Tax Foundation tax calculator shows EVERYONE'S personal taxes going UP if Biden lets Trump tax cuts expire

 A married couple with 2 kids and a modest combined income of $85k would realize a $1,661 tax increase if the Trump tax cuts are allowed to expire under Joe Biden. 

The tax calculator is here.

Sum Ting Wong: Low top marginal tax rates since 1986 have NOT delivered

Low top marginal tax rates have NOT delivered since 1986.

The average top marginal rate has been 38% for the last thirty years, 49% lower than the average rate of 75% which prevailed from 1956 until the Reagan tax reform of 1986.

After the reform, stocks have done little better than before, but gross public debt has increased at a rate 21% higher than before, growth of current dollar GDP has plunged by 66%, and growth of household net worth has slowed by 48%.

Where did the gains from the Reagan tax cuts go?

You know the answer. The number of US billionaires has exploded from just 41 in 1987 to 536 in 2015, up 1,207%. The money has gone into the pockets of the few, instead of into investment. From 1960 to 1986 net domestic investment grew 846% whereas in the 30 years since 1986 the metric has grown by only 117%, a contraction of 86% under the more favorable personal income tax regime.

The lesson seems clear.

Higher marginal income tax rates force the wealthy to invest in business and derive their income from investments taxed at the preferred lower long term capital rates. Lower marginal personal income tax rates, however, entice them away from going through all the trouble, in turn depriving the economy of growth, employees of growing incomes and wealth, and the government of revenue.

Like the formerly sound public policy which invented the 30-year mortgage to force people to save for the future in the housing piggy bank, the time has come to reincentivize business owners to invest more in their businesses by making the personal income option less attractive.

Neither Republican tax bill does this. 

  

How to tax the rich and only the rich as originally intended in 1913, and solve a lot of problems

In 1913 when the average Joe made about $800 a year, the first income tax under the 16th Amendment didn't worry him because he didn't pay it and probably thought he never would. The personal exemption for a married couple in the original tax code was $4,000.

Today that $4,000 personal exemption adjusted for inflation using the Consumer Price Index amounts to about $100,000.

Even in 2016 that kind of income is made by fewer than 10% of individual wage earners. Under the original income tax of 1913, 90% today wouldn't have to worry about paying the dreaded income tax either.

Is there a way to return to this golden age of taxation?

I'm here to tell you that I think so, and I say that as a conservative. We could easily simplify the tax code by returning to the status quo which prevailed before the First World War, pay all the bills, abolish Social Security and Medicare taxes, the corporate income tax and all the other little irritating taxes and reduce income inequality in the process. We'd also save a lot of time and money wasted in complying with the tax code's myriad baroque features.

Here's the math.

In 2016 according to the Bureau of Economic Analysis personal income in the United States was $15.9287 trillion.

Social Security's Office of the Chief Actuary tells us that in 2016 there were 163.5 million individual wage earners. If you exempt the first $100,000 of everybody's individual wage income in 2016, including from the rich, you're talking about $6.213 trillion of individual wage income which would be tax-free.

That leaves $9.7157 trillion of personal income left in 2016 to tax, to pay all the bills.

According to The Tax Policy Center, the bills were the total estimated federal outlays of $3.9513 trillion in 2016.

So, the tax is 40.67% (9.7157 X .4067 = 3.9513) on all personal income in excess of $100,000 a year, no itemized deductions, no credits of any kind (this is where they all came from in the first place, because the rich pissed, moaned and complained and bribed the politicians to carve out privileges for them to escape paying).

The rich, all 14.9 million of them, will still have $7.2544 trillion to play with ($1.49 trillion from their first $100K tax-free, just like everybody else, and $5.7644 trillion left over after taxes from the income in excess of $100K).

The rest of us, 148.6 million, won't pay any federal income tax, Social Security or Medicare tax, gasoline tax, or any other kind of federal tax on our $4.723 trillion. The only taxes we'll have to pay will be State and Local Income Taxes, property taxes, sales taxes and the like. Of course rich people will have to pay those too, but that's a problem for all of us and for a different level of politics.

I summarize:

$15.9287 trillion personal income 2016 (BEA)

-  3.9513 trillion federal taxes, all from those making $100,000+ per year @40.67%

-  7.2544 trillion left over for the 14.9 million making $100,000+ per year (top 10%)

-  4.7230 trillion left over for the 148.6 million making less than $100,000 per year (bottom 90%)

___________________________________________________________________

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And the budget balances.   

The Tax Foundation says Trump tax plan will blow up the deficit, reducing revenues to 12% of GDP

From Alan Cole, here:

"Looking at these rates, collectively, note that Mr. Trump is frequently cutting rates in half, and sometimes cutting them by even more than that. Taken together, these rate reductions are enough—by my estimates—to reduce tax collections from about 18 percent of GDP to about 12 percent. Under rates as low as these, economic growth—moderate or otherwise—cannot restore federal revenues to current-law levels.

"Tax cuts can do a great deal of good; each of the provisions I outlined above could help a lot of people lead better lives. However, the reductions in federal revenue need to be acknowledged, and likely mitigated through substantial cuts in spending, in order to make this plan feasible."

Capital Gains Income Averaged $497 Billion Annually 2000-2009

From a story in June by the Tax Foundation, here, on volatility in the sources of personal income.

Taxed at 15%, average capital gains income of $497 billion produces almost $75 billion in revenue annually, just shy of what the mortgage interest deduction "costs" the government. You could almost say the current capital gains tax pays for the mortgage interest deduction for everybody. Taxed at 20%, the same amount produces $99 billion annually. At 28% $139 billion annually. At 35% $174 billion annually.

Tax Foundation Finds Romney's $17K Deduction Cap Revenue Neutral

And says the plan maintains progressivity in the tax code. In other words, it keeps the rich paying far more than their fair share.

Read about it, here.

Adam Davidson of NPR Wants to Increase Taxes on It, But What Really is The Middle Class?

In The New York Times, here, where he expansively defines the middle class as everyone making between $30K and $200K:

To solve our debt problems, we have to go to where the money is -- the middle class. People who earn between $30,000 and $200,000 a year make a total of around $5 trillion and pay less than 10 percent of that in taxes . . .. [M]ost economists acknowledge, and most politicians privately concede, that the middle class will have to give up some benefits . . . or it will have to pay more in taxes. Actually, it will probably have to do both.

It's a frequently repeated myth that the middle class includes many of the people in the top income quintile, that is, those making in excess of $100,000 per year, but it just isn't true no matter how often it gets repeated.

Richer men and women don't want to be called rich, of course, so they make believe they're just like the rest of us and call themselves middle class when they're anything but.

That this myth is getting repeated so often these days, however, and not just in liberal quarters like The New York Times but also in places like The Wall Street Journal, should make your antennae stand up.

I say this is all part of a softening-up operation to get the rubes ready for a big fat tax increase.

That uncomfortable feeling you get reading the article above might as well be because the author is using one of these to blow smoke up your rear end:

In all seriousness, though, the fact of the matter is that in 2010 there were 99.5 million wage earners making less than $40,000 a year, according to the latest information from Social Security, here. That's fully two thirds of all the wage earners in the country, and a long way from the earners in the top quintile.

The next tranche up from there, namely wage earners making between $40,000 and less than $80,000 a year, is really small by comparison, just under 35 million wage earners.

And fewer than 10 million wage earners inhabited the next level up in 2010, those who made between $80,000 and $120,000.

The $120,000 to $160,000 set is hardly a crowd by comparison, just over 3 million wage earners strong.

Between $160,000 and $200,000 there were 1.25 million people.

And beyond that: 1.75 million wage earners, making to infinity and beyond.

Asserting that middle class extends all the way up to $200,000 when nearly 90 percent make less than $80,000 a year is quite simply ridiculous. It's obvious that the middle is below $40,000 when the average wage of all 150 million workers in 2010 was $39,959. Worker number 75 million from the bottom made just $26,363.

A more meaningful metric for middle class is what kind of housing income can buy at that great dividing line of $40,000.

For example, when I bought my first real traditional home way back in the nineties, the seller's attorney congratulated us at closing by saying, "Welcome to the middle class." I might have said we'd never left it, seeing that we had been owners of other kinds of dwellings twice before, but the attitude represented the cultural consensus that single family home ownership with a lawn to cut defines the socio-economic middle. Being able to afford such a place has been synonymous with achieving the American dream since WWII, after a long period of economic upheaval which quite literally unsettled millions.

So who can afford what when it comes to housing today is an important measure for judging whether the American dream continues intact.

Consider that the median price of an existing single family home in the US stands at $165,400 in September 2011, according to the National Association of Realtors, here. The lowest median price is in the Midwest at $137,400, and the highest is in the Northeast at $229,400.

Assuming one can come up with the 20 percent down payment of $33,080, which is a tall order for someone making $40,000 a year in today's economy, $132,320 financed at 4 percent over 30 years means a principal and interest payment of $631 a month. Add $300 a month for taxes and insurance and the $931 monthly payment means, at a maximum percentage of income of 28 percent, income must be $3,325 a month, or $39,900 a year.

Another way to put this is that the maximum price of a home which can be afforded by a $40,000 income is the current median price of $165,400. Anything beyond that is out of reach.

So, for how many people is that out of reach?

Based on the numbers from Social Security above, for easily 66 percent of the workforce, or nearly 100 million workers who individually couldn't buy more home than the median priced home without more income. But of course many households have two earners who combine their incomes to do just that.

Nevertheless tax data from 2009 more than support the conclusion that a clear majority of Americans cannot afford housing at the median price level.

The latest information indicates that half of the country, nearly 69 million tax returns in 2009, had adjusted gross incomes of less than $32,396.

The next tranche up from there, consisting of 34.5 million more tax returns, takes us up to 75 percent of the whole country, and adjusted gross income of less than $66,193.

(And contrary to Mr. Davidson, the combined adjusted gross income of the first 75 percent of taxpayers is only $2.7 trillion. Of the first 50 percent, barely $1.1 trillion. The money is most definitely not in the middle. It's in the top 25 percent, with $5.2 trillion in AGI last year).

In other words, somewhere between 50 and 75 percent of the country would have to settle for housing which falls well below today's median price level if they had to buy today, despite the 16 percent decline in the median price from $198,100 reached in 2008.

Many who already own a home under these circumstances are desperately trying to keep theirs because they know their chances of being able to buy another one are not very good. Incomes are flat to declining and unemployment and underemployment are widespread. With home prices depressed, many who purchased during the bubble from 1998 to 2007 wouldn't walk away with enough from a sale for a down payment on another home. Some estimates put that number of underwater mortgage holders at 25 million, fully half of Americans with mortgages.

They dare not sell, because to do so is to leave the middle class.

Indeed, according to the Census Bureau here home ownership rates have fallen almost 4 percent from peak, back to 1998 levels.

And the liberals' solution to this middle class implosion is to raise their taxes.

It's not just crazy. It's mean, because increasing taxes on the real middle class will turn it into the working class, which, I gather, is the whole point of socialism.

Bill Clinton's Middle Class Tax Increase Meant the Rich Got a Bigger Piece of the Pie

Mark Perry seems to have missed a good story.

He's been talking recently about how the income share of the top 20 percent has been FLAT since 1994, as shown here.

What's more interesting, however, is the oddity that his charts show that the income share of the top 20 percent experienced a pronounced spike up between 1992 and 1994, which includes the first two years of the Bill Clinton administration.

Why did the richer get a bigger share of the income pie after Bill Clinton raised taxes on them in 1993?

Top marginal income tax rates had declined from 38.5 percent in 1987 to 28 percent in 1988, as shown here, and in 1991 another higher rate of 31 percent was added under Bush 41. But under Clinton in 1993 an additional marginal rate of 39.6 percent was added with the help of the Democrat controlled Congress. So higher marginal income tax rates prevailed, but the richer nevertheless got a bigger share of the income.

That doesn't make any sense. How did that happen?

The answer is Clinton's middle class tax increases.

For one thing, the cap on income subject to Social Security taxes was raised. That bumped up the limit on incomes on which the tax was levied. A tax increase for all wage earners. For another thing, the cap on income subject to Medicare taxes was removed. That meant no ordinary income could escape the tax any longer. Another huge tax increase. And thirdly, Social Security income beyond 50 percent up to 85 percent became subject to income taxation. Anyone taking Social Security income felt this, not just the rich. Another huge tax increase.

These were massive tax increases on wage earners, as opposed to those richer Americans who could take their income differently if need be, often in the form of capital gains, or from tax-free municipal bonds, or from tax shelters.

The net effect of the Clinton tax increase was that just about everyone in the four quintiles below the top 20 percent lost ground on income, which meant that the rich appeared to spike up in their share of the income pie. The regimentation in law of the tax increases on everyone altered and froze the aggregate shares of the income pie going forward, hence the flatness of those charts since 1994.

The truth was that Clinton's tax increase on the richer, who ended up shifting income to avoid taxation, masked a massive tax increase on everyone else, who couldn't shift their income if they wanted to, and they've experienced a smaller bite of the income pie ever since.

That's what expanding the tax base in tandem with raising rates will do.

Republicans, take note.

Senate Democrat Millionaire Tax Would Pay Less Than 10 Percent of Jobs Bill Cost

In the first year. The Democrat trick is to levy the tax over ten years to pay for a spending bill this year, and to rely on data which is suspect.

So one would have to infer from an AP story here, but you have to do the math:

About 392,000 households would get hit by the Senate Democrats' proposed 5.6 percent tax on income above $1 million, according to an analysis by the Tax Policy Center, a Washington think tank. In 2013, the first year the tax would take effect, those households would see their taxes increase by an average of $110,500, according to the analysis.

The latter figure extracted from that many households comes to just $43 billion, $404 billion short after the money has already been spent.

Socialsecurity.gov reports here, however, that fewer than 80,000 individuals had net compensation in excess of $1 million in 2009, collecting in the aggregate $184 billion. Taxing each and every dollar of that amount, not just the adjusted gross income over $1 million as the Democrats propose to do, would net just $10.3 billion.

The Tax Foundation here has a much more conservative estimate of the numbers than The Tax Policy Center. It says that for 2009 there were just 230,323 tax returns reporting adjusted gross incomes in excess of $1 million, and just 8,148 reporting $10 million or more. (Adjusted gross income captures more than just wage compensation). It calculates that the 5.6 percent millionaires' surcharge all by itself would take an extra almost $45,000 in new taxes from the median filer in this group. That also comes to $10.3 billion in new revenues annually if that median filer is typical of millionaires.

Even over ten years for a one year jobs program Obama needs to get re-elected next year, either the rest of us will be paying the $344 billion the scheme is short, or it just gets added to the deficit, crowding out other spending.

The fact of the matter is, taxing the AGI of everyone in the top half of the country with an extra 5.6 percent surcharge still would not pay for Obama's one time $447 billion jobs spending bill.

That doesn't make any sense!

The Biggest Tax Loss Expenditure Benefits the Rich: $150 Billion for Social Security

In 2008, the AGI of the top 10 percent of earners was $3.9 trillion, represented in just 14 million tax returns, as reported here.

Assuming these are individuals (which cannot be true because only 140 million returns in total were filed that year but let's make the assumption anyway), about $2.4 trillion of that money would have escaped Social Security taxation above the threshold limit, rounded, of $107K of income per year.

About $1.5 trillion of the $3.9 trillion would have been taxed for Social Security purposes. Again, I'm using adjusted gross income which is also not going to be an accurate measure, but it'll have to do for this back of the envelope calculation.

6.25 percent of the remaining $2.4 trillion comes to $150 billion in lost revenue for Social Security in 2008, way ahead of the top tax loss expenditures, medical insurance at $131 billion, pensions at $117 billion, and your mortgage interest at $88 billion. See the data here.

The Super Committee, aka The Gang of Twelve, is interested in all proposals to raise revenues by closing "loopholes," like your mortgage interest deduction. Yet that's only fourth on the list of "lost" government revenues. The biggest loophole goes to the richest 10 percent of earners.

We're taxed enough already. Cut the spending instead. 

Another Voice Wrongly Claiming 'The Money is in the Middle'

Brian Wesbury at The DC, here:

What most people don’t realize is that the U.S. has gorged so much (boosting spending from roughly 18% of GDP in 2000 to 24% of GDP today), that the only way to pay for it is to tax the middle class. ...

The money is in the middle. And the only way our politicians can get it is to follow Europe’s lead and institute a national sales tax or Value-Added Tax (VAT). This is the elephant in the room that is never talked about. Those who are using the debt ceiling in an attempt to cut spending are actually saving the middle class from tax hikes — not the millionaires and billionaires.


It's a frequently repeated claim that the money is in the middle, but it's just not true, no matter how often  it is said.

If all the (reported) income in America were poured into a giant hour glass, you'd have to start it and wait about twenty minutes to begin to visualize how all the money is actually distributed.

A snapshot taken at that moment would show $5.7 trillion in adjusted gross income still in the top, and $2.8 trillion in AGI in the bottom. The kicker is that 35 million tax returns split what's on top, while the remaining 105 million tax returns, 75 percent of the total, divvy up what's on the bottom.

The money's definitely not "in the middle."

It's hard to get agreement on what's middle class in America, especially since it is a conceit of our society that everyone is middle class. The rich aspire down to it to escape notice, the poor up to it to escape the indignities of dependence.

But no matter what smoke anyone tries to blow up your bottom, the biggest single pile of money remains with the top 25 percent:

Top 10 percent = 14 million tax returns (10 percent of the total) = $3.9 trillion in AGI
The next 25-10 percent = 21 million tax returns (15 percent of the total) = $1.8 trillion in AGI

The next 50-25 percent = 35 million tax returns (25 percent of the total) = $1.7 trillion in AGI
The bottom 50 percent = 70 million tax returns (50 percent of the total) = $1.1 trillion in AGI.

It's ridiculous to think that a VAT tax will somehow generate huge piles of new tax revenue on the backs of the middle class.  The VAT will hurt them just like Social Security and Medicare taxes hurt them because it's regressive, not because they have a lot of untapped money they're going to be parting with.

Considering how much tax evasion there already is in America of the unreported income variety, variously estimated (here at $2 trillion, resulting in a tax gap of $500 billion), a VAT will fail simply because it will drive more and more of the economy underground where cash is king and credit cards, checks, invoices and receipts are anathema. Think of it as the inverse of how the rich escape high rates of taxation, for example by shifting to capital gains away from ordinary income. A quicker way to become Greece I cannot think of.

Setting money free to move around openly is the key to an effective tax policy. But bringing it out into the open where it can be captured and taxed depends on perceptions of fairness.

As long as too many people think some people should pay taxes at a higher rate just because they have more, we're not going to get there. 

America's Top Half of Income Earners Paid 36 Times More in Taxes in 2008

Individual income tax revenues in 2008 were $1.03 trillion on AGI of $8.43 trillion, for an effective overall tax rate on the individual American taxpayer of . . . 12.25 percent, to which add social insurance taxes and excise taxes.

The bottom 50 percent of Americans enjoyed a much lower rate, however, than the top 50 percent: 2.59 percent vs. 13.65 percent.

The top 50 percent in 2008 made 7X as much as the bottom 50 percent, and paid 36X as much in taxes.

And liberals say the rich don't pay their fair share.

(source)

Government Revenues in 2008 were $2.5 Trillion

Government revenues in 2008 came from the following taxes:

Individual income taxes -- $1.14 trillion; (IRS data is slightly different at $1.03 trillion)

Social insurance taxes -- $0.9 trillion; (earnings beyond $107,000 or so are not fully taxed for this)

Corporate income taxes -- $0.3 trillion; (think GE!)

Other -- $0.1 trillion; (think?)

Sales and excise taxes -- $0.06 trillion; (think gasoline)

Total -- $2.5 trillion. Not enough by a long shot, under Obama, Pelosi and Reid.

So whattayawannado? Raise taxes to pay for the new spending under these bums, or get rid of the bums?

(source)

Doh! We Tax the Rich Because That's Where The Money Is, Knucklehead.

Per Census.gov here, these are the income limits by each quintile of 23,507.6 households in 2009:

Lowest: up to $20,453

Second: up to $38,550

Third:    up to $61,801

Fourth:up to $100,000

Fifth:            $100,000+.

That means 80 percent of the country, about 94,030 households, makes $100,000 per year or less.

We know from IRS data that earners reporting adjusted gross incomes of approximately $67,000 or less in 2008, totaling $2.8 trillion in AGI, represented 105 million tax returns out of 140 million total. They are the bottom 75 percent of tax returns in the country, a rough proxy for the first 4 of the 5 income quintiles.

Using back of the envelope estimates, perhaps another 7 million more tax returns represent the rest of the territory up to $100,000, and AGI of another $0.6 trillion, meaning that the first 4/5 of the country contributes AGI of about $3.4 trillion.

Roughly 28 million tax returns would then round out the top quintile, with AGI of approximately $5 trillion. It is certain that 14.4 million of these returns account for $3.9 trillion of AGI, the top 10 percent of earners.

Thus one can estimate that tax returns from the top quintile have something like 6 times the AGI per return compared with the returns of all the quintiles below them taken together.

About 80 percent of the earners have 40 percent of the income, while the top 20 percent of the earners have 60 percent of the income.

That's where the money is.

The Middle Class Doesn't Have The Deep Pockets For The Taxes

The bottom half of the country, 70 million tax returns, in 2008 had adjusted gross income totaling $1.1 trillion out of a total of $8.4 trillion, just 13 percent of total AGI. These earners have AGIs less than $33,000 per year.

The top half of the country, 70 million tax returns, in 2008 had the rest: $7.3 trillion in adjusted gross income, 87 percent of the total.

The first 35 million tax returns in this top half more or less represent the middle class in this country, accounting for $1.7 trillion in adjusted gross income, just 20 percent of the total AGI. Middle class earners have AGIs between $33,000 and $67,000 per year.

The next 21 million tax returns more or less represent the upper middle and lower upper classes, accounting for $1.8 trillion in AGI, or 21 percent of total AGI. People in this group have AGIs between $67,000 and $114,000 per year.

The top 14 million tax returns represent the upper class, accounting for $3.8 trillion in AGI, or 45 percent of total AGI in 2008. People in this group have AGIs in excess of $114,000 per year. They are the top 10 percent of the country by income. That's where the deep pockets are for taxes, not in the middle class. Unfortunately for liberal spenders, even these are not deep enough.

So don't piss down our backs and tell us it's raining when you say the middle's got the money. WE DON'T. 

This IRS data is neatly summarized for anyone to look at, even Rush Limbaugh, Sean Hannity and The Wall Street Journal, here.

But facts are stupid things, aren't they?

4 of 6 Current Tax Rates Already Do Not Apply to 80% of the Country

Per the US Census, all US households divide into five groups of equal size along these income lines for 2009:

1) $0 to $20,453

2) $20,454 to $38,550

3) $38,551 to $61, 801

4) $61,802 to $100,000

5) over $100,000 (the top 5% make in excess of $180,000).

Current tax brackets are concentrated on the fifth group, the over $100,000 set, so that the top four of the six brackets affect the top 20% of earners in the population the most:

10% for adjusted gross incomes $0 to $16,750

15% on AGIs to $68,000

25% on AGIs to $137,300

28% on AGIs to $209,250

33% on AGIs to $373,650

35% on AGIs above $373,650.

The result is that 60% of the country is responsible for very little tax revenue, and the expansion of various credits like the Child Tax Credit and the Earned Income Credit have meant that an increasingly large percentage of the population is paying no tax at all.

For the 2008 tax year the Tax Foundation reported here that 36% of filers paid no tax at all:

Nonpaying status used to be a sure sign of poverty or near-poverty, but Congress and the President have changed the tax laws to pull much of the middle class into the growing pool of nonpayers. The income level at which a typical family of four will owe no income taxes has risen rapidly, now topping $51,000. 

As a result, recently released IRS data for the 2008 tax year show that a record 51.6 million filers had no income tax obligation. That means more than 36 percent of all Americans who filed a tax return for 2008 were nonpayers, raising serious doubts about the ability of the income tax system to continue funding the federal government's ballooning expenditures. 

The situation worsened dramatically in 2009, to 47%, according to the Tax Policy Center in this AP story: 

About 47 percent will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability. That's according to projections by the Tax Policy Center, a Washington research organization. ...The bottom 40 percent, on average, make a profit from the federal income tax, meaning they get more money in tax credits than they would otherwise owe in taxes. For those people, the government sends them a payment.

"We have 50 percent of people who are getting something for nothing," said Curtis Dubay, senior tax policy analyst at the Heritage Foundation. ...The number of households that don't pay federal income taxes increased substantially in 2008, when the poor economy reduced incomes and Congress cut taxes in an attempt to help recovery. 

In 2007, about 38 percent of households paid no federal income tax, a figure that jumped to 49 percent in 2008, according to estimates by the Tax Policy Center. 

In other words, the tax code under George Bush and the Republicans in 2001 and 2003 became an instrument of liberal social policy, providing massive social spending on America's middle and lower classes. Combined with George Bush's massive hand out to the elderly in the form of drugs for seniors you now understand why liberals hate George Bush so much: because he out-liberaled the liberals. 

And don't expect to hear about it from Rush Limbaugh. He thinks there isn't anyone in the country who is undertaxed. 

If there were really any conservatives left in the country, they'd be calling for a complete end to these subsidies because they represent government spending which we cannot afford, and for a broader tax base which embodied every American's patriotic duty to contribute to the general welfare. 

A real conservative would equate exempting low incomes from taxation with the practice of exempting high incomes from taxation. The "refund" checks which "the poor" receive from the government when they file their taxes are no different from the exemption the rich receive when payroll taxes are not collected on income above $106,500. The former are justified as offsets of the payroll taxes the poor pay, the latter as exemptions from contributions the rich would never live to recoup. Everyone in a narrower and narrower middle pays and pays those taxes, year in and year out, to benefit the poor and the elderly. It is unsustainable.

When New Taxes Are Necessary Is Also Above Obama's Pay Grade

In an interview on February 9, 2010, President Obama says raising taxes on households earning less than $250,000 a year must be on the table of the deficit commission, but that he doesn't know if raising those taxes is a solution:

GOLDMAN: Well, if your deficit commission came back and said, as part of this overall recommendation, we would recommend raising taxes on households earning less than $250,000 a year, you would accept that as part of the overall?

OBAMA: I don’t want to prejudge the commission because the whole point of it is to make sure that all ideas are on the table and let’s see what folks can come up with.

GOLDMAN: So, even raising taxes?

OBAMA: What I can’t do is to set the thing up where a whole bunch of things are off the table because, at that point, there are going to be - some who say, we can’t look at entitlements. There are going to be some who say we can’t look at taxes, and pretty soon, you just can’t solve the problem.

So, what I want to do is to be completely agnostic, in terms of solutions. I want everybody to sit down and work off of a common base of facts.

Just eight days prior, however, he submitted a $3.8 trillion budget which was anything but agnostic about the need for tax increases on such households.

The new agnostic tone on taxes is interesting because of the dust-up over a news report, later pulled, that Obama would let the Bush tax cuts expire, which would mean huge tax increases on every American, including whopping increases of 50% on the poorest of taxpayers by letting the 10% bracket expire and shoving them into the 15% bracket.

The White House quickly jumped on that news report, and emphasized that the new budget calls for making the Bush tax cuts permanent for those making under $250,000.

The Tax Foundation subsequently pointed out that

What the article does not mention is that Obama's budget extends all of the Bush tax cuts for single returns making less than $200,000 and married returns making less than $250,000. Whatever you think of Obama's proposed budget and tax policies, this omission in an article entitled "Backdoor taxes to hit middle class" is either evidence of intentional deceit or terrible reporting.

So on February 1 Obama is intellectually certain not only that tax increases on the below $250K crowd are not needed in the current budget, but aren't going to be needed period and the Bush tax cuts should be made permanent. But nine days later he's a doubting Thomas? What happened in the interim?

Ganja, that's what.