Tax "Cuts" and "Hikes"
Some friends got me curious about income taxes this week. I suggested that anyone who doesn't like Obama could send me any tax breaks he delivers for them. The response I got was "I'll give you Obama's tax break money if you'll pay for the tax increases that will follow." The implication of course is that Obama will eventually raise taxes. This got me to wondering - are tax hikes inevitable? Is it written somewhere that all Democrats raise taxes and all Republicans lower them? Do taxes always increase over time? Here's what I found:
When income taxes were first introduced (1913), the rich paid 7%, the poor paid 1%. Today the rich pay 35%, the poor pay 10%. The highest rates (and biggest gap) were in 1945 when war time increases had the rich paying 94% and the poor paying 23%. My own opinion after learning this is that any tax proposal that does not return us to the 1% and 7% 1913 rates is complete BS.
I was trying to see if Democrats or Republicans are truly consistent regarding increasing or lowering taxes. I think the answer there is no. Kennedy, Truman, and Wilson were Democrats responsible for some of the biggest tax cuts, and Bush Sr. and Hoover are two Republicans who raised taxes. I think we all remember "Read my lips, no new taxes." Also, seven of the biggest tax increases were tied to funding for WWI and WWII - do we count those "against" the Democratic Presidents during those wars? [2012 update: found a good article on how Reagan, after finding that his tax cuts created tremendous debt, raised taxes many times.]
In recent history, the wealthiest Americans paid (roughly) 70% under Carter, 50% under Reagan, 30% under Bush I, 40% under Clinton and 35% under Bush II. If Obama raises the rates for the $250K plus bracket back to the Clinton 40% is that BS? Absolutely. Do I care? Nope. We all know those people hide their money in tax "shelters" like trusts and stuff, and if I ever make it to that bracket I will too. They'll only pay 40% on the income they report. It's still 10% less than they were paying Reagan, God's gift to the Republican party and less than half of what their parents paid to help us win WWII.
If you raise taxes for the top 2% and lower them for the remaining 98%, is that a hike or a cut? Depends on your party affiliation, and that of the President apparently. Since I'm a registered Republican, I'm supposed to be saying "that big spender Obama is raising taxes!!!" while I quietly pocket the extra money that I'll see in my pay check.
Obama's tax cuts take effect on April 1, and he's not lying when he says that 95% of working families will see a tax cut. Married couples making less than $150K will see an extra $60/month in our pay checks from April through the end of 2010. This stimulus tax break is written to be temporary - in 2011 you'll go back to paying what you did in 2008. That will be a relative increase from 2010, but I would argue that's not a "tax increase" since it simply returns us to the same rates we were paying under the Bush "tax cuts."
It's certainly possible that Obama could increase taxes for the majority of Americans during his first term, but I think that would be unlikely. He campaigned on a "tax cut for 95% of working families" and, like him or not, he has delivered on that promise. I don't see how a politician as wise as he is could turn around and deliver a "tax increase for 95% of working Americans" during the same term.
When income taxes were first introduced (1913), the rich paid 7%, the poor paid 1%. Today the rich pay 35%, the poor pay 10%. The highest rates (and biggest gap) were in 1945 when war time increases had the rich paying 94% and the poor paying 23%. My own opinion after learning this is that any tax proposal that does not return us to the 1% and 7% 1913 rates is complete BS.
I was trying to see if Democrats or Republicans are truly consistent regarding increasing or lowering taxes. I think the answer there is no. Kennedy, Truman, and Wilson were Democrats responsible for some of the biggest tax cuts, and Bush Sr. and Hoover are two Republicans who raised taxes. I think we all remember "Read my lips, no new taxes." Also, seven of the biggest tax increases were tied to funding for WWI and WWII - do we count those "against" the Democratic Presidents during those wars? [2012 update: found a good article on how Reagan, after finding that his tax cuts created tremendous debt, raised taxes many times.]
In recent history, the wealthiest Americans paid (roughly) 70% under Carter, 50% under Reagan, 30% under Bush I, 40% under Clinton and 35% under Bush II. If Obama raises the rates for the $250K plus bracket back to the Clinton 40% is that BS? Absolutely. Do I care? Nope. We all know those people hide their money in tax "shelters" like trusts and stuff, and if I ever make it to that bracket I will too. They'll only pay 40% on the income they report. It's still 10% less than they were paying Reagan, God's gift to the Republican party and less than half of what their parents paid to help us win WWII.
If you raise taxes for the top 2% and lower them for the remaining 98%, is that a hike or a cut? Depends on your party affiliation, and that of the President apparently. Since I'm a registered Republican, I'm supposed to be saying "that big spender Obama is raising taxes!!!" while I quietly pocket the extra money that I'll see in my pay check.
Obama's tax cuts take effect on April 1, and he's not lying when he says that 95% of working families will see a tax cut. Married couples making less than $150K will see an extra $60/month in our pay checks from April through the end of 2010. This stimulus tax break is written to be temporary - in 2011 you'll go back to paying what you did in 2008. That will be a relative increase from 2010, but I would argue that's not a "tax increase" since it simply returns us to the same rates we were paying under the Bush "tax cuts."
It's certainly possible that Obama could increase taxes for the majority of Americans during his first term, but I think that would be unlikely. He campaigned on a "tax cut for 95% of working families" and, like him or not, he has delivered on that promise. I don't see how a politician as wise as he is could turn around and deliver a "tax increase for 95% of working Americans" during the same term.