When is humor no longer funny?

[kandrathe]

Got some data for that one there? Everything I've seen has said the exact opposite.

-Jester

I would start with The Bush Tax Cuts explained which is erroneously attributed to David R. Kamerschen, or to T. Davies. The allegory is still useful to analyze. While the wealthy did experience tax cuts, the heaviest cuts to rates were in the middle, while the lowest 2/5 of wage earners pay zero already and with earned income tax credits on their tax returns actually get more back than they paid. Be sure to read through some of the animated and useful commentary below it.

The ten people represent decile's. If you repeal the Bush Tax cuts, the lower 4 deciles continue to pay nothing, but decile 5 now instead of paying nothing would need to begin contributing about 1% of gross income, and deciles 6, 7, 8, 9, and 10 pay 33%, 28%, 25%, 22%, and 16% more on their taxes effectively.

If you look at it in terms of raw dollars, then yes, the people who pay the most benefit the most in dollars from lowering the rates. But, in terms of percentage of income you can see that the weight of the cuts favors the middle deciles more than the upper deciles. The GAO also corroborates this in terms of real income. The mistake that most liberals make is in thinking that capital gains affects wealthy people more than middle or lower income people. The reality these days is that most people have their retirement savings invested in a market account, so that capital gains in terms of percentage of wealth affect all classes almost equally.

In terms of impact on people, which do you think will hurt more? Asking the middle income (~$60K) family to increase their taxes from $9k to $12k ($3K or ~5% more), or asking the top decile (the $1M> crowd) to pay $35k more? The point here being that realistically the cost of living remains about the same for every person, and that $3k means much more to that middle income family than the $35K ( ~3.5%) does to the very wealthy family (little johnny doesn't get that new Ferrari, but has to settle for the Dodge Viper).

Here is another pretty objective source for the data, the CBO (CBO Effective Tax Rates). If you look at the first chart, you will see that effective tax rates drop substantially since 1984 for the lowest 4/5 of tax payers, but for the top 5% the effective tax rates actually increase over time.

My analysis therefore is that the impact of sunsetting the Bush Tax Cuts is that the middle classes will be hurt the most. The comparison which matters is not in overall revenue paid to the government, but in terms of personal impact from what each of us paid yesterday, to what we will pay tomorrow.