WSJ's Drucker fails to note Obama would only increase capital gains taxes on individuals making more than $250,000
SUMMARY: The Wall Street Journal's Jesse Drucker wrote that Sen. Barack Obama has said he will "seek to raise" the capital gains tax to "at least 20%, the rate before the 2003 cut, and possibly higher." In fact, Obama has said he would not raise the capital gains tax on individuals with income of less than $250,000 -- a fact noted by WSJ reporter Tom Herman in an "Ask Dow Jones" Q-and-A.
In a July 23 Wall Street Journal article, reporter Jesse Drucker wrote that Sen. Barack Obama has said he will "seek to raise" the capital gains tax to "at least 20%, the rate before the 2003 cut, and possibly higher." In fact, Obama has said he would not raise the capital gains tax on individuals with income of less than $250,000 -- a fact noted by WSJ reporter Tom Herman in a July 20 "Ask Dow Jones" Q-and-A; Herman wrote, "Sen. Obama also proposes increasing taxes on long-term capital gains and dividends, but only for those people making more than $250,000."
In a videotaped interview with CNBC's John Harwood that aired on June 10, Obama said, "[K]eep in mind on all of these proposals, what I have said is, let's make sure that we define the well-off so that we're not hitting the middle class. I generally define well-off as people who are making $250,000 a year or more, and that means, for example, if we raise the capital gains tax, I would exempt people who are essentially small investors, and really capture the -- those who have done very, very well over the last two decades."
Indeed, Obama's published tax proposal expressly states: "Barack Obama Will Only Raise Taxes for Those Earning Over $250,000 Per Year."
From Drucker's July 23 Wall Street Journal article:
The figures about the relative income and tax rates of the wealthiest Americans come as the presumptive presidential candidates are in a debate about taxes. Congress and the next president will have to decide whether to extend several Bush-era tax cuts, including the 2003 reduction in tax rates on capital gains and dividends. Experts said those tax cuts in particular are playing a major role in falling tax rates for the very wealthy.
Sen. John McCain has proposed extending the lower tax rates of 15% on long-term capital gains and dividends that apply to most taxpayers, while Sen. Barack Obama has said he will seek to raise them to at least 20%, the rate before the 2003 cut, and possibly higher.
From Herman's July 20 Wall Street Journal "Ask Dow Jones" column:
Q: What are the federal income tax brackets and rates likely to be for tax year 2009? If it's too soon to have even somewhat reliable information, when might it be possible to make a prediction?
A.K., Rancho Murieta, Calif.
A: The Internal Revenue Service won't announce official income thresholds and other inflation-adjusted tax numbers, such as the standard deduction and personal exemption amounts, for tax year 2009 until late this year. However, I usually get reliable estimates, calculated by three respected private-sector tax experts, well before the IRS numbers are issued.
Last year, we published an early peek at the numbers for 2008 in late September.
The numbers came from three sources: the Tax & Accounting business of Thomson Reuters; CCH, a Wolters Kluwer business; and Northern Illinois University accountancy professor James Young.
As for tax rates: Under current law, federal income tax rates range from 10% to as high as 35%.
But nobody knows what will happen next year. Sen. John McCain wants to retain these rates. Sen. Barack Obama wants to raise taxes on people making over $250,000 a year.
For example, Sen. Obama proposes raising the top ordinary income-tax rate of 35% to 39.6%. He also proposes raising Social Security taxes on those making more than $250,000 a year but hasn't given details, such as how much more those people would be required to pay.
Sen. Obama also proposes increasing taxes on long-term capital gains and dividends, but only for those people making more than $250,000.
Under current law, the top rate on stocks, mutual-fund shares and other securities typically is 15%.
How much higher does Sen. Obama want to make it? An adviser says the rate would be lower than the 28% rate that prevailed during the Reagan presidency and "perhaps as low as 20%."
But for people making less than $250,000, "dividends or capital-gains rates would remain where they are."
All the uncertainty makes tax planning unusually difficult this year.
From the June 10 broadcast of CNBC's Your Money, Your Vote:
OBAMA: I think that we've had an economy that's been out of balance for too long. So the general principle of raising taxes on higher-income Americans like myself, and providing relief to those who haven't benefited as much from this new global economy, I think, is a sound one. And keep in mind on all of these proposals, what I have said is, let's make sure that we define the well-off so that we're not hitting the middle class. I generally define well-off as people who are making $250,000 a year or more, and that means, for example, if we raise the capital gains tax, I would exempt people who are essentially small investors, and really capture the -- those who have done very, very well over the last two decades.
I hadn't really thought about it, but it's true: rupert murdoch owns and controls (and maybe manipulates) the Dow Jones Industrial Average (DJIA).
True.
The DJIA is determined by both by a chosen set of corporate stock prices, and by a particular "price-weighted" methodology of combining the share prices of those companies, into an Index, or Average: rupert murdoch now owns "Dow Jones Indexes"
http://www.djindexes.com/mdsidx/index.cfm?event=showAboutUsOverview
"Dow Jones Indexes is a leading full-service index provider that develops, maintains and licenses indexes for use as benchmarks and as the basis of investment products. Best known for the Dow Jones Industrial Average... Dow Jones indexes are maintained according to clear, unbiased and systematic methodologies... Dow Jones Indexes is a unit of Dow Jones & Company, a subsidiary of News Corporation."
The DJIA: just one more thing that I didn't trust in the first place, but couldn't exactly say why... but now I know exactly why: because rupert murdoch owns and directs the minions and stooges who choose the companies that make up the DJIA, and choose the methodology for determining that Index or Average... to whatever manipulative end serves rupert murdoch, I'm sure.
When murdoch chose to use his considerable powers over the cable television line-up offered by your cable provider, to create and get us to stare at something called "Fox Business Channel" (FBC), I thought great, here's a guy who knows a good thing when he sees it, and already exerts so much televised power in influencing and manipulating the American People's political opinions (think BUSH and IRAQ), and so now he's going to expand into a greater and greater influence of the American People's opinions, about the capital markets and Wall Street (greater and greater than murdoch presently manipulates Americans, via hacks like cavuto et al)...
But I think just too many Americans already are just too sick of murdoch's shcemes to influence and manipulate the opinions of the American People (think BUSH and IRAQ), and so FBC didn't exactly take off, probably due to a combination of suspicion and disinterest and it being just too soon in the aftermath of BUSH, and still during IRAQ...
But this is just like how a crooked owner and crooked trainer and crooked jockey would behave, when the bettors at the track started talking too much and with great suspicion, about the horse those crooks had entered in the race today: they just withdraw the horse is all, and keep him stabled until a later date, when the bettors aren't paying such suspicious attention any longer... and then they'll eventually enter that same horse in the race, and then WHAM! PAYDAY! THE RACE IS FIXED YOU DOPES!
Fox Business Channel: rupert murdoch wouldn't mislead you now, would he? (Think BUSH and IRAQ.)
The Wall Street Journal (and for that matter, the DJIA): owned and operated by rupert murdoch, a name you can trust, right? (I won't keep telling you what to think: you already know, and have for some time now.)
Quick--tell your pension fund managers about the Wall Street conspiracies you've uncovered.
Better yet, instruct them to place your retirement money only in non-profits. That'll make ya feel all warm and smarmy. And, better yet--you'll get a return similar to what you get from the Social Security chain letter that most here will defend to the death.
Chapter 437
...in which Pooh bear loosens the woodwork to realease yet again the conservatives who claim lower taxes increase revenue...
Yesterday the WSJ had an editorial showing that despite the Bush tax cuts, the rich were paying a higher percentage of income tax than before the cuts. I waited and waited for a thread by MMFA telling me how this wasn't so, still waiting...
I know the WSJ editorial page is all over their radar so it couldn't possibly have been missed.
the WSJ had an editorial...
Well, it's just an editorial. And coming from the WSJ, there's a strong chance that this opinion was NOT based on facts.
Here's the editorial.
http://online.wsj.com/article/SB121659695380368965.html?mod=djemEditorialPage
More millionaires paying more taxes in total but less individually is the whole point. That's supposed to be a good thing.
Redistibution of wealth to the richest among us is a good thing? Don't think so. Look up "robber barons" and get back to us.
...crickets chirping as the adherents of Class Warfare get confronted with simple logic: those additional millionaires had to come from somewhere, and that would be from less-than-millionaire status.
Don't hold your breath for a retort that makes any sense, Bruce.
"...despite the Bush tax cuts, the rich were paying a higher percentage of income tax than before the cuts."
More information, please. Are the rich paying more as a percentage of their income, or more as a percentage of the total income taxes from all income levels (due to wage stagnation among lower incomes and increases among the higher incomes)?
These things are NEVER that simple.
NEON:
I have a question: How much is enough? What percentage of their income should anybody be forced to hand over to the government? 40? 50? 60? For anyone making in excess of $50,000 it's around 40% for all levels of government. That's not enough??
How does this work in your mind? Where is the line between trying to minimize your taxes (IE the 50K guy) and just being grateful you are rich and paying your "fair share"?
Hey Bruce, I was only pointing out what NoLeft was doing, either using taxable income as income, or pretending that people pay the nominal tax rate, which, of course, nobody does. I also think he may have been applying other secondary taxes (utilities, etc) as a percentage of total gross income.
Do you know anybody who made 50k last year and paid close to 9k in federal taxes?
If you're asking me to re-write the tax code for you in a form that I think is perfect, I'll just say I expect more from you than a question from the Hannity quiver.
Contrary to the conventional wisdom, most of us crazy liberals do not love paying our taxes, and try to reduce them. But we pay them, and move on with our lives.
Liberals also make the argument that the rich aren't paying their fair share, and my point in bringing up the editorial is that the rich are paying a higher share of the federal tax burden after the tax cuts than before.
That Hannity thing was a low blow ;-)
And my other post has mysteriously disappeared, so we look crazy now.Bruce, just act cool, maybe nobody will notice.
Federal Income tax for 2008 on $50,000 taxable income is $8,844. NLT
Are you so young that you've never paid income taxes so you don't know what you're talking about? Or are you incapable of doing them on your own, so you don't really know what you're talking about?
Taxable income is not equivalent to income. Taxable income is after deductions and exemptions, dummy. That's the first thing.
Second thing is, both Republican and Democratic governments have recognized that lower income people and families need virtually all of their money to survive. They don't have much disposable income and don't have much in savings. For those people, there is a real limit to the amount they can be taxed without being really squeezed.
This posting by Media Matters is about people who make over $250,000 a year. They are not squeezed by having to pay a large percentage of their income in taxes in a similar way to the people making 25,000 or 50,000, or even $100,000 with a family. Those people making a quarter of a million dollars can make reasonable adjustments in their purchases and splurges to cover any additional taxes. Someone making $40,000 and supporting a family doesn't have that same leeway.
No one is talking about putting any larger burden on lower income folks. Bush did do that, though, by cutting taxes and waging war against Iraq. The Feds can't give the states as much support, so increases in state and local taxes have outweighed the small tax cuts those consumers got from the Bush tax cuts. Higher income people have not been affected in the same way even if their tax burden has increased. They can afford it, so they should be the people paying more, and in some cases, much more. The people that can afford to pay should pay. Like I said, both Republican and Democratic governments before Bush understood this well.
Snoop,
Care to cite a source for your 9% of the wealth figure? Thanks.
...despite the Bush tax cuts, the rich were paying a higher percentage of income tax than before the cuts.
Why? Because the rich are making more pre-tax profit. The disparity between the income of the ultra rich and of middle and working class people continues to increase.
There are more rich people now. Some that were in the middle class moved up.
And the point of the editorial is that they are paying a higher percentage of the taxes than any time in the last forty years. I posted the editorial above.
You were right to ask for more information, Neon. I'm guessing Bruce is referring to this article (not editorial), which says:
Meanwhile, the average tax rate of the wealthiest 1% fell to its lowest level in at least 18 years. The group's share of the tax burden has risen, though not as quickly as its share of income.
(Emphasis mine)
simply put, the wealthiest pay a higher % of total individual tazes because they make the bulk of the income, the reduction in their marginal rate notwithstanding.
as well, dividends (and interest income) are taxed at ordinary rates. any change in strictly the rate on long-term capital gains (barring congressional action) will have no effect on them whatever.
you'd think someone writing for the WSJ would know that basic fact of tax law.
Meanwhile, the average tax rate of the wealthiest 1% fell to its lowest level in at least 18 years. The group's share of the tax burden has risen, though not as quickly as its share of income.
Which proves -- you knucklehead leftists -- that lower tax rates result in increased revenue. The fact that you want to confiscate more money from everybody due to your class envy doesn't change the fundamental truth of the result of lower rates.
Punishing the so-called rich, i.e. anyboby with a decent job, is a failed idea.
lower tax rates result in increased revenue.
Where, in that quote, does it say anything about increased revenue?
And if it's not too personal, what percentage of your total income did you pay in taxes in 2000 and this year (or, just the difference in percentage, if you don't want to divulge too much). I always ask my Republican friends how their vote for lower taxes actually worked out in the real world, and I've never gotten an answer.
Seriously, this tax-y Democrats idea is so ingrained in the average American, it's ridiculous. I work pretty directly with people making from as low as 25-30k a year (our lower-end guys out in the field) to people who make very solid six figures every quarter.
None of them can tell me how much the Repoops helped them out, and many of them admit that their situations have been much tougher over the past few years( less in the bank, more credit card debt, not so much in the vacation dept.),but a lot still insist that they're voting Repub. to keep their money. It's amazing.
It's between 2 and $4,000 LESS in fed. income tax thanks to elimination of the marriage penalty and doubling of the child tax credit. Thank you GOP.
Thank you, GOP? How about me? I'm single with no kids, and my taxes went up over the past few years.Where do you think you & baby-mamas entitlements came from? You should have just said that in the first place, Welfare Queen.
What am I buying those kids you can't afford for Xmas?
Nice comments. So you are saying your money goes to the welfare queen? Please explain how money you owe governement gets sent to him?
We all now this doesn't happen. If you want to pay less, vote different.
Nice comments.- mikerhyner8202
Thank you Mike.
So you are saying your money goes to the welfare queen?- mikerhyner8202
Yes.
Please explain how money you owe governement gets sent to him?- mikerhyner8202
My taxes have gone slightly up. His have gone down. Our current administration has been very irresponsible fiscally, as far as spending & deficits, so the extra 2-4k he's received obviously isn't a rebate based on some good work by the government.In fact, he admits it's not from any work he's done,but from creating a few dependents.
We all now(sic) this doesn't happen.- mikerhyner8202
Assuming "we all " means you and the chipmunks in your head, I'll concede that point.
If you want to pay less, vote different.- mikerhyner8202
I'm not sure what you mean by "vote different". Are you saying I should vote Republican, to continue the current plan of deficit spending, a weak dollar, and a lousy economy? Where are you getting the idea that continuing the current GOP policies is going to have the opposite effect it's had for the past 8 years?
geez noleffturns, you are a complete maroon! lower tax rates do not, repeat, do NOT, result in increased tax revenues, over the long-term. they never have, and never will, for blindingly obvious reasons.
conceivably, a decrease in the tax on long-term gains may well (and historically has) produce a short-term increase in tax revenues, as people sell off the capital assets they've held for some time. however, that's a one year affect. after that, revenues decrease as, SURPRISE, less tax is paid on those gains in the future.
if this simplistic, republican approach to the budget were actually true, it would make more sense to reduce the tax rates to zero, therebye generating untold trillions in additional revenues. oddly enough, congress, even one controlled by the republicans, has never done that.
why do you suppose that might be, he asked?
In sum, the idea that tax cuts pay for themselves sounds too good to be true because it is too good to be true. Tax cuts lose revenue, and when they are deficit financed, they can also contribute to poorer economic performance over the long term.
Carn,
http://www.treasury.gov/press/releases/reports/treasurydynamicanalysisreporjjuly252006.pdfI suggest that you go read the dynamic anaylysis of the tax cut that your quote references. I could not find any place where thoe claims made by the Center on Budget and Policy Priorities. Their footnote leads to this dynamic analysis by the Treasury. They conclude that the tax cuts provide impetus for for real growth but future tax increases and/or increased government spending will negate that growth. Below is their conclusion. I will appreciate it if you can find out where that "cost" figure came from.
The analysis presented in the paper suggests that permanently extending the President’s tax relief enacted in 2001 and 2003 likely would lead to a long-run increase in the capital stock and an increase in national output in both the short run and the long run. If the revenue cost of that tax
relief is offset by reducing future government spending, the increase in output is likely be about 0.7 percent under plausible assumptions. If, instead, the tax relief is extended only through the end of the budget window (i.e., it is temporary), the tax relief would increase national output in the short run, but long-run output would decline as future tax rates increase. The analysis also suggests that if only the portions of the President’s tax relief that primarily reduce marginal tax rates are extended (i.e., the lower rates on dividends, capital gains and the top four ordinary income brackets), it is likely that output would increase regardless of whether the revenue cost of the relief is financed through a future reduction in government spending or a future increase in tax rates, although the increase would be considerably larger if government consumption is reduced.
The GOP believes that people whose money works for them should be taxed less or not be taxed at all while people who work for their money should continue to pay the regressive payroll (FICA) tax, which favors the wealthy with its $90K cutoff threshold.
Anguished screams all around from Republicans when Obama proposes raising the upper limit of Social Security taxes to $250,000.
Middle class families earning $80-90K are the most heavily taxed. It gets better and better for those earning more.
SS is a chain letter any way you cut it. Elvis can raise the exclusion to 250 or 500, "full retirement" can be raised to 80 or 90, the means testing that is coming can exclude all the evil people who have a net worth over 20 bucks, and so on...
...and it will still fail as the bureaucracy grows and monies arriving in the general fund are vaporized.
AA,
Quote you took from the Treasury study: "If the revenue cost of that tax relief is offset by reducing future government spending, the increase in output is likely be about 0.7 percent under plausible assumptions."
The CBPP was right about the estimates being based on a best-case scenario. It assumes that the cost of the tax cuts will be offset by future reductions in govt. spending.
Furthermore, the "real growth" that the tax cuts are supposed to produce in the long run--0.7 percent--are minuscule:
The featured estimate in the Treasury study is that making the tax cuts permanent would add 0.7 percent to the size of the economy over the long run, under the unrealistic assumption that the tax cuts are paid for by deep and unspecified reductions in government programs that start in 2017. The report does not specify what “long run” means, but if the higher growth rates were spread over 20 years,[3] an ultimate increase of 0.7 percent in the size of the economy would mean an increase of just four one-hundredths of one percent in the average annual growth rate. For example, instead of average annual growth of 3.0 percent, the economy would have an average annual growth rate of 3.04 percent.
As for the claim that the tax cuts would pay for less than 10 percent of the long-term cost, you won't find such a direct statement in the Treasury's report because, for some odd reason, they never released their estimates on how much additional revenue the tax cuts are assumed to bring in. However, it is implied when you make calculations based on the info the study gives:
One straightforward way to derive such a revenue estimate is to compare the cost of the tax cuts in the absence of any dynamic effects to the added revenue that would result from the increased level of economic growth the tax cuts are assumed to produce. According to CBO’s official cost estimate, the Administration’s proposal to make the tax cuts enacted since 2001 permanent would cost 1.4 percent of GDP annually. (This does not include the relief from the Alternative Minimum Tax that the Administration regularly proposes on an annual basis, which would bring the total cost to 2 percent of GDP.) The Treasury study finds that the tax cuts would raise national output by “as much as” 0.7 percent over the long term; with tax receipts projected to be about 18 percent of GDP, this translates into an increase in revenues, as a result of greater economic growth, of about 0.13 percent of GDP.
Thus, under the Administration’s optimistic dynamic-scoring scenario, the net cost of the tax cuts would equal approximately 1.27 percent of GDP annually after the dynamic effects of the tax cuts are taken into account. This is more than 90 percent of the conventional cost estimate of the tax cuts (see Figure 2).[4]
Source for both of the quotes I referenced: TREASURY DYNAMIC SCORING ANALYSIS REFUTES CLAIMS BY SUPPORTERS OF THE TAX CUTS