Whose tax cuts should expire?

[OmahaBlueDog]

The other day I posted this anout CEO pay.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x9077938

According to the AFL-CIO, in 2009, the average American worker made a little over $32K. In a one income household, that's not much at all. In a two income household, we'd be talking $64K, whioh would work for a family of four in my part of the world, but would leave the same family in dire straights in New York, DC, Boston, the Bay Area, or LA.

That lead me to think about the upcoming debate over the Bush tax cuts. I have no problem extending cuts, or cutting further for families with incomes $75K or less. To me, the argument gets into where the upper end line should be drawn. Put more simply -- when are you actually wealthy?

For example, is a two income household with $250K in income wealthy? In Omaha, the answer would be "yes", but I suspect in a lot of those urban centers I mentioned above, you have double income homes with two professionals, and they would argue that they are middle class.

At the other extreme are CEOs and hedge fund managers making in excess of 2000-3000 times what the average worker makes. I can't see how raising the top median rates on these earners constitutes grevious injury. Is there any substantive difference, for example, in earning $20M after tax than earning $30M after tax?

So my question today is whose tax cuts should expire? Should the whole thing be allowed to end? Should we extend for the middle class, and where do we draw that line? Should we look at redrawing the current tax tiers that were brought to us by Reagan?

[customerserviceguy]

1. The very simplest thing to do

is to let ALL the Bush tax cuts expire. You want a Democratic Party that repudiates Bush, then repudiate his acts, too.

[Angry Dragon]

2. The republicans say that tax cuts for the wealthy create jobs

so eliminate all taxes for everyone and there will be so many jobs
we will have to open all the borders to fill the jobs
that this bold and smart tax policy will create.

[rustydog]

4. So, when our economy collapsed and began to drag the global

economy into the vortex, that was just our borders opening up?

cool!

[Yupster]

3. Let all the tax cuts expire

Remember when they were enacted?

The average person got so little they didn't even notice it.

It will be the same when they expire.

The rich are the only ones who will care.

[Warpy]

6. I suspect that is what will happen

because we know they'll gridlock over whose tax cuts will expire and simply allow the whole business to fade away.

[Warpy]

5. Right now, that $250,000/year would be upper middle class

anywhere but Manhattan, where it would be solidly middle class. So taxing anything above it at a higher rate is really not a huge burden for anyone, especially since that first $250,000 is taxed at the lower rate.

In other words, no couple with a kid living in a loft in NYC is going to get poor if their taxes on $300,000/year go up per the Obama proposal. They'll barely feel it on a paycheck to paycheck basis.

However, any tax fix needs to be indexed to inflation. If we go into a big deflationary spiral, that $250,000 income will be reserved to the handful of plutocrats and the government will be starved of revenue. If we go into another inflationary spiral, that $250,000 income will end up being barebones working class and we'll all get hammered like we did in the 1970s, when our working class salaries, always lagging behind inflation, got taxed as though we were upper middle class people in the 50s.

What has been proven over and over again is that a progressive income tax structure that taxes disposable income instead of subsistence income is the only reasonable way to raise government revenue. That means a progressive income tax structure and it doesn't exempt capital gains income. However, we need to tie it to the median wage, something that has to be figured at least annually to cope with inflation and deflation.

What is clear is that we can't run this country while giving its richest citizens a free ride and its poorest taxed into deeper poverty. It has simply become unsustainable.