Editore"s Note
Tilting at Windmills

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November 18, 2010

THE MIDDLE-CLASS-FIRST PLAN DOESN'T LEAVE OUT THE WEALTHY.... Following up on the last item, I described the middle-class-first tax plan as a proposal that would give permanent cuts to those making less than $250,000, but bring the wealthy back to Clinton-era rates. An emailer reminds me that this shorthand description isn't quite detailed enough.

jctchart.gif

It's a fair point, so let's be more precise. Under the proposal that Greg Sargent reports is under consideration, House Democrats would hold a vote on the same plan President Obama has pushed for years. The rates that are due to expire, by Republican design, at year's end would be extended permanently for those making under $250,000. The top rates for the wealthy would return to Clinton-era rates, but that's all that would go up -- these folks would still get tax breaks on their first quarter-million in income.

This chart, published by the Washington Post back in August, continues to be the best illustration I've seen on who would benefit by the competing plans in 2011. The columns show the size of the tax break by income level, and you'll no doubt notice that both the Democratic and Republican approaches would give breaks to every income group. The difference, of course, is with which groups get the biggest break.

The column on the left shows what I've been calling the middle-class-first approach -- everyone gets a tax cut, but the benefits are spread out, with a focus on the middle. The column on the right shows the Republican alternative -- a permanent extension of Bush's failed policy -- which clearly directs the bulk of money to the very wealthy.

The right insists that the column on the left isn't good enough, because it doesn't do enough to help the rich. Indeed, some have even suggested the middle-class-first plan is a "tax hike," despite the fact that everyone would actually get a tax cut.

It should set up a compelling political fight (which would have been smarter before the election): Dems fighting for the middle class, while Republicans fight for the rich. Indeed, Dems fighting for permanent middle-class tax cuts, which also help the wealthy, while Republicans hold the whole package hostage until the rich get more.

It's not every day the two parties' approaches to government get spelled out so clearly.

Steve Benen 4:40 PM Permalink | Trackbacks | Comments (17)

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Yet, somehow, I get the nagging suspicion that the Dems will fail to take advantage of this. After all, it's not as if they'd just failed to do so leading up to the mid-terms.

Oh, never mind,
-Z

Posted by: Zorro on November 18, 2010 at 4:52 PM | PERMALINK

Ezra Klein's chart above was practically a gift from the political gods that the Democrats failed to use. I'd love it if anyone can point to a single Dem Senator or member of Congress that used it during the last election. And if not, WHY THE HELL NOT!

Posted by: Kiweagle on November 18, 2010 at 4:52 PM | PERMALINK

"The column on the left shows what I've been calling the middle-class-first approach -- everyone gets a tax cut, but the benefits are spread out, with a focus on the middle."

Um, no. Why exactly are you lying in a post with that picture included? Neither plan focuses on "the middle" despite the propaganda. The Bush tax cuts are unequally and indisputably biased towards upper income groups, under both competing plans going forward. Just because the Republican plan is obscenely geared towards the wealthiest few, doesn't mean the Democratic plan isn't also a sop to the upper quartile in it of itself. That's a false comparison.

Posted by: Anonymous on November 18, 2010 at 4:53 PM | PERMALINK

um, anonymous, the higher income groups receive a bigger dollar benefit because they have a bigger income and pay a bigger amount of taxes.

Posted by: just bill on November 18, 2010 at 4:58 PM | PERMALINK

Great graphic, Steve. Sadly the lame-stream media (for once, their right-wing critics are right about something) don't pitch it this way so everyone needs to link this around, call in, write letters, blog, etc. Otherwise the public will be just as misinformed about the wealthy still getting a tax cut, as they were about whether taxes rose under Obama.

Posted by: neil b on November 18, 2010 at 4:59 PM | PERMALINK

It'd be nice if this were so, but based on their past behaviors, I see things setting up somewhat differently. The Republicans will present a united front from which none of them will break, willing to let all tax cuts expire if the wealthy can't get their excesses. Enough Democrats will break rank, fearful that the middle class will turn on them for not renewing the cut, thereby preventing the party from taking advantage of what should be an advantage (and allowing the Republicans to characterize their position as the bipartisan one).

Damn I hope I'm wrong!

Posted by: argo0 on November 18, 2010 at 5:05 PM | PERMALINK

Why have the Democrats never made a point of discussing the reason the Republican House, the Republican Senate and Republican President wrote the law so that it would expire?

Posted by: TravisInTexas on November 18, 2010 at 5:05 PM | PERMALINK

@neil b - So far I've seen Rachel Maddow discuss it numerous times on her show and had Klein on to discuss it, but that's about it. Anyone know if it has popped up anywhere else on TV?

Posted by: Kiweagle on November 18, 2010 at 5:07 PM | PERMALINK

No just bill, earners in the top one and three quarters quintiles (excluding the wealthiest 5%, which does even better) get an average 0.25-0.5% higher cut AS A PERCENTAGE OF INCOME than the middle quintile. This has nothing to do with absolute dollar amounts.

Posted by: Anonymous on November 18, 2010 at 5:12 PM | PERMALINK

This is not and has never been rocket science! We simply have journalists who are too lazy in their language or too lacking in a basic understanding of tax law--really basic stuff--to recognize the fact that rates apply to income, not to taxpayers. I understand false statements by politicians, as they have positions to advance, but journalists are supposed to get it right.

Posted by: Mark Rubin on November 18, 2010 at 5:18 PM | PERMALINK

Members of Congress of both parties ARE the wealthy. They're not voting to increase their own taxes. Never overlook simple venality as a driving force in politics.

Posted by: JMG on November 18, 2010 at 5:21 PM | PERMALINK

It should set up a compelling political fight (which would have been smarter before the election): Dems fighting for the middle class, while Republicans fight for the rich. Indeed, Dems fighting for permanent middle-class tax cuts, which also help the wealthy, while Republicans hold the whole package hostage until the rich get more.
*****************

HA! "Smarter" you say? Oh PULL-EASE! Don't we only wish they'd get some smarts, and some balls while there at it. Alas.

Posted by: In what respect, Charlie? on November 18, 2010 at 5:27 PM | PERMALINK

Members of Congress of both parties ARE the wealthy. -- JMG, @17:21

's right. There was something in the NYTimes the other day, where it was mentioned that about half of the members of Congress (understood as both the House and the Senate) are millionaires in their own right. Add the Congressional pay (not bupkies, though it might seem so, to them) and various bennies and that's a lot of personal income to defend from extra taxation, even though, in real life, the extra tax is not likely to hobble their lifestyles much, if at all.

But it's hard wired into humans that giving up *anything* is something to be avoided, even if the use of that something had been *known* to be temporary, from the very first moment. Indeed, when I was a child, my Mother used to tell me that some of very good reasons not to borrow stem from just that reluctance: 1) you borrow someone else's, but you pay back ("give") your own. And, 2) you borrow for a short time, but you pay back ("give") forever.

Posted by: exlibra on November 18, 2010 at 6:48 PM | PERMALINK

I was just thinking about this today and a "Middle Class First Plan" makes great sense. In fact, it should be the guiding principle for Democrats and the reason for Democrats to exist. It makes sense for policies to serve the middle (I prefer to call it the Working Class) class first as creating and supporting a strong working class addresses so many indicators of a healthy society - such as crime, education outcomes, stable communities and families, unemployment, poverty, etc, etc.

Posted by: tomb on November 18, 2010 at 6:54 PM | PERMALINK

wow, anonymous. .25% to .5% is just such a huge number!!!!! come on, don't be ridiculous. the difference in the graph in the between two hundred thousand and over one million is so frickin small to be meaningless.

Posted by: just bill on November 18, 2010 at 7:18 PM | PERMALINK

Dammit, dammit, dammit, can any progressive blogger make the very important point that the $250,000 figure is TAXABLE INCOME? And that, accordingly, we are generally talking about poor folks who "make" $350-400,000 a year? Jeez, can any progressive do some messaging? Does any progressive get that, especially in a Northern major market -- you know, where the people are -- there's a big difference between "making" $250,000 a year and "making" $400,000 a year. We've only been talking about this subject for about four months. At least be friggin' consistent in using the term "taxable income."

Posted by: urban legend on November 18, 2010 at 10:41 PM | PERMALINK

"It's not every day the two parties' approaches to government get spelled out so clearly."

There it is.

Posted by: max on November 19, 2010 at 8:51 AM | PERMALINK
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