Tax the Rich


New Orleans        President Obama announced that in order to pay the piper for health care and for expanding the tax credits to lower income, working families, he was going to advocate a very simple solution:  tax the rich!   Well, not exactly TAX THE RICH, but more just equalize some of the taxes on the relatively rich.  And, for all of the coming hoopla, more of this is a rollback to pre-Bush than a real push for equity in the tax system across the board.  Believe me on this, the revolutionaries have NOT taken over the White House.
    Almost a year ago at the Organizers’ Forum dialogue in DC, Bob Greenstein and others argued that unless the Bush tax cuts were rolled back, the government would be strapped without revenues, and that was before the meltdown.  Part of what the President is doing is a simple readjustment.
    The heart of the changes is captured in the Times today:
The combined effect of the two revenue-raising proposals, on top of Mr. Obama’s existing plan to roll back the Bush-era income tax reductions on households with income exceeding $250,000 a year, would be a pronounced move to redistribute wealth by reimposing a larger share of the tax burden on corporations and the most affluent taxpayers.  [emphasis added!] Administration officials said Mr. Obama would propose to reduce the value of itemized tax deductions for everyone in the top income tax bracket, 35 percent, and many of those in the 33 percent bracket — roughly speaking, starting at $250,000 in annual income for a married couple.
Under existing law, the tax benefit of itemizing deductions rises with a taxpayer’s marginal tax bracket (the bracket that applies to the last dollar of income). For example, $10,000 in itemized deductions reduces tax liability by $3,500 for someone in the 35 percent bracket.
    Mr. Obama would allow a saving of only $2,800 — as if the person were in the 28 percent bracket.
The White House says it is unfair for high-income people to get a bigger tax break than middle-income people for claiming the same deductions or making the same charitable contributions.
    This is hardly the “millionaires'” tax proposed in New York City by Mayor Bloomberg a couple of years ago.  This is mainly a restoration of sanity at the more affluent end of the tax scale.  Furthermore the adjustments are in at the margins, rather than the meat.
    The numbers are substantial though:  $318 billion over 10 years.  I know that’s not big money for bankers, but for the biscuit cookers, this will make a huge difference.
    The right and the richer may squirm and scream, but in the New Depression, they should button the lip and pay the small sums acquired especially because the value of better health care for all citizens and more tax credits for the working poor are far better than any of their vanity philanthropy or whatever anyway.
We need more of this!