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Tax cuts for the rich just not a big deal
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Democrats going to the mat for pennies.
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The way the press and Democrats cover the tax cuts "for the rich" the past few years, you'd think that most of the deficit is wrapped up in these tax cuts. We keep the tax cuts, and we'll have endless deficits. We repeal the tax cuts, and we'll be running surpluses by tomorrow. But what is reality?
Reality is that the Bush tax cuts on the rich amount to a loss of less than 2% of revenue. You heard right: 2%.
Which right-winger spewed such nonsense? Why, Jared Bernstein did; a member of Obama's own economic team. He said here:
"What you are talking about -- a $30 to 40 billion range in terms of adding to the deficit by extending the high end -- could easily become $700 billion over a ten-year budget window."
What he's saying is that the tax cuts "for the rich", the "high end", is $30-$40 billion now, and in the future will be $70 billion/year ($700 billion over 10 years).
So all this fighting and we're talking about $30-$40 billion? Let's put that number in perspective:
As you can see from this link here, the revenues last year in 2009 were $2.2 trillion ($2205.8 billion).
And the tax cuts for the rich is $40 billion.
That means the tax cuts on the rich are just 40/2205 = a loss of just 1.8% of revenue. Meaning we're still collecting 98.2% of revenue.
This makes perfect sense when you think about the tax cuts themselves. The top tax rate wasn't cut from 39% to 5%; it was cut from 39% to 36, a 3% drop. So let's say that the top bracket paid 100% of taxes, all revenue came from them. If we cut their taxes 3%, then revenue would drop 3%. If we increased their taxes 3%, then revenue would go up 3%.
But because the rich pay most but not all of taxes, a 3% drop in their taxes amounts to a loss of just 1.8% of revenue.
Now in terms of Bush tax cuts and the deficit: the deficit this year from Obama's own proposed budget is $1.2 trillion ($1200 billion). You can see the link here, look on Table S-1 for 2011 (Deficit = $1267 billion).
So if the Bush tax cuts on the rich are repealed, we'll add $40 billion in revenue, but our budget deficit is $1257 billion. Meaning our deficit will still be...$1217 billion. Repealing the tax cuts on the rich will make a dent of just 3% of the deficit; we'll still have 97% of the deficit to take care of.
So spare me the doom and gloom with keeping the Bush tax cuts on the rich; they simply are just not that much of an issue.
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