A family of 4 making 40k/year total would lose about 2500/year if all the tax cuts expired in 2011.

[BzaDem]

The tax rate change alone would be around $1k, changes in the child tax credit would be another $1k, and changes in the earned income tax credit would be over $500.

So that's about a 6.25% pay cut.

What about a family of 4 at the poverty line, making 22k/year only? They would lose about $1400 for the child tax credit, and 600 for the earned income tax credit, which is a total of $2k.

That's about a 10% pay cut.

And this is assuming the resulting deal would ONLY extend the Bush tax cuts (and not Obama's tax credits). If the resulting deal extends the Obama tax credits in the stimulus, the difference between "deal" and "no deal" would be closer to 4k for both families.

Just some food for thought before you state that going back to the Clinton tax rates would be fine in this economy. Perhaps this is a reason Obama doesn't want to let them expire for everyone? Maybe he's not a corporatist wall street rich sellout etc etc etc?

[Tuesday Afternoon]

1. link? Graph? Chart?

I thought it was 3%

[BzaDem]

8. There are various calculators.

A Republican organization has http://www.mytaxburden.org/.

The Brookings institution and urban institute has http://calculator.taxpolicycenter.org , which also includes Obama stimulus tax credits being extended (versus none extended). Using this, the families in question would lose even MORE (3.5k-4k, instead of just 2-2.5k) if all the tax cuts expired.

[onehandle]

2. I just want to go back to the FDR rate on the top 2%.

Pay off the deficit in just a few years with cash to spare.

[dkf]

47. Tons of loopholes back then.

Full deductions for all interest not just mortgages and no maximum on deductible retirement contributions. So you put everything you don't need to spend now in a tax deferred vehicle that escapes taxes til you retire. That could be years.

[Mimosa]

70. The tax rates of the 1950s actually worked.

But noooo, we can't tax the rich, right?

[AlabamaLibrul]

3. I just want them to raise the min wage

[yourout]

7. Amazing how the chart follows who has the Presidency.

[Lucinda]

4. Well, I may be wrong

but I think the point in letting them expire is to use them as a tool. If they all expire, we push for middle class cuts, and bash the Reps for dragging their feet. They can't afford to piss of their base, so they get passed without any real damage done.

[bluestate10]

5. Such a family is likely drawing some type of public assistance that will be cut.

Your model family is likely drawing some type of public assistance. You're talking Mississippi level income. Public assistance is going to get cut to the bone once tax cuts are retained, the budget deficit and federal debt have to be cut somehow. Take away as much as $300 per month in public assistance (food stamps, school lunches, Medicaid) and that family of four comes out behind by 50%.

[BzaDem]

6. Nope. Public assistance does not at ALL depend on the tax cuts. It will or will not be cut

completely independently of the extension of the tax cuts.

[Lasher]

14. There is no way you could know that.

As a matter of fact it is much more logical to suppose that there will be attempts to justify cuts in social services by citing perpetuation of Bush tax cuts.

[alcibiades_mystery]

18. It's purely speculative

The actual tax implications of letting them all expire, however, are not speculative. They're immediate and real.

[BzaDem]

21. No, that is completely false. You need a bill signed by the President to cut social services. n/t

[alcibiades_mystery]

17. That's some nice speculation

But the OP was talking about what would definitely happen immediately.

You're willing to roll the dice on that, fine. Let's not pretend that rolling the dice in that manner isn't a huge gamble with working people's lives.

[dkf]

9. That is why we are doomed to be taken over by the IMF.

No one will ever raise those taxes back to the Clinton tax rates. Austerity will have to be force fed to us.

[SoCalNative]

10. How would a family of 4

even be able to live on $40k a year?

[BzaDem]

11. Its actually almost twice the poverty line.

If you would prefer data for higher income brackets, a family of 4 making 100k/year would lose about 4k.

[Kaleva]

12. That's pretty good money where I live.

One can buy a nice home for about 40k.

[Scruffy1]

62. Where is that?

[Kaleva]

65. Upper Michigan

[GSLevel9]

56. not in SOCal, lol...

in some normal parts of the nation... mortgages are $600/month and Gas is $2.49 a gallon. Oh and vehicle tags are $40 a year.

EVERY person in SoCal that makes less than that amount should just move NOW.

[social_critic]

13. That's more of a welfare payment cut

Those credits are more like welfare payments. They're not real tax cuts. I don't have anything against them as such, my sister gets them, but they shouldn't be part of the tax code.

If they want to help people making less money, they need to increase the minimum wage to say $12 an hour, and pass a real health reform act with a public provider designed to subsidize health payments for those who receive the minimum wage, with decreasing subsidies for those making more up to say $50,000 per year. But geez, they love to plunk all sorts of crap on tax legislation, rather than doing it where it makes sense, as part of a comprehensive package to create jobs and help those who make less money.

[leftstreet]

15. +1

:thumbsup:

[hayu_lol]

19. Were the mythological family of four making 40K...

to lose their mortgage deduction, that will sink them pretty quickly on top of the other losses.

Perhaps the middle class should be split into two parts...those making as much as $150,000...and another rate for those from 150K to 300K. Above that, they need to be hit pretty heavily.

Ummm...that will never happen of course.

[Dappleganger]

20. How can a family making 40K have a mortgage?

Certainly not here in FL.

[RobinA]

55. Hell, I'm a Family

of 1 making 45,000 and I can't afford a mortgage where I live.

[Lasher]

22. Right, that family of four making $40K would pay zero federal income tax and get a refund of $2,112

Not much of an argument in favor of extending the Bush tax cuts, particularly if social programs are to be cut to compensate for the continuing revenue loss.

http://turbotax.intuit.com/microsite/tax-tools/?priorityCode=3468341816&cid=all_cjtto-1434610_int_3468341816&PID=1434610

[BzaDem]

24. A family of 4 getting 2k less is NOT an argument in favor of extending the Bush tax cuts?

Particularly considering it is an absolutely false statement that a SINGLE program is going to be cut to compensate for the revenue loss?

Is this ConservativeUnderground now? Do you want to pass welfare reform too?

[Lasher]

28. No, that's a valid argument but it's silly to say no other program would be cut.

A lot of people seem to be serious about cutting deficits. Just for the sake of argument let's say they are right. This would occur either by increasing revenue or by decreasing expenditures. And let's assume that at least part of this deficit reduction would come in the form of decreased expenditures.

In this case the $2K going to your family of four is an expenditure. If we're not going to decrease that expenditure, we're going to have to make spending cuts somewhere else.

You do understand that if we are going to decrease our expenditures, we have to make spending cuts somewhere, right?

[BzaDem]

30. If people want to cut spending and have the power to do so, they are going to do it regardless of

what the current tax code says.

The federal government is not a state. It does not have to balance its budget each year, and it basically never does. It is perfectly fine to run large deficits in an economy like this, in a deflationary spiral at 0% interest rates. That is basically essential to get OUT of the economy we're in.

Eventually, when our economy recovers, we will have to worry about the deficits. But that will be long term deficits, not short term deficits like a 2 year extension of the tax cuts or a 1 year extension of the employment benefits. In the short term, increasing our expenditures does NOT cause spending cuts elsewhere. Anyone who wants to cut spending in this economy is going to try to do it regardless of how much revenue we bring in.

Given how polarized Congress is, there are very few people who think "I normally wouldn't support this safety net cut, but given the tax situation I will." There are people who want to increase spending, and people who want to lower spending. Regardless of taxes.

[Lasher]

38. So the $2K you get from the government has nothing to do with the deficit?

Your hair is on fire because you think you're not going to be able to count on that $2K you get every year from the government. This might or might not be the case if all the Bush tax cuts expire, I don't know. Before I believe that I'll need to consult something else besides a calculator at a right wing website. Maybe you should consider other information sources too.

You have somehow deluded yourself into believing that the money you get has nothing to do with deficits. You are so convinced of this that you don't just predict, but guarantee, that there will be no spending cuts in any program whatever if you keep getting your money. I guess in your world deficits are reduced by frequent trips to the money tree out back.

I can tell you from personal experience that a good night's sleep is very good at controlling hair fires. Maybe we could discuss this more logically tomorrow.

Good night.

[BzaDem]

39. I did not guarantee that there would be no spending cuts. I said that spending will rise or fall

independent of the tax rate.

"Before I believe that I'll need to consult something else besides a calculator at a right wing website."

I posted 2 calculators. One is by the brookings institution. Do you think that is a right wing website? The Brooking calculator actually had the amount at around 4k, not just 2.5k (since it was more realistic about what the deal would be for the extension). So if you don't like the calculator at the right-wing website, you'll have to explain why it's a good idea to take out 4k from the pockets of the middle class in this economy, instead of just 2.5k.

"I guess in your world deficits are reduced by frequent trips to the money tree out back."

Our long term deficit will be reduced by reducing healthcare costs, or it won't be reduced at all. In 50 years, over half of our deficit will be healthcare costs, and it just keeps growing from there. The rest is negligible compared to healthcare costs in the long run.

[BzaDem]

23. And that makes you care LESS about preserving them?

Sheesh! Up is really down today on DU.

Considering that none of your proposals are ever going to pass, these "welfare" payments are essential.

[Hello_Kitty]

27. Yes indeed. Up is down.

People who never seemed to give a shit how policies were going to hit the wallets of working class people (HCR, Catfood Commission recommendations) all of a sudden are full of anguish about the Bush tax cuts (which most of us, you'll recall, didn't support when they were passed 10 years ago) going away.

Very selective.

[BzaDem]

31. So you think it's fine to screw the working class now just because some other people supported the

catfood commission?

[Hello_Kitty]

34. Just pointing out the inconsistencies of some of the arguments here. eom

[BzaDem]

36. Who here supported the catfood recommendations?

[alcibiades_mystery]

16. Finally some policy talk

I've seen a lot of sloganeering, but not much in the way of concrete policy.

It's increasingly clear that "CALL THEIR BLUFF! LET THEM EXPIRE!" is not a serious position. As you've demonstrated quite nicely here, it is also a very dangerous position for the very people those yelling it claim to be advocating for.

I'm glad Obama is strong enough not to succumb to the temper tantrums occurring on the left. It's the difference between scoring points and helping people given a very bad situation, and I think Obama is doing the right thing.

[Rageneau]

26. CALL THEIR BLUFFS; LET THEM EXPIRE was always the plan

By letting these cuts expire, we aren't inflicting a tax increase. We are carrying out the terms of a solemn agreement Congress made back in 2001.

Those who claim the middle class will be hurt by this expiration must blame the Republicans, for it is they who are intentionally making it hard on the middle class. If the GOP gave half-a-shit about the middle class, they could easily join with the Democrats to pass an extension for incomes under 250K. If the GOP won't do that, they deserve and will bear the blame for what happens to the middle class.

The GOP is attempting to extort us. There is no other word for it. The question is: Do we bend over and take it (yet again) or do we -- FOR ONCE -- stand up to them and call their g*damned bluff?

[alcibiades_mystery]

29. I like the gambling metaphor of "calling their bluff"

As it stands, that is precisely what you will be doing with unemployment benefit extensions for 2 million people and families: gambling. Underlying almost all of these "LET THEM EXPIRE!" posts lurks the assumption that the GOP will just go ahead and fold on unemployment benefits, if only we were to "call their bluff." Maybe they will, maybe they won't. I don't see anything other than a thin hope that they would fold. If they don't, you're throwing 2 million people and families into penury in the middle of winter: no income for rent or mortgage. No income for food. No income for heat. Make them do it! That's what people yell. They already did it. Do you remember all the outrage in the media when Scott Brown happily declared to all who would listen that he killed benefit extensions? Um, no.

Is it extortion? Of course it is. Does that mean they won't do it? No. They WILL do it, or at least all the evidence falls that way. So, while you're getting all up in arms and banging the walls over somebody supposedly "caving," take three minutes during the day to think about those 2 million people and their families who will essentially have no income as of a week from Friday if the extensions don't go through. Think about them in their kitchens, talking about what to have for dinner. Think of them at their thermostat, trying to stretch that heat. Think of them as the end of the month approaches, and those bills start piling up on the counter.

Then come back to me with the flag waving and the bravado. I'm happy to see it. I think it's necessary. But let's not pretend that it's cost free. You're gambling with people's lives when you "call their bluff." It's not a game in that kitchen, or at the thermostat, or as that rent date rushes up. It's not as easy as a few words on a message board.

[Hello_Kitty]

25. Just wait until the mandatory insurance kicks in. That's another $1900 a year.

Per the Kaiser calculator.

[Warren DeMontague]

32. Wow. Who knew Dubya got so many things right.

Um, fuck it. We've spent the last 2 months being told that THE DEFICIT IS GOING TO RUIN US IF WE DON'T DO SOMETHING RIGHT FUCKING NOW!!!!

Okay, so, let's increase revenue. Let the George W. Bush Temporary Tax Cuts Expire as they were designed to do.

[BzaDem]

37. People are worried about the long term deficit, not the short term deficit.

Even some of the most ridiculous and obscene deficit reduction plans didn't do anything serious until after 2012 (and most of the stuff came MUCH later than that).

[Warren DeMontague]

43. Let the tax cuts expire. The economy (and the rich) will survive, even prosper.

Then cut the military budget in half, and end the drug war.. add up the numbers, and if there's still a deficit "problem", we can start talking about things like social security.

[TheKentuckian]

33. So...Bush was right and we were being stupid to oppose him on these tax cuts?

Right.

If I give you 3-4 trillion dollars in a budget from borrowed money and you spend it on tax cuts then you are an idiot.

That is exactly what you are proposing, to borrow trillions of dollars and ignore a host of problems and just do what we did to get here.

I favor making the bottom bracket cut permanent but would do it by creating an additional bracket somewhere between a million and 1.5, not going into more debt to do it.

[BzaDem]

35. In this economy, spending borrowed money is EXACTLY what we need to be doing.

ESPECIALLY ensuring that families of 4 at the poverty line don't lost 2,500 a year, which comes directly out consumer demand.

When the economy gets better, all taxes will have to go up, and that won't hurt the economy nearly to the extent it would in the current deflationary trap we are in.

We don't have the choice of spending 3-4 trillion on tax cuts vs spending. It's tax cuts or nothing. A 310 billion dollar hit to consumer demand this year and a 310 billion dollar hit to consumer demand next year (coming directly from the pockets of the poor and middle class, who are the MOST likely to spend it) would be devastating for the economy.

[TheKentuckian]

40. Nothing is better than pissing it away on bad policy.

This is drown the pig 101. Why do you think these cuts were put through? It was to willfully hobble the ability of government to act.

The tax cuts contributed to the bad economy and will continue to inhibit investment and spur the wealth disparity.

The economy is not some mystical creature, it will stagnate, grow, or crash based on policy, supply, and demand. If there is no spending then we will be effectively trapped. Republican/supply side ideology will not fix this mess so telling us we'll deal with the taxes after the voodoo economics works to pull us out.

[BzaDem]

41. Avoiding taking 2k away from families at the poverty line is not supply side economics.

It's amazing how many people throw around "supply side economics" at anything and everything, irrespective of what supply side economics actually is.

We're talking about avoiding 310 billion this year and 310 billion next year of poor and middle class tax increases, in the middle of a recession. That is not supply side economics. That is Keynesian economics.

[Warren DeMontague]

44. How about introducing a separate bill to raise the minimum wage or otherwise assist

people at the poverty line.

Let the voters see, exactly, who is fighting for whom.

[BzaDem]

45. Because that separate bill wouldn't pass, whereas avoiding a tax increase would.

Most voters don't even care about the minimum wage, since they're not receiving it.

[Warren DeMontague]

46. Um, you were talking about people who are living at poverty level.

Ergo, I think for those people, an increased minimum wage- a livable minimum wage- WOULD make a difference.

[BzaDem]

48. I didn't say it wouldn't make a difference. I said the chances of that happening are about as high

as the chances of single payer happening. Which is 0.

Whereas avoiding thousands being taken out of their pockets by extending the Bush tax cuts temporarily can easily happen.

[Warren DeMontague]

52. And I say again, the economy did just fine under Clinton.

If the only way those tax cuts are going to get a "temporary" (yeah, right) extension is to extend ALL of the tax cuts- at a time when we are told the DEFICIT IS SUCH A TERRIBLE THREAT THAT WE MUST RAISE THE RETIREMENT AGE AND DRASTICALLY SLASH "ENTITLEMENTS" (but not the military, or the drug war) ... then I say, draw the lines and let the GOP firmly position itself as the party of being for tax cuts for the uber-rich and against things like, again, raising the minimum wage.

[BzaDem]

53. Just because the Clinton tax rates were fine in the booming Clinton economy

does NOT mean the Clinton tax rates would be fine NOW, when the economy is in the tank. Sure, they would be fine for the rich, since tax rates do not affect the spending of the rich much (so raising their taxes is not a problem). But they would NOT be fine for the middle class and poor. Taking 2-2.5k out of the pockets of people living at or close to the poverty line takes that amount DIRECTLY out of consumer demand.

[Warren DeMontague]

66. Then put the blame squarely where it belongs, on the GOP.

Obama wouldn't be "doing" anything. The cuts are set to expire by themselves. Again, it's a matter of forcefully and cogently articulating a clear philosophical position, something this administration seems to have trouble doing.

[TheKentuckian]

68. We are defunding the government and borrowing huge sums of money and getting about as little as

possible for it.

Tax cuts are shitty stimulus and we have much more pressing needs than handing out a few bucks.

George W Bush/drown the pig economics.

The economic output will be lucky to out pace the interest.

Keynes' concept was that we'd have deficit spending during downturns and tighten up in the boom times not debt on both ends of the cycle and then blowing the deficit spending on proven to be ineffective tax cuts as fake stimulus.

Downturns are the time for investment not buying the fiscal equivalent of lottery tickets. The tax cuts HAMPER the economy. We just did a 10 year experiment and now you're trying to spin it like the dry drunk and Darth were right all along.

[BzaDem]

69. Sorry, shitty stimulus is better than no stimulus (or actually anti-stimulus of letting them expire)

Especially because stimulus for poor and middle income people is MUCH less shitty than "stimulus" for the high income earners.

"We just did a 10 year experiment and now you're trying to spin it like the dry drunk and Darth were right all along."

If a driver runs over a person, the correct thing to do is NOT to put the car in reverse and run over them again. Just because the tax cuts were the wrong policy in 2001 doesn't mean we shouldn't extend them for a few years until GDP is growing at a normal rate again. After that point, the middle class tax cuts can expire with much less damage to the economy (if the GOP holds them hostage again at that time).

[TheKentuckian]

71. In a few years if GDP is growing at a normal rate it will make no observable difference to most

working class and poor folks. The money is being funneled ever quicker to the wealthy and the ability of the government to perform critical functions is hamstrung too far into the future to get a handle on the infrastructure deficit.

The country is being obviously mismanaged to a crippling degree.

The tax cuts are a proven drag and they are our "stimulus".

The tax cuts are almost indefensible, even the people pushing them are reduced to lies and appeals to demonstrable false "common wisdom".
We hit the law of diminishing returns on the top rate somewhere around twenty percentage points ago, now they are sucking the life out. Adding in more estate tax holidays as a sweetener is beyond the pale. Complete ideological and operational capitulation.

Post-partisan, indeed. Republicans with crumbs and high minded sounding rhetoric.

[VMI Dem]

42. Rec.

[spinbaby]

49. I'm willing to pay more taxes

It's easy for me to say, I know, because we're not living hand-to-mouth like so much of the country, but I would be thrilled to pay a couple thousand more in taxes if it also meant that the Walton family paid an extra billion in taxes.

[lamp_shade]

50. K&R

[Yo_Mama]

51. That's absolutely right

No economist thinks the economy is strong enough to withstand these tax increases.

That is why the real issue is the tax cuts for much higher brackets, and on that issue economists are divided.

Lower income families got a higher percentage tax break with these tax cuts than higher families, and right now they desperately need it. Remember that wage increases have been poor (with many receiving no increases or even cuts over the last couple of years), and that the price of basics (food, fuel, medical care) has risen sharply from the 2001-2003 period.

Our problem is incomes, and beating the poorer folks with a stick isn't going to improve the economy at all.

I think that much of the criticism aimed at Obama over this issue is misguided. I don't agree entirely with his proposals (I think we should raise taxes starting at about 90K, and increasing as we work our way up the ladder), but there is no support at all for this in even the Democratic congressional contingent.

I can absolutely guarantee you that letting the bulk of these tax cuts expire as scheduled will shove us into a second hard contraction next year.

Economically, we urgently need to either extend unemployment benefits or develop a HUGE public works program that will allow people to get some income, and we also cannot afford to tax lower-income workers more.

To back up what I am saying, look at Census historical data. You want to pick the all races link. It will open a spreadsheet. Look at the second table (scroll down) which gives history by household income quartile in 2009 dollars (history adjusted for inflation):
http://www.census.gov/hhes/www/income/data/historical/household/index.html

Lowest quintile:
1999: 22,059
2009: 20,453

Second lowest quintile:
1999: 41,090
2009: 39,550

Middle quintile:
1999: 64,859
2009: 61,801

Second highest quintile:
1999: 101,995
2009: 100,000

Highest quintile:
1999: 182,795
2009: 180,001

This is a measure of how deep this recession was. (I picked ten years, but it is really from one peak to one trough, so in a way these numbers present a distorted picture.)

You absolutely cannot raise federal taxes from the middle quintile down to the lowest quintile. Remember that most states and localities HAVE raised taxes already, and that what inflation there is in the system is weighing much more heavily on lower-income households. That effect does not show up in these tables, but in fact the drop in real income is higher for the lower-income quintiles than is shown here.

There were multiple parts of the 2001-2003 tax cuts. It is true that rates were cut across the board, but the standard deduction was raised, and some tax credits that are very important for families were expanded.

[Winterblues]

54. Did you get this from the Heritage Foundation or maybe the Cato Institute?

That is what it sounds like...Why are you always using Republican sound bites? They sound exactly the same now as when they were used in 1991 against Clinton. Those very same tax rates under Clinton did not cause all that much pain and the Economy actually enjoyed the greatest expansion in History..Millions and millions of jobs were created because Government had more to spread around..Government accounts for a very large portion of enplyment in both a direct and indirect means.

[BzaDem]

57. Brookings institution. Nice try though :)

You are free to use the calculator, or point out how it is somehow incorrect.

The very premise of your post is false. The government will not spend one PENNY more because the tax cuts expire. Spending only occurs when Congress authorizes it. The money taken out of the economy from tax cuts will not be spent.

[devilgrrl]

58. What heaping pile.

:popcorn:

[BzaDem]

59. That's a really persuasive argument. Not. n/t

[devilgrrl]

61. I don't buy your op - and I don't have to.

No argument needed.

:hi:

[Nye Bevan]

60. You disagree with the math?

Perhaps you could post your calculations?

Or you agree with the math, but you don't like the implications?

Or perhaps you think that raising taxes on people like the family described in the OP, during a severe recession, is not that big a deal?

[asdjrocky]

63. It's really sad, what you are doing. nt

[BzaDem]

64. Yeah. Posting numbers from a CALCULATOR is really sad. It's really sad that facts are presented.

:sarcasm:

All because the implications of these facts make you uncomfortable.

[Mimosa]

67. The middle class can't do without the money, the rich don't need it

So WHO is going to act in the interests of the middle class who are barely hanging on? Why do our needs have to be hitched to the demands of the uber-rich?