On Sunday, Republican Majority Leader John Boehner was asked [PDF] whether he would only support locking in middle-income tax cuts if Congress also made tax cuts for the wealthy permanent. "I want to do something for all Americans who pay taxes," he replied. The good news is, he can! As the Center on Budget and Policy Priorities reported a month ago today, the wealthy will benefit far more from the "middle class" tax cuts than the middle class itself.
This point seems lost upon both Republican politicians and the media, who have sometimes presented the current debate as a strict choice between a set of "middle class" cuts and a set of "wealthy" cuts, with no middle ground. It's simply not accurate to say that thanks to our progressive taxation system, cuts for lower brackets also benefit higher-earners. Democrats, for their part, would do well to start mentioning that their plan helps everyone, with some extra emphasis on the middle class and small businesses during a recession. Regardless, it's not even accurate to say that wealthy people making between $250,000 and $500,000 will receive a huge boost from Republicans' proposal to make high-income tax cuts permanent; they'll pick up an average of 400 bucks, about a measly one-one-thousandth of their income.
As Boehner himself admitted yesterday, only 3 percent of small business will be affected by the expiration of the Bush tax cuts. Of those, the vast majority fit into the 250k-500k bracket, according to Dean Baker. Simply put: The idea that repealing the extra upper-class tax cut will have a dramatic impact on small business' hiring doesn't add up -- unless you know someone looking for a $400 annual salary.
-- Sam Petulla