Senate Republican leaders apparently think it's smart election-year politics to double down on their goal of keeping the Bush-era tax breaks intact for the wealthiest 2 percent of Americans, never mind the strong fiscal and tax fairness arguments against that. Yet according to a new national poll by CBS and The New York Times, a majority of Americans disagree with Republicans on that issue: 53 percent favor President Obama's proposal to keep the tax cuts for everyone else, but let the high-end tax cuts for the very wealthy expire as scheduled at the end of the year. Just 38 percent agree with Republicans' push to continue the high-end tax cut.
That's an encouraging sign. It suggests that more Americans are tuned in to the economic reality of the Bush-era tax-cut calculus than Republicans give them credit for. Most agree that America's broad middle class continues to need the modest tax-relief they received under the 2001/2003 tax cuts, especially given the difficulty of generating new jobs in the wake of the Great Recession. But they reasonably do not see why the very wealthy should keep getting the outsized break that former President George W. Bush and the Republican congress lavished on them.
That high-end tax break, which slashed taxes for families with incomes of $250,000 or above, or singles with incomes of $200,00 or above, was hugely disproportional, especially for the nation's mega-millionaires.
To give you an idea, consider how much difference it would make for all taxpayers annually if the Bush-era tax breaks on income, dividends and capital gains were to expire:
* Families in the bottom 20 percent of earners, with incomes up to $19,356, would pay $69 more.
* Families in the bottom middle 20 percent of earners, with incomes up to $37,493, would pay $583 more.
* Families in the middle 20 percent of earners, with incomes up to $65,656, would pay $1,016 more.
* Families in the top middle 20 percent, with incomes up to $111,659, would pay $2,124 more.
* Families in the top 20 percent, with incomes above $111,659, would pay, on average, $9,018 more.
That $9,018, it must be emphasized, is a broadly skewed average: It is heavily distorted by the much higher incomes of the very rich and the ultra-rich, in the top one percent bracket, and above that, the top 0.1 percent income bracket. The Bush tax cuts for these two narrow income tax brackets were so disproportional because they received the lion's share of the Bush cuts on dividends and capital gains.
* Families in the top 1 percent, with incomes from $599,181 to $2,727,123, would pay $72,446 more, as their income tax brackets returned to 32.6 percent, from the Bush cut to 28.7 percent, and as the capital gains and dividends tax rates returned to earlier rates.
* Families with incomes above $2,727,123, would pay, on average, $371,650 more annually, as their income tax brackets returned to 35.6 percent, from the Bush cut to 31.2 percent, and the cuts in capital gains and dividend taxes were restored. That average figure, of course, includes the additional taxes that would be paid on incomes well above the $2.7 million entry level for top 0.1 percent category. A few years ago, the average annual income for that bracket was $28 million.
It's no wonder that President Bush famously referred to people in the very top brackets as his "base" for campaign contributions. Indeed, virtually half the family households with incomes above $250,000 actually earn about $8 million annually. Just 2-to-3 percent of the over-$250,000-income level, moreover, are counted as small business owners.
For tax fairness ...
These income disparities merits attention not because of wealth-envy or class resentment, as Republicans defensively charge, but because the reason for letting the Bush tax cuts expire for the top 2 percent of taxpayers is crucially important as a matter of both tax fairness and national fiscal policy.
The 98 percent of taxpayers whose family incomes are under $250,000 are the people who spend the money that largely keeps our consumer-driven economy ticking. We need to keep the Bush tax cuts going for all these taxpayers, at least for a few years, because that additional spending is needed to rebuild the economy from the deep damage suffered in the 2008 financial crash.
... and consumer spending
If this vast majority of Americans significantly slows their general spending, the economy will continue to linger in the current trough of slow growth. That won't generate the economic activity and the number of new jobs that are needed to restore the 8 million jobs lost in the crash.
America's super-wealthy multimillionaires, by contrast, are unlikely to spend more than they already spend if the top-end tax cut is retained.
That money - an estimated $700 billion over the next decade, plus another $200 billion from changes in the alternative minimum tax - is best retained to reduce deficit spending. That's a legitimate goal that Republicans otherwise pretend to care about.