The richest 1 percent — households making at least $732,800 — would get an average tax cut of $129,030, the analysis finds. For the typical one-percenter (who earns much more than $732,800), that means 8.5 percent more income after taxes. The richest 0.1 percent, earning at least $3.4 million a year, would get $722,510 back on average, for a 10.2 percent average boost in after-tax income.
By contrast, the middle class (households earning $48,600 to $86,100 a year) would get $660 back, a 1.2 percent income boost. The poorest fifth of Americans, earning $25,000 or less, would only get $60, a 0.5 percent increase.
.. But the next guest on the “This Week” was Vermont Sen. Bernie Sanders, who delivered a stinging rebuttal:
Everything he [Mnuchin] said is dead wrong … They are repealing the Estate Tax. The Estate tax only applies to the top two tenths of one percent — millionaires and billionaires, like the Walton family of Wal Mart, like the Koch Brothers, like the Trump family. $269 billion in tax breaks for the top two tenths of one percent over the next ten years. And this is not a tax break for the rich? Well, I don’t know what a tax break for the rich is.
The Trump Fog Machine erased all his Tweets supporting the other guy in Alabama. No need for that. We do it for him, by following the fresh distractions. Trump is not Teflon. Things do stick to him. But he survives by saying or doing something so outrageous, so regularly, that we forget the last atrocity, and turn on one another.
.. So, this week his cabinet official charged with taking away health care from the poor and cutting the budget for cancer research is using our money to fly private planes at his pleasure. The multimillionaire treasury secretary wanted the same perk for his honeymoon.
.. He’s already tweeted the word “loser” 234 times, “incompetent” 92 times and “pathetic” 72 times. Call them projection tweets, showing the man for what he truly is.
.. He’s already lied about whether his tax plan will benefit the rich and his own family. It will, by eliminating the estate tax, and ensuring that the top 1 percent will get nearly 50 percent of the windfall.
True reform will require a bipartisan consensus around closing loopholes to pay for the lowering of statutory tax rates paid by businesses, and reducing burdens on working families. Changing tax law must be done in a fiscally responsible way, without cutting taxes for the very wealthy.
First, changes in the tax rates for individuals must at least maintain the current levels of progressivity
- Cutting tax rates for the very wealthy would deepen the income inequality that underlies the anxiety and anger among American voters. If Congress doesn’t preserve or increase progressivity, we won’t have the resources to pay for investments like infrastructure and child care.
- .. Congress must also maintain the estate tax, which is levied only on estates worth more than $5.49 million ($10.98 million for a couple), affects only the wealthiest 0.2 percent and protects small businesses, including family farmers.
- .. Many of the estates that are taxed have assets that have increased in value but have never been subject to capital gains tax, and never will be. The idea that the estate tax imposes double taxation is largely a myth.
- Second, tax cuts must be offset by revenue-raising measures. With the country in the ninth year of an economic recovery, the case for pure stimulus is weak, and digging a deep hole of debt by cutting taxes will make it harder to pay for other priorities.
- Tax cuts need to be revenue neutral, paid for by reducing tax subsidies, ending loopholes or generating new revenue.
- Third, Congress should rely on its Joint Committee on Taxation and the Congressional Budget Office to estimate what a tax bill will cost.
- Claims that tax cuts pay for themselves must be treated with great skepticism.
- Such a reckless move would almost surely produce an explosion of debt. In 1981, 2001 and 2003, tax cuts based on projections that they would largely pay for themselves did not, and when deficits soared, future presidents had to make hard choices to restore fiscal stability.
- Fourth, business tax reform must not open up new loopholes for top earners to evade taxes. Proposals to lower the tax rate on “pass-through” income (income that partnerships, sole proprietorships, S corporations and limited-liability companies “pass through” to owners) would create a costly, unpoliceable loophole. Wealthy individuals and businesses could easily reorganize on paper to take advantage of low pass-through rates.
- most pass-through income goes to wealthy individuals and big businesses like hedge funds and large oil and gas pipeline companies organized as limited partnerships.
- Kansas instituted a similar policy in 2012 and repealed it this year after 100,000 new pass-throughs emerged — among them the coach of the University of Kansas basketball team, who had his salary paid to a pass-through entity to escape state income tax. Yet job and economic growth in Kansas lagged that of most neighboring states, evidence that the policy did not produce the growth that supporters promised
A common, though apparently ineffective, response to this frustration is to double down by discussing more facts.
.. When arguing about politics, it is often helpful to construct the best possible version of your opponent’s reasoning
- .. Much normative (or value-based) reasoning by liberals (and mainstream economists) is about the consequences of political actions for the welfare of individuals. Statements about the desirability of policies are based on trading off the consequences for different individuals.
- .. Meanwhile, much conservative normative reasoning is about procedures rather than consequences. For example, as long as property rights and free exchange are guaranteed, the outcome is deemed just by definition, regardless of the consequences.
- .. People are “deserving” of whatever the market provides them with.
.. Our conservative likely believes that everyone has the right to keep the fruits of her labor, and free contracts of exchange between any two parties are nobody else’s business. She will consider someone who has worked hard their whole life, has been frugal and saved their income rather than indulging in consumption
.. Exasperated, the liberal empiricist then bemoans the post-factual state of contemporary political discourse.
- .. A first option is to accept the conservative value framework, but focus on children instead of parents. Consider a child born to rich parents who has never worked hard but indulged in gratuitous consumption in the expectation of receiving a rich inheritance. Such a person is not “deserving” in terms of the ethics of rewarding work; to not reward such immoral behavior, we need to tax bequests.
- .. A second option is to explicitly argue for a liberal value framework.
- .. A third option is to challenge the conservative value framework. In a modern society based on a complex division of labor, nobody can be said to consume only the products of their own labor. We rely on social institutions including markets and governments to provide us with all the goods we consume, and absent a theory of just prices (which present day conservatives don’t have) there is no sense in which we are entitled to specific terms of exchange.