Oklahoma Latest Republican State To Push Tax Cuts For The Rich

By Travis Waldron/Think Progress

Oklahoma Gov. Mary Fallin (R) is the latest Republican governor pushing for cuts to the state income tax, and like the plans from other states, Fallin’s would give most of its benefits to the state’s wealthiest residents. The proposal isgaining steam in the state legislature, where it has passed the House and is awaiting consideration in the Senate.

Fallin’s plan reduces the top income tax rate from 5.25 percent to 5 percent, and while it is modest compared to tax cuts other Republican states are pursuing, it would still cost the state roughly $100 million a year. And according to the Oklahoma Policy Institute, more than 40 percent of its tax cuts would go to the state’s richest 5 percent of residents while the bottom 60 percent would see just 9 percent of the benefits. The poorest fifth of Oklahoma residents would see no tax cut at all:

Oklahoma’s tax code is already skewed toward the wealthy: the poorest Oklahomans pay an average of 10.3 percent of their income in taxes, while the wealthiest 1 percent pay just 4.6 percent of theirs, according to the Institute for Taxation and Economic Policy. And while Fallin is cutting taxes and reducing state revenues, Oklahoma will spend less this fiscal year on education than it did last year and is still spending 10.7 percent less on higher education than it did before the recession.

Republican governors across the country are pitching tax cuts that benefit the wealthy, and like Fallin, they sell them as a way to boost their economies. A recent report from the Center on Budget and Policy Priorities, however, found that after a similar round of tax cuts in the 1990s, states that cut taxes saw slower economic and job growth than states that did not. (HT Citizens for Tax Justice)

Millionaire Mitt: It’s ‘Fair’ For Me To Pay Lower Taxes Than Middle Class Americans

By Igor Volsky/Think Progress

Mitt Romney told CBS’s 60 Minutes that it’s “fair” for him to pay a tax rate of just 14.1 percent on his investment income of $20 million, a lower rate than someone earning $50,000 a year in wage income:

SCOTT PELLEY (HOST): Now, you made on your investments, personally, about $20 million last year. And you paid 14 percent in federal taxes. That’s the capital gains rate. Is that fair to the guy who makes $50,000 and paid a higher rate than you did?

ROMNEY: It is a low rate. And one of the reasons why the capital gains tax rate is lower is because capital has already been taxed once at the corporate level, as high as 35 percent.

PELLEY: So you think it is fair?

ROMNEY: Yeah, I think it’s the right way to encourage economic growth, to get people to invest, to start businesses, to put people to work.

There is little economic evidence to support Romney’s argument that higher capital gains and dividend rates will discourage investment. As Paul Krugman has pointed out, the current very low rate of 15 percent, wasn’t enacted until 2003. Between 1986 and 1997 “long-term capital gains were taxed at close to 30 percent” and under President Clinton, the rate sat at 20 percent, while dividends were treated as regular income. “I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain,” Warren Buffet explains.

Indeed, investors continued to invest, despite the higher rates, and throughout the Clinton period, the nation actually saw stronger investment. So it’s difficult to take Romney’s argument seriously — both because history shows that the wealthy don’t need a capital gains rate 20 points below the top marginal income tax rate (currently 35 percent) in order to invest their money and because Romney himself believes he paid too little in investment taxes, choosing to forfeit $1.8 million in charitable deductions.

New Study Finds Tax Cuts For The Rich Cause Income Inequality, Not Economic Growth

By Pat Garofalo/Think Progress

According to a new report by the Congressional Research Service, cutting taxes for the wealthiest does not cause economic growth, despite constant conservative claims that it will. Instead, tax cuts for the rich merely exacerbate income inequality, CRS found:

Throughout the late-1940s and 1950s, the top marginal tax rate was typically above 90%; today it is 35%. Additionally, the top capital gains tax rate was 25% in the 1950s and 1960s, 35% in the 1970s; today it is 15%. The real GDP growth rate averaged 4.2% and real per capita GDP increased annually by 2.4% in the 1950s. In the 2000s, the average real GDP growth rate was 1.7% and real per capita GDP increased annually by less than 1%. There is not conclusive evidence, however, to substantiate a clear relationship between the 65-year steady reduction in the top tax rates and economic growth. Analysis of such data suggests the reduction in the top tax rates have had little association with saving, investment, or productivity growth. However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution.

As this chart shows, per capita GDP growth rates and the top tax rate have essentially no relationship:

This jibes with other recent studies that show little relationship between the top tax rate and economic growth. A new analysis by Owen M. Zidar, a former staff economist on President Obama’s Council of Economic Advisers and a graduate student at California-Berkeley, found that “a one percent of GDP tax cut for the bottom 90% results in 2.7 percentage points of GDP growth over a two-year period. The corresponding estimate for the top 10% is 0.13 percentage points and is insignificant statistically.” GDP growth, business investment, and a host of other economic indicators were all stronger during the 1990s, after taxes were raised on the rich, than during the supply-side eras of Presidents George W. Bush and Reagan.

Romney wants to cut more from the middle class

Visit msnbc.com for breaking news, world news, and news about the economy

Romney Claims He’s ‘Not Worried About The Rich,’ But Wants To Cut Their Taxes By One-Third

From Stephanie Miller Facebook Page

By Pat Garofalo/Think Progress

On the campaign trail, Mitt Romney constantly claims that he is “focused” on the middle class. “I’m not worried about rich people. They are doing just fine,” he’s said.

However, Romney’s tax plan doesn’t back up that rhetoric, as it includes huge giveaways to the already wealthy. In fact, during a debate in South Carolina last night, Romney told Fox News’ Brett Baier that he’d like the top income tax rate of 35 percent to be cut by at least a third, down to no higher than 25 percent:

BAIER: I’d like to ask a question about keeping money for all of the candidates down the line. What is the highest federal income tax any American should have to pay? We are looking for a number. [...]

ROMNEY: I would like 25 percent, but right now it’s at 35, so people better pay what is legally required. But ultimately let’s get it down to as low as we possibly can, if it’s 20, if it’s 25, but paying more than 25 percent, I think, is taking too much out of our pockets.

BAIER: So the highest you had was 35?

ROMNEY: Well, that’s what the law is right now, but 25 is where I would like to see us go.

Watch it:

Romney’s tax plan would double the Bush tax cuts for the wealthy, while increasing taxes on millions of middle class families, including half of middle class families with children. But maybe we should, as Romney suggested, only talk about this in “quiet rooms,” lest the “politics of envy” rears its ugly head.

Romney fights for the 1%

Visit msnbc.com for breaking news, world news, and news about the economy

Romney’s Economic Plan Includes $6.6 Trillion Tax Cut For The Rich And Corporations

Michael Linden/Think Progress

According to our new analysis, the economic plan offered yesterday by GOP presidential candidate Mitt Romney would deliver a massive $6.6 trillion tax cut that would primarily benefit the very wealthy and corporations. After accounting for the added interest costs that we’ll have to pay, the total cost of Romney’s plan grows to $7.8 trillion over the next 10 years.

Romney lays out several tax policies, all of which primarily benefit the super wealthy.

– Extend all the Bush tax cuts: While everyone got a tax cut from President Bush, the extremely wealthy got the lion’s share of the benefit. In 2010, fully half of the entire benefit from all of the Bush tax cuts flowed to the richest 5 percent of Americans. Extending them all (plus indexing the Alternative Minimum Tax to inflation) will cost nearly $4 trillion, not including interest costs.

– Eliminate capital gains taxes for middle income households: Capital gains tax rates are already extraordinarily low, but middle class Americans don’t enjoy much benefit from that. According to the Tax Policy Center, 67 percent of the entire benefit from lower capital gains tax rates goes to millionaires. Romney’s proposal won’t cost much because it won’t benefit many people.

– Cut corporate taxes: Romney’s proposal to cut the corporate rate by about a third would cost more than $900 billion. Needless to say, this cut would benefit mainly the very rich and corporations.

– Eliminate estate taxes: Right now, only the very biggest, richest fraction of a percent of all estates pay any tax at all. Eliminating even this paltry amount would cost about $175 billion, and would, of course, only benefit a few extremely wealthy heirs and heiresses.

These, along with some other tax changes suggested by Romney (repealing the Affordable Care Act, for example) would result in federal revenue averaging just 16.7 percent of gross domestic product. That’s far below the 20 percent of GDP that Romney says he wants to spend (though, of course, he neglected to lay out what he would cut to get there). It’s even below the levels suggested by House Republican Budget, which abolished Medicare as we know it, slashed Medicaid, and still didn’t balance the budget until 2040.

Taken together, Romney’s fiscal policies would be even worse than the House Budget. His spending levels are the same — though he provides few details as to what he would cut to accomplish this — but his revenue levels are even lower. The result would be continued unsustainable deficits and more debt. In fact, Romney’s plan would yield approximately $6.5 trillion in deficits from 2013 through 2021.

Given these facts, it is odd that Mitt Romney also supports an amendment to the U.S. constitution that would require balanced federal budgets. Romney’s plan doesn’t even come close to balancing the budget, instead resulting in unsustainable deficits and growing debt.

So, how does Romney deal with the fact that his own fiscal plan would be unconstitutional if President Romney got his way? He doesn’t. Either he hasn’t done the math, or he’s hoping you won’t notice his numbers don’t add up. Either way, it doesn’t reflect all that well on him or his economic “plan.”

Iowa’s GOP Governor Vetoes Tax Break For The Poor Because It Didn’t Lower Corporate Taxes

By Marie Diamond/Think Progress




Iowa Gov. Terry Branstad (R) has a curious justification for vetoing a tax break last week for 240,000 Iowa families making $45,000 or less a year: the plan didn’t also include a tax break for corporations. Members of both parties in the Iowa House and Senate agreed to increase the state’s Earned Income Tax Credit (EITC), which reduces the amount of income taxes lower-income families owe:

The change would have saved Iowa families an estimated $28.5 million in taxes over two years.

Branstad vetoed that part of the bill writing that it is his desire to approach tax policy in a more comprehensive and holistic manner. [...]

Branstad additionally campaigned last year to slash Iowa’s corporate income tax rate by 50 percent, which he said would attract businesses while costing the state about $200 million a year in lost revenue. That proposal also failed.

Ironically, given Branstad’s fondness for expensive corporate tax breaks, he said he wasconcerned about the cost of the measure, estimated at $28.5 million a year. Branstad explained that he would only support “an overall tax reduction package that both fits within our sound budgeting principles while reducing those taxes that are impeding our state’s ability to compete for new business and jobs.”

Tim Albrecht, a spokesman for the governor, reiterated that Branstad would have supported the tax break if it had been part of a “larger effort” that included lower taxes for corporations. But since this tax break was only for poor families, Branstad suddenly abandoned his “strong support for tax relief.”

Sen. Joe Bolkcom (D), the chairman of the Senate Ways and Means Committee, points out that the EITC “is the most effective antipoverty program for working families.” Bolkcom said of Branstad’s veto, “He has again shown that he will only consider tax cuts that benefit Iowa’s wealthiest citizens and corporations.” The tax break for working families would have translated into more money for people to spend in Iowa’s economy, but Branstad apparently prefers “huge, unaffordable tax breaks for Wal-Mart and other wealthy out-of-state corporations.”

Branstad has the authority to veto individual items in spending measures. He also effectively shut down dozens of unemployment offices by vetoing language that would have prohibited the Iowa Workforce Development from closing 37 unemployment field offices across the state.

Major Karl Rove Donor Ken Langone On Debt Negotiations: ‘I Should Pay More Taxes’

By Lee Fang/Think Progress


In Feb. 2010, Karl Rove and operatives from the U.S. Chamber of Commerce convened a meeting of mostly Wall Street titans to fund a set of Republican groups designed to run attacks on Democrats. Ken Langone, a wealthy Wall Street investor and controversial former head of the New York Stock Exchange, was one of the very first majordonors to the Rove campaign groups, which now include American Action Network, American Action Forum, American Crossroads, and American Crossroads GPS.

Yesterday on the Fox Business Network, Langone was asked by host Lou Dobbs about how to kickstart the economy. Langone repeatedly said high unemployment is the greatest problem, but conceded that corporations are doing better than ever. To get things going, Langone explained, everyone would have to feel “pain.” In a sharp contrast with his friend Karl Rove, Langone said wealthy guys like him “should pay more taxes”:

LANGONE: Well I say this as a devout Republican. I think in these negotiations, I think number one guys like me, I’ve said this before, there’s a caveat. I shouldn’t get Social Security. I should pay more taxes.

Watch it:

Langone says higher taxes on wealthy individuals like himself should go “entirely to paying down the debt.”

As President Obama and Democrats have pushed to include modest tax increases on the wealthy as part of the debt negotiations, as well as a repeal on tax subsidies to big oil companies (deemed a tax hike by some conservatives and those in the media), Rove’s front groups have hit back with nasty attack ads claiming any tax increase would hurt the economy. Perhaps Rove should listen more to his own wealthy donors.

CHART: Lower Taxes On The Rich Don’t Lead To Job Growth

By Pat Garofalo 

Congressional Republicans — during both last year’s debate over the pending expiration of the Bush tax cuts and the current negotiations regarding raising the nation’s debt ceiling — refused to consider tax increases on even the very richest Americans. In fact, House Majority Leader Eric Cantor (R-VA) blew up debt ceiling negotiations last week due to his insistence that those making more than $500,000 annually be shielded from any tax increase.

The GOP justification for its position — even with income inequality at its worst level since the 1920s — is that raising taxes on the rich will destroy jobs. “What some are suggesting is that we take this money from people who would invest in our economy and create jobs and give it to the government. The fact is you can’t tax the very people that we expect to invest in the economy and create jobs,” said Speaker of the House John Boehner (R-OH).

However, history doesn’t back up the GOP’s claim. In fact, as Center for American Progress Director of Tax and Budget Policy Michael Linden found, “in the past 60 years, job growth has actually been greater in years when the top income tax rate was much higher than it is now”:

For instance, in years when the top marginal rate was more than 90 percent, the average annual growth in total payroll employment was 2 percent. In years when the top marginal rate was 35 percent or less — which it is now — employment grew by an average of just 0.4 percent.

And there’s no cherry-picking here. Pick any threshold. When the marginal tax rate was 50 percent or above, annual employment growth averaged 2.3 percent, and when the rate was under 50, growth was half that.

In fact, if you ranked each year since 1950 by overall job growth, the top five years would all boast marginal tax rates at 70 percent or higher. The top 10 years would share marginal tax rates at 50 percent or higher. The two worst years, on the other hand, were 2008 and 2009, when the top marginal tax rate was 35 percent. In the 13 years that the top marginal tax rate has been at its current level or lower, only one year even cracks the top 20 in overall job creation.

Contrary to Republican claims, lower taxes on the rich don’t lead to higher economic growth either.

GOP Blew Up Debt Negotiations To Protect Tax Breaks For People Making $500,000 Or More

By Marie Diamond/Think Progress

Yesterday House Majority Leader Eric Cantor (R-VA) and Sen. Jon Kyl (R-AZ) may well have doomed negotiations to raise the nation’s debt limit when they walked out over a dispute with Democrats about raising revenues. Their theatrics bring the country closer to the brink of financial collapse, and observers have described the move as a “tamper tantrum” and “political grandstanding.” Today, more details emerged about exactly what Republicans are willing to threaten the global economy over to defend.

Rep. Chris Van Hollen (D-MD), a member of the bipartisan debt discussion group led by Vice President Joe Biden, said Republicans chose to “protect taxpayer subsidies for big oil companies, tax breaks for corporate jets, and tax breaks for millionaires”:

Democrats want to close tax loopholes that benefit oil companies, and eliminate a tax preference that gives corporate aircraft a friendlier depreciation schedule than commercial aircraft. Additionally, Van Hollen said,Democrats were proposing to phase out tax deductions and certain credits for people making more than $500,000 a year. These would be paired with a reduction in the tax burden on lower earners, by eliminating existing limitations on their deductions. [...]

“The message Republicans sent was…unless we accept their lopsided approach…they’re prepared to tank the economy,” Van Hollen said.

Cantor had been vague about the specifics, saying only that the disagreement had been a “tax issue.” His spokesman, Brad Dayspring, described the impasse as being over “Democrats’ push to raise taxes” on “individuals, small businesses, and employers,” which TPM notes is the language Republicans often use to make their position sound more palatable than “defending tax breaks for millionaires.”

Democratic aides also said Republicans’ refusal to consider defense spending cuts to alleviate painful cuts to domestic programs was “central” to the negotiation breakdown. As Democrats have repeatedly emphasized, it’s impossible to improve the country’s debt situation without raising revenues or by slashing discretionary spending alone.

There’s also evidence that Republicans planned the walk-out weeks in advance to pressure Democrats and improve Speaker John Boehner’s (R-OH) negotiating position. In short, at no point have Republicans been negotiating in good faith or honestly trying to broker a deal. They’re more interested in “striking a Tea Party pose” and using the massive debt they createdas an excuse to enact their radical political agenda.

As Richest Pay Lowest Taxes In A Generation, Bachmann Would End Income Tax For 23,000 Millionaires

By Zaid Jilani

As ThinkProgress Economy editor Pat Garofalo noted last week, GOP presidential hopeful Rep. Michelle Bachmann (MN) has assembled a tax plan that would involve a massive corporate tax cut and tax increase on the working poor. Meanwhile, Bachmann would continue to cut taxes on the richest income-earners among us.

But Bachmann’s plan would do even worse things than simply continuing to hand out tax cuts for the rich and corporations. As Dan Baneman of the Tax Policy Centerfound, Bachmann’s proposal to repeal taxes on capital gains would actually remove 23,000 millionaires from the tax rolls altogether. Meanwhile, the Tax Policy Center’s Howard Gleckman estimates that “this largess would add about $25 billion to the deficit in one year.”

This is particularly shocking in light of the fact that the richest Americans are currently paying the some of the lowest effective tax rates in American history. As this chart from from Wealth for the Common Good shows, the top 400 taxpayers — who have more wealth than half of all Americans combined — are paying lower taxes than they have in a generation, as their tax responsibilities have slowly collapsed since the New Deal era as working families have been asked to pay more and more:

Although it is impossible to surmise their exact intentions, it appears that Bachmann’s campaign is operating under the notion that the rich in America don’t have it good enough and that expanding the deficit is not a problem — as long as you’re continuing to cut taxes for the richest Americans.