We’ve seen the following scenario more than a few times before: a proposed massive tax cut is proposed – focusing mainly on the upper 5% or on corporate interest groups. Many Congressional Democrats (rightfully) protest this, and are painted as ones who want to raise the taxes of “people like you and me”. Ultimately, even though this is highly dishonest, at best, some sort of massive tax cut is passed – mainly benefiting those who I mentioned above – with no way to pay for the cuts.
Now picture this scenario, because the outcome is baffling in it’s backward nature, yet at the same time completely expected. A massive tax hike is set to take place on tens of millions of families , including many who only work and own a home, and even a good number of families that earn under $100,000. Democrats in Congress are pushing to get a bill that takes care of this, and as promised last year, don’t want to add another $50 billion to the deficit so they want to offset this cut with other increases on a select group of very high earners who are already getting an unfair tax advantage elsewhere.
Republicans don’t want to pay for this tax cut to the middle class, even though they are “in favor of it” and therefore either want to add another $50 billion to the deficit or give these millions of families a tax hike, while preserving the unfair tax cuts to their favored constituents. Democrats are being blamed for not getting something done quicker, and as a result, even if something is passed, 38 million people will now have delays in getting their refund early next year.
Of course, I am talking about the AMT (Alternative Minimum Tax) bills that are kicking around Congress now. And while I don’t really want to talk tax, I want to talk about the framing here in terms of what should be said and how this should be discussed – because this should be an absolute slam dunk winner of an issue for Democrats, yet they are going to be painted into a corner if they don’t get out in front of this.
Right now, the republicans, and Mister Bush are playing chicken with the Democrats on this, all while holding hostage the $50 billion in additional taxes that the middle class will have to pay. By doing so (in addition to being a total dickish move), they are at the same time continuing to be completely fiscally irresponsible and also show their contempt for the plight of the middle class.
It is really that simple. Because of their delays and threats of filibuster of anything that is remotely fair or responsible, we have stories like this (from the AP link above):
Silena Davis had counted on an early tax refund to pay for getting her teeth fixed. Now, because Congress has dawdled all year on a tax bill, she and millions of other early filers could have to wait extra weeks for refunds that last year averaged $2,291.
The Internal Revenue Service is looking hard at delaying the start of its filing season, set to kick off on Jan. 14, if Congress fails to pass legislation in the next two weeks. At issue is how to handle what could be a dramatic increase in the number of people facing a higher alternative minimum tax.
If there is a delay and it extends into mid-February, it would slow nearly 38 million refunds worth a total of about $87 billion, the IRS Oversight Board predicts.
“It would definitely make a big difference with me,” said Davis, a George Washington University Law School administrator. “I’m going to have to get a crown and it’s going to be really expensive.”
For those who don’t know or think about how bad this will be if nothing is passed, the Joint Committee on Taxation released a report (JCS-38-07) that has nearly 14% of all households being hit this year, with that number increasing over the next couple of years. Approximately half of all families with income between $75,000 – $100,000 will be hit this year alone. So we are talking some pretty big numbers.
Republicans want to cut spending to pay for this, if they even want to pay for it at all. Yet, nobody has come up with a proposal that even has basics in terms of paying for this. So, the lip service aside, republicans are perfectly content with causing 38 million refunds to be delayed and increasing taxes on those who can afford it least by $50 billion. This is obviously a killer of an issue both politically and in reality.
Yet, instead of using the majority that he has or doing any sort of public awareness of the fact that republicans are doing this, Senator Reid is working to add another $50 billion to the deficit while promising to extend other tax cuts with appropriate spending cuts elsewhere. And the party line is that something has to and will get done but at this point it looks like Bushie tax cuts will be extended as well, with cuts to programs that republicans will be amenable to (read: stuff that impacts We the People).
Either way, millions of people are going to be screwed, and a golden opportunity to lay this at the feet of those who are responsible for this debacle (and at the same time irresponsible with the country’s money) is getting missed. As a result, the “Democrats don’t care about the deficit either” meme will be easier to use against them.
The fact that republicans aren’t getting slaughtered for this predicament is simply amazing. The fact that tens of millions of people are about to get royally screwed because of this game of chicken, especially at a time when holiday bills will come due and the housing market is crashing is reprehensible.
also in orange
Clammy, who does the AMT actually apply to? Is it a certain income level, does filing status or the number of dependents you have affect whether it hits you, or what? I’ve been wondering this for a while, but never see anything that clearly lays out just who is in for an ugly surprise if this isn’t fixed.
basically it is a different way of calculating your tax, and whichever one is higher is the one you use.
There is an exclusion of around $60,000 (which will drop to $40,000 or so this year if nothing is done) where there is no tax. Then there is around 26% on the next $50,000 or so and then 28% on the rest.
The income used is your regular income, but you add back any state and local taxes, property taxes, mortgage interest paid, etc. so that people that work and own a home get hit when this wasn’t supposed to really hit any wage earners….
So, all of the people that are at least in that $20,000 range of the potential drop are vulnerable, or if you bought a home, had a child or a few other things.
So, if I understand this correctly, people who may not have been hit with this last year are at risk for owing taxes of 26% on the 20,000 ($5,200) that will no longer be excluded if nothing is done before the end of the year? And there’s the potential that it will also push part of their income into the 28% bracket?
something like that, although as with all tax stuff, it is a bit more complex and confusing than that…..
Am I mistaken, but wasn’t it Bill Clinton who lost the Congress in 1994 because he raised taxes on the wealthy? Kansasans typically vote against their own best interests, isn’t that the axiom? So what makes anyone believe that a Democratic Congress standing behind a Democratic president after 2008 is going to go against the grain and rescue the middle class. We are not even talking about the poor any more.
But there is no middle class; it is all about the rich and famous, and of course, the credit card path to wealth. Goddamned tax and spend liberals! They won’t be in for long.
I’m sorry but to me Reid is part of the problem, i.e. representing corporations and the super elites instead of the American people, national interest.
This one is incredible for there is so much bi-partisan support to change the AMT so I see it easily passing, except for the other corrupt corporate representatives.
A little awareness and getting on the talk shows would do it.
Either he is corrupt as hell, which I suspect because while people are forgetting fast that the comprehensive immigration bill was written by corporate lobbyists, the US Chamber of Commerce, had massive guest worker Visas in it and the AFL-CIO opposed it…they tried to push that through anyway.
So, now we get another scenario that isn’t representing what the American people want in any way.
Either that or he is incompetent, but I think more he’s representing huge money interests frankly.