tax to get thousands of dollars “refunded” to them.
There were also a couple of items in the stim bill that either extended Bush era cuts for small business or enhanced existing programs.
What we can glean from this thumbnail summary is that both sides are right, and both sides are being disingenuous in picking and choosing what constitutes a tax cut and what doesn’t. The facts, however, are clear; taxes were cut for a large majority of Americans while the president is taking credit for some tax cuts not of his own design.
I think it very revealing of the philosophy of both sides in this argument as it relates to taxes in general and how the government funds itself.
Whose money is it anyway? It appears to me that on the left, there is the feeling that whatever you earn belongs to the government and it is up to government to decide how much of your money you can keep. Admittedly, this is put rather crudely but I think it an accurate reflection of what liberals believe, at least subconsciously. It is philosophically satisfying for many liberals to reduce what the government withholds from your paycheck because it signifies the government’s power to determine how much of your own property you are entitled to - even if the amount is paltry as it is in the stim bill.
Conservatives, on the other hand, believe that your earnings are your property and that the citizen consents to have the government take that portion it needs to operate efficiently. Ideally, we give our consent by electing representatives whose philosophy reflects that basic, underlying creed of personal liberty and the sanctity of private property. If taxes become too high, we elect people who promise to ease the burden. That also, is a form of consent.
I never hear the word “consent” from the left when it comes to a citizen parting with their property for taxes. Is it an important distinction? I believe it is indeed and that this fundamental outlook on taxes highlights a huge divide between right and left.
So perhaps all the hub-bub on the right about Obama not cutting taxes for the vast majority of Americans has more to do with a basic disagreement over whose money we’re talking about to begin with. Liberal governments appear to take an entirely different view of property than conservatives ones. This manifests itself in support for expanded eminent domain powers by the left, and a more limited definition of “private” property.
But if we’re going to criticize the president, let’s do it for his disingenuousness in claiming credit for tax provisions he had absolutely nothing to do with creating.
As President Clinton once said, we send it out, it’s only fair that we get some of it back.
Comment by Juan Paxety — 2/14/2010 @ 11:47 am
Give me a break, the issue is because Obama never used the word “consent”? I don’t remember Bush ever using that word either yet he’s revered for passing “tax breaks”, even though they were concentrated at the upper end of the income scale. I think it’s great that you’re honest enough to admit that Obama cut taxes for the vast majority of Americans.
I find it amusing that you mention how these tax cuts/rebates didn’t really work, without following that line of thought and discussing whether Republican’s only economic plan for the past 30 years (lower taxes) doesn’t actually work. Sure it had some impact when marginal tax rates were 70%, but they’ve been in the 30s for a while now. Surely at some point lowering taxes actually hurts the government? Obama tried to appease Republicans by making 1/3 of the stimulus package tax cuts/rebates, and what did he get for it? Very little economic impact, 0 votes from the Republicans (on anything) and a majority of Americans don’t even know he cut their taxes (which I blame on horrible PR by Obama and the Dems mostly, but also on conservative media lying to people).
Obama promised those tax cuts during the campaign. He promised them not to appease Republicans but to get the votes of the middle class.
Might I suggest that you leave political analysis to those who know a little something about it? Your painfully amateur attempt here only served to embarrass you.
ed.
Comment by Anonymous — 2/14/2010 @ 1:23 pm
The issue that seems to be coming into focus for an increasingly large segment of the public goes beyond “tax cuts.” It’s the extent to which fiscal policy is being driven by considerations other than the amount of revenue necessary to run the government. I’m talking not just about entitlements, which are simply wealth redistribution programs, but also the endless subsidies that get worked into the tax code (e.g., for buying a new car, investing in green technologies, etc.). People are awakening to the fact that the government holds sway over way too large a portion of the country’s private wealth.
Comment by Conrad — 2/14/2010 @ 1:38 pm
If you want a less slanted explanation of the leftist viewpoint on earnings and taxes, it would be like this: The very existence of money and wealth is a social construct (as opposed to a strict barter system, or a tribal collectivism). You have wealth because we all have agreed to act like your stack of dead presidents has value. You collected that stack of presidential engravings in an environment of government-supplied “externalities”, a legal system that makes contracts enforceable, a road system that makes it easy to get around, a social safety net that keeps poverty-driven crime down and a penal system that tries to keep those that commit crimes anyway out of circulation, the list goes on.
You only have wealth because society made that wealth possible. So you have both a moral obligation and a self-interest motivation in preserving that structure, and simply by the self-evident fact that you have “wealth”, you have obviously gained more from it than those that do not, and should expect to kick more into the pot.
Comment by Dave Rickey — 2/15/2010 @ 1:01 am
This “list” might be at the heart of the biggest disagreement amongst liberals and conservatives - how much power/reach/responsibility should the federal government have? Conservatives would argue that they gain wealth IN SPITE of that “list” and liberals will argue that they gain wealth BECAUSE of that “list”.
And when they hear through their brother-in-law (who pays no attention to politics) that “you just have to pay it back at the end of the year, anyway”, the Obama administration has a communication problem.
When people generically say “tax cut”, most think of income taxes. To my brother-in-law, it felt more like an accounting gimmick.
I have met very few tax cuts I didn’t like, but a few extra bucks per paycheck is definitely hard to organize rallies around.
I find it hard to get too wound up about that. Every president takes credit for the previous administration’s “good times” and blames them for any “bad times” they’ve inherited. Each one benefits from the previous administration in some way and Obama is no different. Supporters on either side will never admin it (which, again, is just growing more and more tiresome).
Comment by sota — 2/15/2010 @ 7:25 am
Interesting but depressing the manner in which these WH thugs lay blame on the very same people they steal credit from. You would think that someone approaching a degree of normalcy would limit or refrain from such ugliness.
But who’s normal in this crew?
Comment by johnt — 2/15/2010 @ 10:53 am
@ D Rickey: What that explanation boils down to is pure mob rule. It says, in effect, that even though “society” has, up to this point, seen fit to allow you (or your family) to accumulate wealth, society can at any time decide you’ve had enough of the good life and take it all away. Or, it can do something in between, such as tax the hell out of you while still allowing you to retain a better-than-average pile of dough.
I would call that philosophy “mob rule” because at its heart lies the notion that the individual is completely at the mercy of “society” when it comes to keeping the fruits of one’s own labors.
It’s no answer to say that society, by virtue of having created social conditions that made it possible for you to accumulate wealth, is thereby entitled to take your wealth away. That would be paradoxical: If society reserves the right to deprive you of the fruits of your own labors, then it ipso facto has not “created social conditions that made it possible for you to accumulate wealth.”
It makes no sense to speak of a “society,” i.e., a system of rules and customs, that reserves unto itself the right to dispense with rules and customs as the price you pay for enjoying the benefits of such a system of rules and customs. And whereas arguably the most fundamental of all of society’s rules and customs is the idea that you get to keep what you earn, you simply cannot square that right with the notion that society can take what you earn at any time as the price you pay for having been allowed to earn it in the first place.
Society enforces contracts, jails thieves, etc. so that people can pursue their individual happiness in relative peace and with the assurance that their efforts will not be looted by marauding mobs. I don’t think even “the left” (certainly not as we think of the term in this country) rejects the idea of property rights. Again, that would be tantamount to supporting mob rule.
I think the real crux of the difference between the left and the right, in contemporary political terms, is the scope of things BEYOND enforcing contracts, jailing thieves, building roads, etc., that the two sides consider to be within the appropriate sphere of government. Because the more government does, the more demands it places on individuals. And the more demands placed on individuals by the government, the less time and energy individuals have to pursue their own happiness.
To take the most immediate example, when Obama and the Dems enact legislation to guarantee health care to another 30 million currently uninsured individuals, they are forcing people to (a) pay more taxes, (b) pay higher health insurance premiums themselves, and/or (c) get less coverage than they would otherwise be able to get for the same money. Those are all costs borne by at least certain individuals in order to support the needs and wants of other individuals. IOW, society is taking some of the fruits of my labors in order to give it to someone else.
This, I think, represents the real nub of disagreement between the left and the right, or at least I think this is the fault line going forward.
Comment by Conrad — 2/15/2010 @ 10:54 am
Do not forget that many poor Americans work, and that FICA and Medicare take a huge chunk from their paychecks every payday. They also have phones, electricity, housing ect…they smoke, drink eat, ect…
All these things are heavily taxed, many by the feds. Poor people, in whole, will not get more in return than they ‘paid-in’.
Comment by Mike Ramon — 2/16/2010 @ 12:37 am
It appears to me that on the left, there is the feeling that whatever you earn belongs to the government and it is up to government to decide how much of your money you can keep.
Oh, come on.
What the liberals I know tend to believe is that society provides a lot of things that allow individuals to “earn” their money and that the individuals should therefore pony up society’s cut of the loot.
You are missing the point. The very fact that you put “earn” in quotes makes my case. It’s not “society’s” (government’s) decision to seize an individual’s property. The only right they have to our property is that which is given by the people. The people give their consent for government to tax them. They may not consent to every detail that government will use their property for. But the principle stands. And when government misuses taxes that have been granted it by the people, citizens have a perfect right and obligation to throw the rascals out.
ed.
Comment by angullimala — 2/16/2010 @ 5:05 pm